Materiality assessment – and then? From data point derivation to the reporting structure

published on 14 February 2025 I reading time approx. 5 minutes

Although the Corporate Sustainability Reporting Directive (CSRD) has still not been transposed into German law and the Omnibus initiative creates additional legal uncertainties, most of the companies required to report from 2025 have already started the process of preparing their first CSRD-compliant sustainability report in the past year. The number of companies that are about to complete their double materiality assessment or have already fully identified their material sustainability aspects is correspondingly high. Now that this first important milestone has been reached, the key question is: what happens now that the material matters have been determined?

Transparency and comparability in sustainability reporting - in order to achieve this goal, the European Union is gradually obliging all companies in the user group to disclose comprehensive sustainability information through the CSRD. The associated framework, the European Sustainability Reporting Standards (ESRS), is intended to ensure high-quality reporting that is as uniform as possible.

Starting point: the double materiality assessment

In order to ensure the relevance of reporting and to meet the information needs of the users of the sustainability report, companies are first obliged to carry out a double materiality assessment. This forms the basis for the creation of a targeted and informative sustainability report, as the key sustainability aspects are defined in this initial phase. As soon as the results of the materiality assessment are available, the specific report content can be defined. This is done by systematically transferring the material sustainability matters to the material ESRS data points.

From material sustainability matters to material data points

By deriving the data points, the population of the almost 1,200 data points contained in the ESRS is narrowed down so that only the relevant information is included in the report. The EFRAG data point list (IG 3 – List of ESRS Data Points) published in May last year can be used as the basis for this. The list not only provides an overview of the content requirements, but also provides information on the data type (narrative, semi-narrative, quantitative), the binding nature of the respective data point (voluntary or mandatory) and the applicability of transitional provisions, among other things.

For data point derivation, the topic-specific standards and the associated data points are set against the material sustainability matters (topics, sub-topics and sub-sub-topics) and specifically narrowed down. As neither the EFRAG data point list nor the ESRS establish a concrete link between material sustainability aspects and material data points, EFRAG published a final mapping document in December 2024 after a lengthy discussion and revision phase (Mapping of Sustainability Matters to Topical Dislosures – Q&A ID 177). This contains tables for each topical standard that show which disclosure requirements and data points result from which material sustainability matters. For example, the sub-topic “Gen-der equality and equal pay for equal work” is assigned to the disclosure requirement S1-16 “Compensation metrics (pay gap and total compensation)”. It should also be noted that it may be necessary to define specific data points if an aspect is not covered by the ESRS or is only covered with insufficient granularity (see also ESRS 1 para. 11).

Furthermore, the flowchart for determining the disclosures within the framework of the ESRS in ESRS 1 Annex E, which aggregates and visualizes various relevant requirements of the ESRS, must be observed in the derivation. This results in the following rules in particular:

If a topic is not material, all related disclosure requirements are omitted. In the case of ESRS E1 Climate Change, a detailed explanation must be provided as to why this is not material (see also ESRS 1 para. 32). For all other topics, the explanation of the lack of materiality is optional.
If the company has defined policies, actions and targets for the respective material impacts, risks and opportunities (or the material topics, sub-topics, sub-sub-topics), these must be disclosed using the MDR disclosures (see ESRS 2), among other things. If this is not the case, the company states this fact and can optionally communicate a timeframe within which it aims to adopt corresponding policies, anctions and targets (see also ESRS 1 para. 33).
If an individual data point within a material disclosure requirement is not material, it does not have to be disclosed (see also ESRS 1 para. 34).

While the relevance of the majority of the data points therefore depends on the results of the materiality assessment, there are also some data points that are always reportable regardless of this. These include all data points of ESRS 2 General Disclosures (if relevant) as well as all disclosure requirements in connection with ESRS 2 IRO-1, which are located in the topic-specific standards. For example, the process for identifying and assessing the material impacts, risks, dependencies and opportunities related to biodiversity and ecosystems (disclosure requirement in connection with ESRS 2 IRO-1 in E4) must always be disclosed, regardless of whether biodiversity was assessed as material in the materiality assessment or not.

Companies also have the option to exclude certain data points if transitional provisions are used (see ESRS 1 Appendix C and corresponding marking in the EFRAG data point list). In addition, voluntary data points (marked “V” and highlighted in orange in the EFRAG data point list) do not have to be reported.

In the process of deriving data points, a decision must therefore be made for each data point as to whether it will be included in the report or not. In view of the obligation to review the content of the sustainability report, comprehensible documentation is also required for this step, and early coordination with the auditor is also recommended.

Outlook: Creating the reporting structure on the basis of the key data points

Although there are still some key milestones on the way to the finished sustainability report between the derivation of the data points and the creation of the report structure - including the conceptualization and implementation of the data collection - the data points identified as material already allow an outlook on the later structure of the report. A few basic rules must also be observed here:

The sustainability report must be divided into four parts in the following order (if material): General information, environmental information including disclosures in accordance with the EU Taxonomy Regulation, social information and governance information (see also ESRS 1 Appendix D).
With the exception of ESRS 2 BP-2 and ESRS 2 SBM-3, for which there is an option, the ESRS 2-related disclosure requirements of the topic-specific standards must be stated in the general information of the sustainability report (i.e. together with the disclosure requirements of ESRS 2).
For some data points, certain table formats in which they must be presented are prescribed. These should be integrated directly into the reporting structure, either by software or manually.
The reporting framework should only contain those data points that were identified as relevant during the data point derivation process. Within the chapters, there is no rule for the exact order and arrangement of the data points; however, the comprehensibility and stringency of the information must always be ensured.

Conclusion: Data point derivation as a key step in determining the specific report content

The systematic selection of relevant data points forms the basis for the further report structure and requires precise documentation and early coordination with auditors. Although central tasks such as data collection are still outstanding, the content defined in this step already provides a clear direction for the final report. This brings the goal of comprehensive and ESRS-compliant sustainability reporting within reach.