XBRL Taxonomy for ESRS: What’s Changing and How to Prepare

The digitalization of corporate reporting has taken a significant step forward with the adoption of the XBRL (eXtensible Business Reporting Language) Taxonomy for ESRS (European Sustainability Reporting Standards). This is a crucial development for companies that must comply with the Corporate Sustainability Reporting Directive (CSRD). The goal of this framework is to unify and standardize sustainability reporting, moving away from traditional formats like PDFs or narrative documents to ensure greater transparency and accuracy.

The XBRL taxonomy for ESRS standards not only requires digital reports but also encourages businesses to adopt advanced tools that facilitate the standardization and comparability of sustainability data. This shift compels companies to upgrade their data collection and reporting systems, improving internal processes and ensuring regulatory compliance.

More than a trend, digitalization is now a regulatory requirement that reshapes how companies communicate key sustainability information. The ability to adapt to these changes will be essential for companies to meet European regulations and enhance their competitive edge.

Mandatory Digital Sustainability Reports

What does this mean?

Under the XBRL taxonomy for ESRS standards, businesses are required to submit their sustainability reports in a standardized digital format. This means abandoning PDF or paper reports, as they no longer meet the XBRL (eXtensible Business Reporting Language) criteria.

Impact

Companies will need to transform their reporting systems to comply with the new digital format. The immediate impact will be the integration of new technological tools that structure, tag, and validate sustainability data according to XBRL standards.

Preparation

To comply with these new requirements, companies must invest in XBRL-compatible software platforms capable of managing the collection, organization, and submission of sustainability data. While this transition may seem complex, it will be essential to meet the regulations.

Granular Data Tagging

What does this mean?

The XBRL taxonomy for ESRS standards requires a granular level of tagging for all sustainability report elements. This means that even narrative text must be tagged accurately to ensure clarity and comparability of the data.

Impact

This increased level of detail will enhance transparency in reports and reduce the risk of «greenwashing.» However, companies will need to adjust their data collection processes to meet these stricter taxonomy requirements.

Preparation

Businesses should review their data collection processes and ensure they capture the necessary level of detail. Implementing robust ESG data management systems will be key to handling the granularity required by the XBRL taxonomy.

Distinction Between Mandatory and Voluntary Reporting

What does this mean?

The XBRL taxonomy for ESRS clearly distinguishes between mandatory and voluntary disclosures. This provides companies with a clear guide on what information must be reported and what can be added voluntarily as they develop their reporting capabilities.

Impact

This distinction makes compliance easier, as businesses will know exactly which disclosures are mandatory to avoid regulatory penalties. At the same time, they have the flexibility to include voluntary information as their reporting processes mature.

Preparation

Companies should review and update their reporting frameworks to ensure all mandatory disclosures are properly included. Additionally, they should plan for a gradual implementation of voluntary disclosures in the future.

New Validation Rules

What does this mean?

The XBRL Taxonomy for ESRS standards also introduces stricter validation rules. These rules are designed to ensure that reports are complete and accurate before submission, taking into account the phased implementation to avoid errors in early reports.

Impact

Failing to comply with these rules could result in reports being rejected or marked as incomplete, leading to delays and potential penalties. Companies will need to ensure their reports pass all validations before final submission.

Preparation

It is advisable for companies to invest in automated validation tools that can identify errors before submitting reports to regulators. This will ensure that reports are accurate and compliant with all XBRL taxonomy requirements.

Structured Data Disaggregation Without Hypercubes

What does this mean?

The XBRL taxonomy for ESRS standards eliminates the use of hypercubes and establishes fixed levels of data disaggregation. This requires companies to follow a predefined structure to break down sustainability metrics, such as disaggregation by region or activity.

Impact

While this change reduces flexibility in personalized reporting, it ensures greater consistency in the data presented by companies, making comparisons across sectors and industries easier.

Preparation

Businesses need to review their data collection and reporting systems to align them with the levels of disaggregation defined by the taxonomy. Adjusting internal data processes will be crucial for compliance with these standards.

What Do These Changes Mean for Businesses?

Adopting the XBRL taxonomy for ESRS standards forces companies to transform their data collection and reporting systems. Traditional narrative or PDF reports will no longer suffice; instead, businesses will need to transition to structured reporting systems that comply with the XBRL format.

This change will increase transparency in sustainability reports, improve comparability between companies, and reduce the risk of data manipulation. Furthermore, companies operating internationally will benefit from aligning with global standards like ISSB and GRI, allowing them to meet various regulations with a unified reporting framework.

How Should Companies Prepare?

At APLANET, we position ourselves as a key strategic partner in this transformation. Our ESG management and analytics platform is designed to facilitate CSRD compliance, enabling companies to collect, organize, and report their ESG data efficiently and in line with new regulations.

Invest in XBRL-Compatible Reporting Tools

APLANET offers an all-in-one solution that automates data collection, tagging, and validation according to the XBRL taxonomy for ESRS standards. With our tools, companies can manage the reporting process seamlessly and ensure compliance with regulatory requirements.

Conduct a Double Materiality Assessment

The CSRD requires businesses to assess both financial materiality and the impact of their activities on the environment and society. APLANET monitors this assessment with its platform, helping companies structure and analyze ESG data to meet sustainability standards.

Review and Map Data Sources

With APLANET, companies can organize and structure their ESG data sources, ensuring alignment with the taxonomy requirements. Our platform helps identify information gaps and optimizes data collection processes, making regulatory compliance easier.

Involve Interdisciplinary Teams

Collaboration between sustainability, finance, and technology teams is key to effective compliance. APLANET enables teams to collaborate centrally, using a single platform to manage all aspects of the ESG reporting process, simplifying the implementation of the XBRL taxonomy for ESRS standards.

Conclusion

The XBRL taxonomy for ESRS standards is shaping the future of sustainability reporting in Europe. While this shift presents a technical and financial challenge for companies, the long-term benefits in terms of transparency, comparability, and alignment with global standards are undeniable.

Businesses that proactively prepare and adopt the necessary tools and processes will not only meet the new regulations but also gain a competitive edge. At APLANET, we are committed to supporting your company through this process, providing the solutions needed to comply with CSRD and improve your ESG management. Contact us today to learn how APLANET can help your company meet CSRD requirements and optimize your sustainability strategies.

📥 Download our XBRL Taxonomy Practical Guide and position yourself as a sustainability leader.

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