XBRL for ESG Reporting

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Companies are facing mounting pressure to disclose Environmental, Social, and Governance (ESG) data in a clear and comparable way. XBRL (eXtensible Business Reporting Language) offers a powerful framework for ESG reporting that aligns with regulatory standards like the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS).

Find out more about how XBRL and ESRS work together to improve ESG disclosures and why they are essential for businesses striving to meet today’s sustainability expectations.

What is XBRL?

XBRL is a globally recognised framework that allows business data to be reported in a standardised way. This is particularly important for ESG reporting, where comparability has previously been hampered by the use of multiple different voluntary frameworks and methodologies for collecting data.

The process adds machine-readable labels to financial and non-financial metrics, which allows users to analyse and compare data across different companies and sectors more easily. As a result, the format of data is more structured and consistent, promoting greater transparency of reported data.

Having already been used to promote the systematic reporting of financial data for some time, it is increasingly being used for the reporting of ESG data, with regulations including CSRD mandating that companies prepare sustainability reports in XBRL format. The technology is also being used by the International Sustainability Standards Board (ISSB) and the GRI, which have recently launched their own XBRL taxonomy.

Digital tagging of sustainability information is essential to ensure the data can be accurately analysed and compared across different companies and sectors.

Key benefits of XBRL for ESG reporting

Standardisation

With XBRL, companies can present ESG data in a standardised format, allowing stakeholders to compare performance across organisations seamlessly.

Data Quality

Automated data input reduces the risk of human errors, enhancing the reliability of ESG reports.

Efficiency

Machine-readable formats allow for quicker processing, reducing the time and cost associated with manually analysing ESG data.

Transparency

Companies can present detailed, trustworthy information that fosters greater stakeholder trust and compliance with regulatory standards.

Its role in ESRS reporting

The ESRS taxonomy enables companies to utilise XBRL in their sustainability disclosures, allowing them to align with CSRD requirements and produce high-quality, regulatory-compliant ESG reports. Here’s a closer look at how XBRL interacts with the ESRS framework:

  • Taxonomy-based structure: ESRS data, structured within XBRL, offers a standardised set of concepts and metrics tailored for ESG reporting. This approach ensures that ESG data is consistent across organisations, streamlining compliance and improving data comparability.
  • Accessibility: With XBRL, ESG data tagged to ESRS standards can be easily accessed and compared by regulators and stakeholders, enabling faster response and assessment.
  • Detailed concept tagging: Companies can use ESRS-based XBRL to tag individual ESG concepts, such as greenhouse gas emissions or diversity statistics, down to granular details, which provides in-depth insights into their sustainability practices.

How to use the XBRL taxonomy

Mero, Anthesis’ comprehensive ESG information management platform, allows companies to simplify the management and reporting of data. It enables users to turn sprawling data into streamlined reports, revealing insights to advance performance. Mero can be used by companies reporting under CSRD, and it is fully aligned with the XBRL-aligned ESRS dataset.

Steps to implement XBRL for ESG reporting

  1. Plan and align
    Identify the ESG regulations and frameworks that apply, review the relevant XBRL taxonomy, and map your current disclosures to pinpoint gaps. Establish a cross-functional team, assign data owners, and build XBRL tagging into your reporting timeline.
  2. Prepare and structure data
    Collect ESG data in a consistent format, validate its accuracy, and structure it to match taxonomy concepts. Ensure both narrative and numeric disclosures are ready for tagging.
  3. Tag, validate, and file
    Use an XBRL-enabled tool to apply the correct taxonomy tags. Validate the file for errors, test submissions if possible, then generate and submit the final iXBRL report to the regulator and publish it.
  4. Review and improve
    Gather feedback, monitor taxonomy updates, and refine processes to improve efficiency and compliance in future reporting cycles.

As sustainability reporting regulations continue to tighten, XBRL will play a crucial role in enabling companies to meet these demands efficiently. The ESRS taxonomy will likely evolve to include more specific requirements, allowing organisations to offer even greater transparency and accuracy in their ESG disclosures.

Early adopters of XBRL for ESRS reporting stand to benefit by positioning themselves as leaders in sustainability and compliance, gaining a competitive edge in a fast-moving market.

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