The EU-wide CSRD directive presents companies with new challenges in sustainability reporting. Starting in 2025, around 15,000 German companies will be required to disclose detailed ESG data and assess climate risks. This marks a significant expansion from previous regulations, reflecting the EU’s ambition to drive transparency and accountability in corporate sustainability efforts. According to PwC research, many organizations are still in the early stages of adapting to these requirements, highlighting the urgency for proactive preparation.
Your advantage? Early preparation not only ensures compliance but also strengthens trust with investors and business partners. Act now!
The CSRD requires nearly 50,000 European companies to disclose extensive sustainability data annually in addition to their financial reports. For German companies, this means providing detailed information on environmental, social, and governance (ESG) aspects. Learn more about ESRS standards and CSRD disclosure requirements. This expansion is a response to increasing investor demand for reliable, comparable ESG data, as noted by the European Parliament.
A central element of CSRD reporting is the double materiality assessment. This involves not only evaluating the impact of your business activities on the environment and society, but also transparently disclosing the financial risks arising from sustainability issues. This dual lens is designed to ensure that sustainability is not siloed but integrated into core business risk management (GRI Standards).
From 2025, companies must submit an emissions reduction plan aligned with the Paris Agreement goals, supporting the achievement of net-zero emissions by 2050. This also includes reporting on Scope 3 emissions—indirect emissions along the entire value chain, which often make up the largest share of total emissions. For guidance, see decarbonising Scope 3 emissions. According to McKinsey, Scope 3 emissions can account for more than 70% of a company’s carbon footprint, underscoring the importance of robust value chain engagement.
The reported data is subject to limited assurance by auditors. The European Commission emphasizes the importance of reliable reporting:
Reports often omit information that investors and other stakeholders think is important. Reported information can be hard to compare from company to company, and users of the information are often unsure whether they can trust it.
In Germany, the CSRD is implemented through the CSRD Implementation Act, which integrates the EU directive into national law. This leads to changes in the Commercial Code (HGB) and increases the number of reporting companies in Germany from 550 to 15,000. For more on German company requirements, see German companies and CO2 reduction.
Sustainability information must be published in the management report, so that financial and sustainability data are presented together. This approach ensures that sustainability is seen as an integral part of corporate strategy.
The CSRD complements existing obligations such as the Supply Chain Due Diligence Act (LkSG). While the LkSG has already established due diligence obligations along the supply chain, the CSRD expands these with comprehensive reporting requirements. Future regulations like the Corporate Sustainability Due Diligence Directive (CSDDD) will further tighten requirements and place even greater focus on climate protection. See our CSDDD compliance guide for details. The alignment between CSRD and CSDDD is designed to reduce administrative burden and avoid redundant reporting (Regulatory & Compliance).
One advantage: The reporting requirements of the CSDDD are aligned with the CSRD, so no double reporting is necessary. However, non-compliance with the CSDDD can result in significant penalties of at least 5% of global annual net turnover.
The CSRD will be introduced in phases, depending on company size and type. German companies should begin preparing for the new requirements now, even if legal adjustments are still ongoing.
| Financial Year | Reporting Companies | First Publication |
|---|---|---|
| 2024 | Companies already subject to the NFRD (large listed companies, banks, and insurers) | 2025 |
| 2025 | Large companies (250+ employees, €25M balance sheet or €50M revenue) | 2026 |
| 2026 | Listed SMEs (with a two-year opt-out option) | 2027 |
| 2028 | Latest reporting start for listed SMEs | 2029 |
| 2029 | Non-EU companies with €150M EU revenue and a large EU subsidiary | 2030 |
Large companies are defined as those meeting at least two of the following criteria: at least 250 employees, a balance sheet total of at least €25 million, or revenue of at least €50 million. Alternatively, thresholds of €20 million balance sheet, €40 million net revenue, and an average of 250 employees in the fiscal year apply.
Currently, only 56% of companies required to report from the 2024 financial year have fully addressed the CSRD and the ESRS. CSRD data points consist of approximately 70% qualitative and 30% quantitative information. This requires careful planning and systematic data collection. For practical steps for SMEs, see ESRS compliance for VSMEs. The high proportion of qualitative data highlights the need for robust narrative and process documentation, not just numerical disclosures (PwC).
Companies should set up an interdepartmental project team early on, defining clear roles and responsibilities and developing a roadmap for CSRD implementation. A test run of reporting can help identify weaknesses early.
These legal requirements lay the foundation for a targeted climate risk strategy, which will be discussed in more detail in the next section.
In Germany, companies face the challenge of not only identifying climate risks but systematically integrating them into their ESG strategy. The CSRD demands more than superficial reporting—it requires in-depth analysis and strategic planning. Here’s how to assess climate risks, develop transition plans, and leverage data to meet requirements and unlock strategic opportunities.
Assessing climate risks is the starting point for any sustainable strategy that meets CSRD requirements. You should identify and quantify physical, transition, and liability risks, which fall into three categories:
Scenario analysis is a proven tool for assessing these risks. For example, in May 2024, the German Weather Service reported extreme rainfall in Saarland with over 100 liters per square meter in 24 hours—a strain the infrastructure was unprepared for.
To better understand site-specific risks and adaptation options, interdisciplinary collaboration is essential. Workshops with local experts and stakeholders, such as public administration representatives or infrastructure operators, help analyze interdependencies and potential cascading effects.
A best-practice example for comprehensive climate risk assessments is Allianz, which has used qualitative and quantitative models since 2023. Physical risks, extreme weather events, climate litigation, and their potential impacts are examined. It’s crucial that all decisions on risk prioritization are well documented.
A climate transition plan (CTP) is your strategic roadmap to reduce greenhouse gas emissions and align your business model with clear climate targets. The CSRD requires transparent reporting on these strategies and the steps toward net-zero emissions—without losing sight of long-term economic stability.
Such a plan includes several steps:
The inventory of Scope 1, 2, and 3 greenhouse gas emissions forms the basis of every transition plan. Building on this, you define short- and long-term goals and actively involve relevant stakeholders. A concrete emissions reduction roadmap is essential.
Successful real-world examples show how ambitious targets can be integrated into corporate strategy: Siemens, as part of its DEGREE sustainability concept, aims for net-zero emissions by 2030 and a 90% reduction compared to 2019. The Volvo Group plans to electrify 35% of its vehicles by 2030 and operate fully fossil-free by 2040. Schneider Electric is also pursuing drastic carbon reductions with its Zero Carbon Project and EcoDesign Way (Siemens Sustainability, Volvo Group Sustainability, Schneider Electric Sustainability).
The Transition Plan Taskforce (TPT) sets the benchmark for CTPs by focusing on ambitious targets, concrete actions, and clear responsibilities. The key is to firmly embed the transition plan into corporate strategy and secure top management support.
A solid risk and strategy analysis is the foundation—but only precise data and specialized tools enable effective implementation. Data quality and reliability are crucial for the success of a climate transition plan. Sabine Mauderer, Executive Board Member of the Bundesbank and Chair of the NGFS, puts it succinctly:
“The availability of comprehensive, consistent, and timely data is the key to everything we do. [...] The better the data, the more targeted our actions can be.”
ESG software solutions help you efficiently capture, manage, and analyze environmental, social, and governance data. These tools not only simplify data collection and increase accuracy, but also ensure compliance with sustainability requirements, improve stakeholder communication, and enable data-driven decisions. When choosing ESG software, look for the following features:
| Assessment Area | Key Metrics |
|---|---|
| Environment | CO₂ emissions, energy consumption, waste volumes |
| Social | Employee structure, occupational safety, training |
| Governance | Compliance systems, risk management, supply chains |
With the right data and tools, you are well equipped not only to meet CSRD requirements but also to use them as an opportunity for a sustainable and future-proof corporate strategy. Explore our insights on ESG climate risk management technologies.
Companies acting as pioneers use the CSRD as a strategic advantage by integrating modern technologies and well-thought-out strategies into their processes. For them, regulatory requirements are not just an obligation but also an opportunity to fundamentally advance their sustainability strategy. According to Deloitte, organizations that view CSRD as a catalyst for transformation are more likely to realize operational efficiencies and reputational gains.
“Seeing the CSRD as just a compliance exercise is a missed opportunity. If a company reports seriously according to CSRD guidelines, it gets so much inspiration for what it can do differently and better.”
Below, we introduce tools, expert approaches, and assessment methods that drive the transformation process within the CSRD framework.
Advanced companies rely on specialized data management platforms (DMPs) that simplify sustainability reporting through automated validation and AI-powered analytics. For example, a manufacturing company uses a central DMP to collect ESG data, break down internal silos, and enable unified reporting.
Cloud-based solutions allow teams from HR, operations, and sustainability departments to collaborate on a shared report in real time. This not only increases efficiency but also ensures all stakeholders are always up to date.
Artificial intelligence and machine learning also play a key role. AI algorithms analyze energy consumption and waste data to identify patterns and optimization potential. Machine learning models can also predict environmental changes, such as the risk of supply chain disruptions due to extreme weather events. See our article on AI tools for climate risk analysis. According to Gartner, AI-driven ESG platforms are becoming the industry standard for large enterprises.
In addition to technological solutions, many companies rely on the expertise of specialized consultants.
The CSRD’s requirements—with its 12 standards and 82 reporting obligations—can quickly overwhelm companies. Successful pioneers therefore seek targeted support from specialist consultants to optimize their sustainability strategies and efficiently implement regulatory requirements.
For 42% of respondents, managing large volumes of data is a central challenge. This is where specialized consulting firms like Fiegenbaum Solutions come in. They not only help introduce robust data governance practices but also develop tailored ESG strategies. The collaboration offers clear benefits, such as lifecycle assessments (LCA), precise climate risk analyses, or the development of net-zero strategies. Particularly helpful is the integration of CSRD software into existing systems to minimize disruptions and ensure smooth data flows. Learn more about our sustainability consulting services.
A common stumbling block is underestimating the effort required for data collection. External consultants can help avoid delays and streamline processes.
Choosing the right method for assessing climate risks is crucial for strategic success. Many pioneers combine qualitative and quantitative approaches, depending on context and available data. The following comparison shows the main methods and their best uses:
| Assessment Approach | Advantages | Disadvantages | Best Use |
|---|---|---|---|
| Qualitative Methods | Quick to implement, lower data requirements, flexible analysis | Subjective assessments, hard to quantify | Initial risk assessment, stakeholder workshops, planning |
| Quantitative Methods | Precise measurability, objective data basis, better comparability | High data requirements, complex modeling, time-consuming | Detailed scenario analysis, financial planning, reporting |
| Hybrid Approaches | Combines flexibility with precision, allows stepwise refinement | Increased complexity, higher coordination effort | Comprehensive risk strategy, continuous improvement |
For example, a technology company uses a DMP that automatically validates ESG data. The platform checks energy consumption against preset thresholds and historical data patterns to detect anomalies or errors and ensure data quality.
Successful companies often use an iterative approach: They start with qualitative assessments for a quick overview, then deepen critical areas with quantitative analysis. This helps close gaps and gradually align sustainability data with financial data.
The experience of pioneers makes one thing clear: A CSRD-compliant climate risk assessment requires foresight and long-term commitment. Companies that act early and take a structured approach can secure decisive competitive advantages.
“The most important advice—for ourselves and our clients—is: start early. Don’t underestimate CSRD implementation.”
This clear message comes from Wineke Ploos van Amstel, Chief Sustainability Officer at PwC.
Another key to success is cross-departmental collaboration.
“We see that in most cases, the finance department is the driving force, working closely with the sustainability department.”
Emphasizes Alexander Spek, Sustainability Lead at PwC Netherlands. Procurement, compliance, legal, sustainability, and HR also play a crucial role.
From these insights, concrete measures can be derived that German companies should implement immediately. Although national CSRD implementation is delayed, early preparation is essential. Around 15,000 companies in Germany will be required to report for the 2024 financial year starting in 2025. However, according to a PwC study, only 56% of affected companies have fully addressed the CSRD and ESRS requirements so far.
The most important steps to prioritize now:
“Working with Sunhat enables us to optimally manage our internal processes and ensure the reportability and auditability of our sustainability data. This forms the basis for meeting future reporting obligations.”
This is how Dr. Stefan Gräter, Director Group Sustainability at WEPA, describes the benefits of a structured approach.
A test run with standardized formats helps identify and fix weaknesses early on.
In addition to short-term measures, companies must also keep an eye on the evolving regulatory landscape. Requirements are becoming more complex with new mandatory and voluntary sustainability frameworks. ESG reporting under the CSRD covers over 1,100 data points, while traditional financial reporting covers only about 200 (PwC).
The challenges are significant: 84% of companies report at least one financially material impact, but only 4% provide comprehensive information on impacts along the value chain. Climate change is seen across industries as the greatest financial risk. Reporting on Scope 3 emissions, in particular, poses major challenges for many companies, as more risks than opportunities are identified (McKinsey).
Additionally, organizations are facing rising audit fees, which have already increased by a third due to the requirements for limited assurance (PwC).
To meet growing demands, companies must go beyond incremental adjustments. A fundamental change is needed in how data is collected, processed, and integrated across systems. Those who act now will not only ensure compliance but also gain a competitive edge.
Companies can successfully integrate double materiality into their sustainability strategy and reporting by conducting a thorough double materiality analysis. This involves assessing both the impact of their business activities on the environment and society, as well as the risks and opportunities that sustainability issues present for the company. This analysis serves as the basis for prioritizing key topics and building a solid foundation for reporting.
It is crucial to document the results clearly and transparently and actively integrate them into corporate strategy. This way, sustainability aspects can be better embedded into risk management, supporting informed decision-making. Transparent communication of the results strengthens stakeholder trust and helps fulfill CSRD requirements. See our article on integrating climate risks in financial planning. For further guidance, the GRI Standards and EFRAG provide practical resources on implementing double materiality.
An effective climate plan starts with a comprehensive analysis of current emissions. This inventory forms the basis for developing targeted measures. Companies should then define clear, measurable targets for reducing CO₂ emissions and set a realistic timeline for implementation.
Based on this, a practical roadmap is created, detailing concrete steps and investments needed for decarbonization. It’s important that these measures are closely linked to the existing business strategy so that climate action and corporate goals go hand in hand.
Implementation requires a strong governance structure. All relevant departments should be involved, and sufficient resources must be provided. Regular reviews and adjustments to the plan are also essential to remain flexible in response to new developments and changing conditions. The Transition Plan Taskforce (TPT) offers detailed guidance on developing robust transition plans.
ESG software solutions play a central role in meeting the requirements of the Corporate Sustainability Reporting Directive (CSRD). They make it easier to efficiently collect, analyze, and report ESG data, making the entire process not only more accurate but also significantly more efficient. With these tools, companies can, for example, comply with the EU taxonomy, implement ESRS standards, and specifically improve their CO₂ accounting. Learn more about sustainability metrics and technologies for 2025. Leading vendors such as SAP and Workiva offer solutions tailored to CSRD and ESRS requirements.
Implementing such software usually involves integrating it into existing business processes. This also includes training employees to use the new systems effectively, as well as ongoing adaptation to changing regulatory requirements. In this way, companies can not only ensure CSRD compliance but also actively contribute to reducing climate risks. For more on technology adoption, see Gartner’s ESG software outlook.