The Importance of Documentation for CSRD Reporting

Introduction 

The Corporate Sustainability Reporting Directive (CSRD) sets out a comprehensive framework for sustainability reporting, emphasizing transparency and accountability. An often-overlooked, yet crucial aspect of CSRD reporting is the meticulous documentation of every step in the sustainability reporting process. This documentation is not only critical from an audit and assurance perspective but also plays a key role for internal stakeholders by clarifying how material issues are identified and addressed.

Why is documentation crucial for assurance?

From an assurance standpoint, thorough documentation forms the foundation of reliable sustainability reporting. At NordESG, we have observed that clear, structured records are essential when preparing for audits. Auditors need to track every detail of the reported information. This includes how material issues were screened, which thresholds were defined, and which data sources were used. This documentation allows auditors to verify the accuracy and completeness of disclosures, ensuring that the reported outcomes truly reflect the sustainability practices of the company. We have advised companies across diverse industries, including an online retailer, a pharmaceutical company, an IT software company, and a Private Equity firm. A common theme from these experiences is the critical importance of thorough documentation. For example, for a software company we assisted, the documentation of carbon emissions and energy use within their data centers was crucial in establishing the reliability of their climate-related disclosures.

How can documentation help for non-assurance purposes?

Comprehensive documentation benefits internal stakeholders beyond compliance and audit needs. It helps departments like finance, legal, and HR understand how sustainability data is compiled and enables meaningful contributions to the process. Documenting the methodology for identifying material issues ensures consistency, reproducibility, and alignment with organizational values.

For example, in our work with an e-commerce firm, we observed that even small changes in materiality thresholds could significantly affect whether an issue was deemed material. By documenting these thresholds and the rationale behind them, transparency was enhanced, helping the leadership team understand the implications and prioritize strategic actions accordingly.

Documenting collaboration with various departments—such as finance, legal, compliance, and human resources—is essential for a comprehensive sustainability report. Successful CSRD reporting relies on input from across the organization, where data and insights from different areas are harmonized. For example, in our work with a pharmaceutical company, integrating data from R&D, compliance, and finance was crucial for presenting a complete view of the company’s societal and environmental impact. This approach not only ensured a thorough report but also streamlined processes and aligned sustainability initiatives with the overall business strategy.

Conclusion

Comprehensive documentation of the CSRD reporting process serves multiple purposes. It ensures audit readiness, fosters internal understanding, and boosts the credibility of sustainability efforts. By documenting methodologies, stakeholder assessments, and inter-departmental communications, companies can meet regulatory expectations and strengthen their commitment to sustainability.