The Corporate Sustainability Reporting Directive (CSRD) introduces comprehensive requirements for companies on sustainability reporting, including detailed emission reporting guidelines. It emphasizes the need for transparent disclosure of greenhouse gases emissions, incorporating strategies for climate change mitigation and adaptation. This directive could significantly influence existing and future reporting practices, pushing companies towards more rigorous environmental accountability.
What is the CSRD and its implications for greenhouse gas emission reporting?
The CSRD mandates a holistic approach to sustainability reporting, focusing on environmental, social, and economic responsibilities. A pivotal component, the ESRS E1 standard, specifically targets climate change and requires detailed reporting on greenhouse gas emissions. Learn more about the CSRD.
EFRAG published the original ESRS standards in 2023. However, following the Omnibus I initiative, EFRAG has prepared simplified ESRS standards, which are expected to be approved in mid-2026. The ESRS 1 standard on climate change will remain in place and, for example, the disclosure requirement for emissions accounting will remain virtually unchanged. Only the numbering of the disclosure requirement may change. The information below is based on the standards approved in 2023, which are valid at the time of writing.
What are reporting disclosures in ESRS E1?
The ESRS E1 standard (2023) outlines specific disclosures for climate-related reporting:
- Transition plan for climate change mitigation (E1-1)
- Policies related to climate change mitigation and adaptation (E1-2)
- Actions and resources in relation to climate change policies (E1-3)
- Targets related to climate change mitigation and adaptation (E1-4)
- Energy consumption and mix (E1-5)
- Gross Scopes 1, 2, and 3 and Total GHG emissions (E1-6)
- GHG removals and GHG mitigation projects financed through carbon credits (E1-7)
- Internal carbon pricing (E1-8)
- Anticipated financial effects from material physical and transition risks and potential climate-related opportunities (E1-9)
How are emissions calculated under the CSRD?
The reporting disclosures for greenhouse gas emissions are based on an approach according to the GHG Protocol standards. The reporting instructions for emission calculation presented in the ESRS E1 standard draft do not differ from the guidelines in the generally used emission calculation standards. However, the new standard clarifies the guidance by concluding the essential points into a few pages.
- The company must calculate its Scope 1, Scope 2 and Scope 3 emissions, total emissions and GHG intensity based on the net revenue
- Both location- and market-based methods shall be applied to calculate Scope 2 emissions related to purchased energy and total emissions are reported on both a location and market basis
- Each significant Scope 3 emission category shall be included in the calculation of Scope 3 emissions. According to the GHG Protocol standards, Scope 3 emissions are divided into fifteen emission categories
- In addition, significant emissions related to cloud computing and data center services can be reported separately under sub-category of purchased goods and services.
The company may disaggregate its Scope 1, 2 and 3 emissions by country, economic activity, operating segment, subsidiary, greenhouse gas (CO2, CH4, N2O, HFCs, PFCs, SF6, NF3) or by emission source, if appropriate. Biogenic CO2 emissions from combustion and biodegradation of carbon must also be reported separately from Scope 1 emissions, but other greenhouse gas emissions (in particular nitrous oxide) must be included in the calculation. Offsetting (carbon credits and emission allowances) may not be included in the emissions calculation.
Companies that have already done emission calculations and included their scope 3 emissions in the calculation do not need to worry about the requirements set by the CSRD directive for emission reporting. On the other hand, companies that have not yet started their emissions calculation, are in hurry to get started.
Conclusion
The CSRD represents a significant advancement in corporate sustainability reporting and increases the need for emissions accounting. By requiring detailed and transparent disclosures, it not only enhances the comparability of reports but also encourages companies to adopt more sustainable practices. Companies previously engaged in comprehensive emission reporting will find the CSRD’s requirements familiar, yet more structured. Those new to emission calculations must swiftly adapt to comply with these rigorous standards, marking a pivotal shift in corporate environmental responsibility.
The tools on the OpenCO2net platform are CSRD-compatible. Our organization-specific emissions calculator is based on GHG Protocol standards and includes all scope 1, 2 and 3 emission categories. Our service also includes tools for setting emission targets and monitoring emissions. Our extensive emissions database also provides reliable and up-to-date emission factors for your calculations.
