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The first reporting cycle under the new sustainability Directive is approaching. Here’s who is in scope, what data will be required, and how to build an audit-ready process already in 2025.

Starting with the 2025 financial year, non-financial (ESG) reporting under the ESRS standards must be prepared not only by large EU companies but also by Ukrainian groups that have subsidiaries in the Union and generate ≥ €150 million in turnover on the EU market. The report is filed in digital XHTML format to the European Single Access Point (ESAP) and is subject to limited assurance. Penalties can reach up to €10 million or 5% of EU turnover. To avoid regulatory and reputational risk, you need a phased programme: materiality assessment, closing data gaps, IT integration, and early auditor engagement.

1 Regulatory landscape
• Directive (EU) 2022/2464 (CSRD) expands the earlier 2014/95 framework, introduces digital tagging, and brings third-country undertakings with material EU activity into scope.
• Article 40a of the Accounting Directive: if a non-EU group has ≥ €150 million in EU revenue and at least one subsidiary or branch (≥ €40 million), reporting is required at the parent-company level.
• The first set of 12 base ESRS was approved by EFRAG in October 2023.

2 Scope criteria and filing timeline

Wave 1
• Who: Listed PIEs > 500 employees
• Reporting year: 2024
• Filing deadline: 30.06.2025

Wave 2
• Who: All “large” EU companies
• Reporting year: 2025
• Filing deadline: 30.06.2026

Wave 3
• Who: Listed SMEs (with an opt-out/deferral option)
• Reporting year: 2026
• Filing deadline: 30.06.2027

Wave 4
• Who: Non-EU groups with ≥ €150 million EU turnover
• Reporting year: 2025
• Filing deadline: 30.06.2027

The European Commission has confirmed the €150 million threshold, as indicated on finance.ec.europa.eu.

3 Double materiality and the ESRS structure

3.1 Double materiality
Companies assess both Impact Materiality (effects on people and the environment) and Financial Materiality (risks/opportunities affecting enterprise value). Practice benchmark: ≥ 10 stakeholder groups, ≥ 30 ESG topics.

3.2 ESRS modules
• E — Environment KPIs: Scope 1–3 GHG, energy, water. Typical sectors for UA subsidiaries: metals, agro-processing.
• S — Social KPIs: D&I, health & safety, supply chain. Typical sectors: IT hubs, manufacturing.
• G — Governance KPIs: anti-corruption, risk management, tax. Typical: holding-company level.

3.3 Digital tagging
Reports are filed in XHTML + XBRL under the ESEF taxonomy; early ERP integration and an ESG data-lake minimise manual re-tagging.

4 Data and systems readiness
• Gap analysis: first-time reporters typically face ~55% indicator gaps.
• Data governance: appoint an ESG data owner; integrate IoT meters for energy and water.
• Audit trail: use GRC platforms (e.g., Workiva, Enablon) to evidence data lineage.

5 Assurance and corporate governance
• Limited assurance (ISAE 3000) is mandatory from the first report; reasonable assurance from 2028.
• The board should embed ESG oversight into the audit committee’s mandate; at least one member should have sustainability expertise.
• Combined assurance: internal audit covers processes; external assurance covers metrics.

6 Tax and financial implications
• Scope 1–3 data must align with CBAM calculations, affecting the cost of exporting steel and fertilisers.
• Disclosure of the Effective Tax Rate (ESRS G4) increases transparency for investors and lenders.
• EU Taxonomy alignment facilitates issuing green bonds under Standard 2024/2631.

7 Six-quarter action plan

Q3 2024
• Key deliverable: Double-materiality workshop
• Outcome: Topic & KPI matrix

Q4 2024
• Key deliverable: Data-gap remediation plan
• Outcome: IT and HR budget approved

Q1 2025
• Key deliverable: Pilot data collection
• Outcome: >70% KPI coverage

Q2 2025
• Key deliverable: ESRS report draft
• Outcome: Board review completed

Q3 2025
• Key deliverable: Audit readiness test
• Outcome: Limited-assurance “no major findings”

Q4 2025
• Key deliverable: Final report structure
• Outcome: Ready for FY2025 close

8 Alstera recommendations
• Appoint an ESG lead with a cross-functional mandate.
• Automate Scope 1–3 via certified calculators to cut audit costs by ~30%.
• Embed ESRS KPIs into management incentives.
• Run a “shadow audit” for 2024 to surface weaknesses ahead of the final report.
• Align with the EU Taxonomy—this opens the door to preferential financing and grants.

This article was prepared in part using materials from eur-lex.europa.eu, finance.ec.europa.eu, and xbrl.efrag.org.