An ESG lead’s guide to thriving in 2025

The EU Corporate Sustainability Reporting Directive (CSRD) is forcing businesses to implement new strategies to get their sustainability reporting under control.

However, understanding the regulations is one thing; effectively identifying, collecting, storing, cleaning, and using the required data is a different beast entirely.

This is especially true when trying to consolidate external ESG data, needed for reporting against the CSRD, from dispersed modern supply chains where stakeholders use different frameworks and data platforms. From the 1st of January just gone, an additional 50,000 companies will have to begin preparing to report against the CSRD.

To lend a hand, we’ve prepared this clear guide that walks you through the steps you need to know to ensure compliance in 2025. 

1. Know your reporting requirements

The CSRD sets out comprehensive requirements for sustainability reporting, expanding greatly on older frameworks like the GRI and widening the scope of disclosures you need to make.

These changes are designed to enhance transparency and accountability in all matters relating to environmental, social, and governance (ESG) sustainability matters. Here’s what you need to know.

Who does the CSRD affect?

In short, CSRD will impact anybody doing any kind of business in the EU, even if they’re based elsewhere, either directly or indirectly. However, the new rules will affect different companies in different ways.

For example, multinationals will need to consolidate their sustainability data from across the full breadth of their global operations (rather than just the EU) to comply with the requirements of the CSRD.

Many of these companies will already have dedicated ESG reporting functions, but the new regulations will still significantly affect which information needs to be disclosed and requirements will evolve rapidly.

Meanwhile, many SMEs listed on the local EU market will need to implement completely new processes to meet reporting standards. 

Specific reporting timelines

All companies affected by the CSRD will need to adhere to specific reporting timelines. Starting in 2025 (for the financial year 2024), large public interest entities with over 500 employees will be required to report on sustainability data.

In 2026 (from the 2025 financial year), this requirement will expand to include all large companies meeting two out of three criteria (250+ employees, €40 million turnover, or €20 million in total assets).

From 2027 (for the 2026 financial year), listed SMEs will be required to report, with an opt-out option until 2028. This phased approach provides organisations time to prepare for compliance.

The role of third-party assurance

A key element often mentioned in CSRD documentation is third-party assurance. This means you’ll need to have your reports verified by independent auditors to ensure they’re accurate and reliable.

These third-party auditors will provide limited oversight while regulations are first implemented. Then, as standards and methodologies mature, they’ll be able to provide more comprehensive assurance.

These auditors will need to be approved by the EU and serve as a protection against greenwashing and misrepresentation of reported data.

2. Get clear on Scope 3 emissions

Scope 3 emissions encompass all indirect emissions that occur in your wider value chain, both upstream and downstream. These emissions often constitute the majority of your total carbon footprint and accounting for them is often one of the most challenging areas of reporting on your environmental impact.

Challenges of collecting external scope 3 emissions

Data accessibility and data fragmentation are some of the biggest hurdles in accurately recording and submitting reports on Scope 3 emissions.

Complex modern supply chains make it particularly difficult to gather emissions data from external suppliers — especially smaller ones who lack the frameworks, resources, and expertise to provide precise information.

What’s more, this data is often scattered across multiple departments and systems, making it nearly impossible to consolidate and turn into actionable insights or reports. For example, you might need to collect data on transport, waste management, and product use from multiple stakeholders, in multiple companies, with each using different reporting formats and standards.

Strategies for engaging suppliers and partners

Before we look at how to effectively clean, collate, and present this data, here are some top tips to initially collect it.

• Collaboration. Build strong supplier relationships and create open channels of communication around ESG. Look into organising workshops or providing toolkits to help suppliers understand their reporting obligations and the importance of accurate data.
• Technology integration. Leverage data platforms like 5Y with a wide range of integrations to work seamlessly with your suppliers’ existing systems. This helps to streamline data collection by reducing manual input and minimising errors.
• Standardisation. Implementing standardised reporting frameworks will help keep data collection consistent across your entire supply chain. This not only makes things easier for suppliers but streamlines aggregation and internal analysis.

3. Conduct a double materiality assessment

Double materiality is a key principle of CSRD. In short, it means you need to report on both the financial impact of sustainability matters as well as their effect on society and the planet. This double-edged approach is designed to make you consider both internal and external perspectives when identifying important sustainability factors.

Key stages of conducting a double materiality assessment

Follow these steps when conducting a double materiality assessment:

1. Identify relevant topics. Get together a list of all ESG factors affecting your business or impacted by it, using CSRD ESRS 2 as guidance. This might be environmental factors like emissions, social issues like people policies or governance concerns like board diversity.
2. Engage stakeholders. Collect input from a wide range of stakeholders including staff, customers, suppliers, investors, and the wider community. You can use calls, surveys, interviews or workshops to achieve this.
3. Evaluate financial impact. Calculate the financial impact of each ESG factor on your company. This includes how they affect revenue, overheads, assets, or liabilities.
4. Assess societal impact. Determine how your activities impact society and the environment, both positively and negatively.
5. Prioritise issues. Using the insights you’ve gathered, prioritise these factors based on their effect on financial performance and society. This can be visualised with a materiality matrix which plots issues based on their importance to different stakeholders and their impact on success.
6. Document and report. Document the results of your assessment, including how you reached your conclusions and prioritised your list. This report will need to be included in your sustainability disclosures to comply with CSRD disclosure requirements.

Helpful tools and frameworks

The process of conducting a double materiality assessment can sound daunting at first. Here are some useful resources to explore that will help keep everything organised and compliant.

• Global Reporting Initiative (GRI) standards. This provides a framework for reporting on sustainability impact and also offers guidance on relevant topics.
• SASB materiality map. This useful tool helps you to identify relevant sustainability issues based on the industry you operate in.
• Materiality matrix software. There are multiple software solutions available to help you visualise and manage the materiality process.
• ESRS 2. ESRS 2 is a mandatory standard under the Corporate Sustainability Reporting Directive (CSRD), providing a structured approach to conducting materiality assessments. It outlines specific disclosure requirements, ensuring alignment with regulatory expectations and transparency.

4. Automate data collection

Manual data collection for ESG reporting is hugely challenging and can seriously impact the speed and accuracy of your processes.

It also leads to data fragmentation where key data is scattered across different departments and systems and requires manual intervention to be collated in a unified location.

All of this makes compiling a coherent report difficult, and if reporting requirements change, the process requires even more work… Automation, however, can transform the entire workflow.

Impact of automation on data accuracy and reporting efficiency

Automation significantly mitigates risks, improving accuracy by minimising human error and reducing workload by streamlining the entire reporting process.

By leveraging automated systems, you can trust the data you use and enhance the quality of all ESG and CSRD reporting. You also free up valuable workload allowing employees to focus on strategic tasks instead of admin-intense manual processes.

This accelerates the reporting timeline while also allowing for real-time data monitoring and empowering rapid responses to emerging trends or evolving reporting requirements.

What to look for in an Automated ESG data collection solution

When looking for a data platform to help you out with ESG and CSRD, be sure to bear in mind:

• Automation and structure. You need a platform that automatically collects information in a consistent, structured manner, minimising the need for manual intervention.
• Integration with existing systems. Look for a platform built on leading data infrastructures like Microsoft Azure. It should also have slick integration with existing ERP and HR systems.
• Collecting unstructured information. Often transactional applications don’t collect or store the required ESG / CSRD information. The ability to augment transactional data with live and invoice-specific information (eg: kVA or Km detail) is vital. It is preferable that this information is live and collected in an automated fashion.
• Ease of use. Intuitive platforms with a smooth desktop and mobile app allow for quick manual data input and can be used by non-tech staff easily.
• Human touch. Look for a solution that combines the technology you need with expert guidance on ESG and compliance matters. This ensures you have the support you need to avoid penalties and drive success.

5. Get in touch with 5Y

The good news is that 5Y brings all of these features and more together. In a single solution, 5Y offers:

• Comprehensive data integration. 5Y’s analytics is built on Microsoft Azure architecture and our data platform integrates with your existing systems such as ERP, HR, and supply chain management software. This reduces manual input and improves accuracy.
• Real-time reporting and insights. 5Y’s platform not only automates collection and stores data, but it can also provide real-time insights through intuitive dashboards. These dashboards empower stakeholders at all levels to gain a clear view of sustainability metrics and identify areas for improvement.
• Tailored support and expertise. The 5Y platform is backed by a dedicated team of sustainability professionals and data analysts who work closely with you to tailor the solution to your specific industry and reporting needs.
• Extensive expertise. We’re already working with leading global clients who are using 5Y to streamline ESG data, reporting, and compliance affordably. Check out their success stories here.
• Fast deployment. With 80% of your BI analytics ready out of the box, there’s no need for long deployment times or high data engineering costs.

We’re committed to evolving alongside your business, continuously updating our tool to accommodate changing regulations and new ESG trends. Get in touch to discuss your CSRD requirements.