CO2 reporting: what companies need to know now
Climate change has long since become an economic reality. Not only customers and investors are demanding more transparency when it comes to sustainability – legislators are also increasing the pressure. Particularly in focus: the CO2 reporting. But what exactly does that mean? And why is the CO2 balance sheet mandatory for companies? Find out about your obligations now!
What is CO2 reporting?
Depending on the industry and the size of the company, the effort required for comprehensive CO2 reporting can vary significantly.
Carbon footprint assessment is a key component of the ESG strategy.
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CO2 reporting as part of the ESG strategy
ESG stands for Environmental, Social, and Governance – drei zentrale Bereiche, an denen Unternehmen heute gemessen werden. Dabei bildet der The environmental aspect (E for Environmental) is the foundation of any credible ESG strategy.
CO2 reporting provides the necessary data to:
- To make environmental impacts transparent,
- formulate concrete reduction targets and to
- document progress in a measurable and comparable way.
CO2 balance sheet – increasingly mandatory for companies
What used to be voluntary is now increasingly becoming a legal obligation. The European Corporate Sustainability Reporting Directive (CSRD) will require more and more companies to publish sustainability reports from 2025, including CO2 balance sheet to be submitted. This initially affects large companies with over 250 employees or more than 40 million euros turnover – but medium-sized companies will soon follow. Further information can be found below.
CO2 balancing is a central central component. It not only helps to fulfill legal requirements, but also:
- recognize and manage climate risks,
- ESG requirements and
- competitive advantages through transparency and credibility.
What is the CSRD Directive?
The CSRD stands for Corporate Sustainability Reporting Directive and is an EU directivewhich obliges companies to provide extended and standardized sustainability reporting. It was adopted in 2022 and is available in the Entered into force on January 2023.
The aim of the CSRD is to improve the transparency and comparability of ESG data – i.e. information on the environment, social issues and corporate governance. The directive replaces the previous Non-Financial Reporting Directive (NFRD) and goes much further:
- In future, companies will have to publish ESG data on the basis of the new ESRS (European Sustainability Reporting Standards).
- Sustainability reports must be part of the management report (no longer separate).
- The information must also be audited by an auditor or external third party.
- Since January 1, 2020, capital market-oriented companies have been obliged to publish their annual financial statements in the standardized electronic reporting format ESEF so that they can also be read by machines.
The CSRD is therefore a decisive lever on the way to more sustainability and a sense of responsibility in the European economy.
To which companies does the new CSRD apply?
The CSRD affects significantly more companies than its predecessor directive. The reporting obligation is set out in four levels introduced:
From 2025 (for the 2024 financial year)
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Companies that were already subject to the NFRD (e.g. large capital market-oriented companies with > 500 employees).
From 2026 (for the 2025 financial year):
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All large companies under accounting law.
From 2027 (for the 2026 financial year)
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Listed small and medium-sized enterprises (SMEs) – with a transition option until 2028.
From 2029 (for the 2028 financial year)
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Non-European companies that generate more than 150 million euros in turnover in the EU and have at least one subsidiary or branch in the EU.
Even companies that are not (yet) directly affected should prepare themselves – because many large companies are already requesting ESG data from their suppliers (keyword: supply chain).
Which environmental key figures must be reported?
As part of the CSRD, companies must disclose comprehensive ESG key figures in accordance with the ESRS standards (European Sustainability Reporting Standards). The most important mandatory contents of the ESG pillar “Environmental” are:
Environmental
- Greenhouse gas emissions (Scope 1, 2 and partly 3)
- Energy consumption and energy efficiency
- Water and resource consumption
- Effects on biodiversity and ecosystems
- Type and quantity of waste
In addition, further key figures must be reported for the social and governance items.
Advantages of early CO2 reporting
Companies that act now will benefit in the long term. Structured CO2 reporting offers numerous advantages:
Trust among customers, investors, and partners
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