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Tag: ESG Compliance

  • IFRS’s New Chairs Are Supervisors, Not Accountants

    On 11 August the IFRS Foundation named the two people who will run global corporate reporting for the rest of the decade. Almost nobody in the sustainability press covered it, because governance announcements do not read like news. They are, however, one of the more reliable predictors available: personnel is policy, and the Foundation has just told you a great deal about how IFRS S1 and S2 will be interpreted, pushed and enforced.

    The short version is that the Foundation skipped the accounting bench. Neither appointee comes from technical financial reporting. Both come from financial supervision, which is a different profession with different instincts about what a disclosure is for.

    What was announced

    Steven Maijoor becomes Chair of the IFRS Foundation Trustees from 1 January 2027 on an initial three-year term, succeeding Erkki Liikanen, who has held the role since 2018. Maijoor is currently an Executive Board member and Chair of Supervision at De Nederlandsche Bank and sits on the ECB Supervisory Board. Before that he was Chair of ESMA through the period in which SFDR and the EU Taxonomy were designed.

    Sam Woods becomes Chair of the IASB from 1 October 2026 on a five-year term, succeeding Andreas Barckow, whose term ended in June. Woods was Deputy Governor of the Bank of England and Chief Executive of the Prudential Regulation Authority.

    The two appointments complete the Foundation’s senior slate alongside Emmanuel Faber, who remains ISSB Chair to 31 December 2027, and Laura Forzani, who becomes Managing Director on 1 September 2026.

    Why a supervisor reads a disclosure differently

    A standard-setter’s core question is whether a requirement is conceptually sound and faithfully represents the underlying economics. A supervisor’s core question is narrower and more awkward: can I compare this across forty firms, and does it hold up when I ask the firm to show me where the number came from?

    That difference has consequences. Supervisors are institutionally impatient with disclosures that are technically compliant but not usable. They tend to favour prescription over judgement where judgement produces incomparable results. They ask for the underlying data, not the narrative around it. And they have spent their careers in regimes where the answer “that is our best estimate” is only acceptable if it is accompanied by a documented method, a stated limitation and a trail back to source.

    Put a former ESMA Chair over the Trustees and a former PRA chief executive over the IASB, and the reasonable expectation is that this register becomes the house style of global reporting.

    Four things this makes more likely

    1. Harder pressure on connectivity

    Connectivity, the requirement that sustainability information hangs together with the financial statements rather than sitting beside them, is already in IFRS S1. It has been unevenly applied because it is easy to satisfy in form. Supervisors are unusually good at spotting the gap between a transition plan that assumes an asset is retired in 2030 and a balance sheet that depreciates it to 2045. Expect that inconsistency to be treated as a finding rather than a presentational quirk.

    2. Assurance expectations move ahead of assurance mandates

    In most jurisdictions sustainability assurance is either limited-scope or not yet required. That will not stop the direction of travel. Supervisors do not wait for an assurance mandate to ask evidential questions; they ask them through their existing supervisory relationship, and preparers answer. If your organisation is already working through what limited assurance actually requires, that work now has a second audience beyond the auditor.

    3. Adoption gets negotiated with supervisors, not accounting bodies

    Jurisdictional adoption of ISSB standards has largely been driven through securities regulators and central banks already: the FCA in the UK, the FSA in Japan, ASIC and the AASB in Australia. Two supervisors at the top of the Foundation makes that channel the default rather than the exception. For preparers the practical read is that local implementation detail will increasingly be set by your market regulator, and that is where to watch for the rules that actually bind you.

    4. The evidence bar rises while the scope bar falls

    This is the tension worth internalising. Europe has spent eighteen months narrowing who has to report: the Omnibus cut the CSRD population, the revised ESRS reduced datapoints, and the Taxonomy is being simplified again for FY2027. It is tempting to read that as a general softening. It is not. Fewer companies are being asked to report, and those that do are being asked to prove more. Scope and rigour are moving in opposite directions, and the Foundation just staffed for rigour.

    What this does not change

    Two clarifications, because governance news invites over-reading.

    First, the technical programme is unaffected. Faber remains ISSB Chair through 2027, so the work in flight proceeds on its existing timetable: the targeted IFRS S2 amendments on greenhouse gas measurement are effective for annual periods beginning on or after 1 January 2027 with early application permitted, and the nature-related work continues as a non-mandatory IFRS Practice Statement, with an exposure draft targeted for October 2026. If you are already preparing for nature disclosure, nothing in this announcement moves that date.

    Second, neither appointment changes a single current obligation. Nobody’s filing deadline moved on 11 August. This is a signal about the next three to five years, not a compliance event.

    What a reporting team should actually do about it

    Very little that is new, and quite a lot that is usually deferred. The useful response to a rising evidence bar is not more disclosure. It is better provenance behind the disclosure you already make.

    • Attach evidence at the point of collection, not at audit. Every figure should carry its source document, method, preparer and date without anyone having to reconstruct it in February. Reconstruction is where first assurance cycles overrun.
    • Write down your estimation methods before you need to defend them. Estimates are acceptable; undocumented estimates are not. A supervisor’s objection is almost never to the estimate itself.
    • Reconcile your sustainability assumptions to your financial ones. Asset lives, impairment triggers, provisions, capex commitments. Do the comparison internally before somebody external does it for you.
    • Read your market regulator, not just the standard. If adoption is supervisor-led, the binding detail arrives in a policy statement or a consultation from the FCA, FSA, ASIC or SEC, not from the IFRS Foundation.
    • Stop treating scope relief as workload relief. If simplification has taken pressure off your reporting population, redirect that capacity into data quality rather than banking it.

    The signal underneath the announcement

    For four years the central question in sustainability reporting has been who has to report. Politically that question is closing, and the answer is fewer companies than the 2023 architecture envisaged. The question replacing it is how well, and that is a supervisory question rather than a legislative one. It gets answered slowly, through examinations and findings and comparability reviews, and it does not respond to lobbying in the way scope thresholds do.

    The teams that will find the next few years comfortable are not the ones with the most disclosure. They are the ones that can answer “where did this number come from” in minutes rather than weeks.

    If your emissions and ESRS data live across spreadsheets, inboxes and a consultant’s model, the evidence trail is the thing you do not have. Horizon ESG helps reporting teams collect data once, keep source, method and owner attached to every figure, and report it against CSRD, ISSB and California requirements without rebuilding the inventory each cycle. Book a free demo.

  • SB 253 Deadline: Three Reliefs Buried in CARB’s Redline

    The nearest binding climate-reporting deadline anywhere in the world is not in Brussels. It is 10 November 2026, when the first Scope 1 and Scope 2 disclosures under California’s SB 253 fall due — around fourteen weeks from now. And the document that decides how hard that filing will actually be was published on 27 July, arrived as a redline, and has been read by almost nobody outside the law firms.

    On that date the California Air Resources Board published its modified initial regulation implementing SB 253 and SB 261, and opened a 15-day public comment period closing 11 August 2026. Most coverage led with the deadline deferral — from 10 August to 10 November — already known since June. Further down the text sit three first-year concessions that materially change what an in-scope company has to produce this year, each the kind of provision that vanishes in a press-release summary.

    First, what this document is — and isn’t

    It is a modified text out for comment, not a final rule: it still has to clear the comment period and review by the Office of Administrative Law before it binds. Treat what follows as a strong signal of CARB’s intent rather than settled law — while not planning a fourth-quarter data sprint as though none of it exists.

    The scope test is unchanged: companies with total annual revenue above $1 billion that do business in California. The first report covers FY2025 Scope 1 and Scope 2 emissions, due 10 November 2026.

    Relief one: the 5 December 2024 data cut-off

    For initial reporting only, a company may rely on information it possessed, or was already in the process of collecting, as of 5 December 2024.

    Read that slowly, because it inverts the instinct most teams are acting on. The benchmark for your first California filing is not the best inventory you could assemble by November — it is the inventory your systems were already producing more than eighteen months ago. If utility data for a set of leased sites was never metered separately in 2024, CARB’s text does not require you to reconstruct it now.

    The practical effect is that the sensible first-year project is narrower than most teams have scoped it. Rather than retro-instrumenting every site, the work is to establish what you genuinely held at that date, report on that basis, and document the boundary clearly enough that it survives a later question. That is a governance and evidence exercise more than a measurement one — the same discipline that applies whenever estimated data is good enough to report: state the method, state the limitation, keep the trail.

    What it does not do

    It is explicitly a first-year provision. It does not waive the obligation to file, and it does not carry into the 2027 cycle — by which point the expectation is a properly built inventory. Nor is it self-executing: relying on it means being able to evidence what you held and when. A company that quietly uses the relief without recording why has taken the risk without the protection.

    Relief two: intercompany revenue is out of the $1 billion test

    The modified text clarifies that revenue transmitted between a parent and a subsidiary, or between different parts of the same company, is not counted as revenue when applying the $1 billion threshold.

    This matters more than it sounds. Groups running captive distribution entities, internal manufacturing transfers or centralised procurement can show gross figures well above the threshold that are substantially internal turnover. An entity that looked comfortably in scope may not be in scope at all once genuine third-party revenue is isolated.

    If your scoping decision was made in 2025 on a quick read of group revenue, re-run it before you commit a reporting budget. Threshold questions are cheap to answer now and expensive to answer in November.

    Relief three: one consolidated report for the group

    The modified regulation permits a parent company to submit a consolidated report covering its in-scope subsidiaries, rather than requiring each entity to file separately. Fees are still assessed on a per-company basis, so this is an administrative simplification rather than a financial one.

    The value is in coherence. One filing means one organisational boundary, one consolidation approach, one set of emission factors and one assurance conversation — instead of several subsidiary submissions that anyone can lay side by side and find inconsistent.

    One caveat: the consolidated boundary you use for California should reconcile to the consolidation approach in your GHG inventory and to whatever you publish elsewhere. A boundary chosen for administrative convenience creates a discrepancy you will spend years explaining.

    What the reliefs don’t touch

    Scope 3 arrives in 2027 — but only five categories

    CARB has signalled a phased approach for the 2027 cycle, with initial Scope 3 reporting focused on five commonly reported categories rather than all fifteen: purchased goods and services, fuel- and energy-related activities, waste generated in operations, business travel, and employee commuting, with flexibility around de minimis categories.

    That is a genuine sequencing instruction, and it is unusual to be handed one. Four of the five can be built largely from data your finance and HR systems already hold. The fifth — purchased goods and services — takes a year, because it depends on spend categorisation and supplier engagement rather than a single system. That is your critical path.

    Assurance is coming, on a proposed schedule

    CARB’s proposals introduce limited assurance over Scope 1 and Scope 2 from qualified independent providers, recognising several standards families — AICPA, IAASB and ISO-based frameworks among them — with a move toward reasonable assurance signalled around 2030. The detail is still in play; the direction is not. If you have been through limited assurance under CSRD, you know the real cost is not the auditor’s fee. It is having evidence attached to every number.

    SB 261 is still enjoined — SB 253 is not

    These two laws are routinely discussed together but sit in very different positions. The Ninth Circuit enjoined enforcement of SB 261, the climate-risk reporting law for companies above $500 million in revenue, on 18 November 2025 pending appeal; oral argument was heard on 9 January 2026 and, at the time of writing, no merits decision has been published. SB 253 was not enjoined. Its deadline is live. Anyone who paused California work on the strength of “the courts blocked it” has confused the two.

    Fourteen weeks: a working sequence

    • Re-run the threshold test on third-party revenue only, excluding intercompany turnover, and write down the answer with its basis.
    • Establish your 5 December 2024 position. What Scope 1 and Scope 2 data did you hold, or have in collection, at that date? That list defines the scope of your first report.
    • Decide the filing structure — consolidated at parent level or entity by entity — and check the boundary reconciles to your existing inventory.
    • Comment by 11 August if any of the three provisions is ambiguous for your structure — the last low-cost way to influence the text.
    • Separate the FY2025 filing from the 2027 build. Different projects, different standards of rigour; merging them is how first-year filings become nine-month programmes.
    • Start purchased goods and services now, not in 2027. It is the only one of the five categories that cannot be delivered in a quarter.

    The pattern is familiar. As we argued when the SEC’s climate rollback failed to free US multinationals, federal deregulation has not reduced disclosure obligation — it has moved it to states and to Europe, where the timetables are statutory and the reliefs are technical rather than political.

    If 10 November is on your calendar, the question is not how much data you can gather — it is how much you can evidence. Horizon ESG helps teams collect emissions data once, keep the audit trail attached, and report it against SB 253, CSRD and ISSB without rebuilding the inventory each time. Book a free demo.

  • ESRS-40a: CSRD Is Back for Non-EU Parent Companies

    For eighteen months, the message reaching boardrooms in New York, London, Zurich and Singapore has been reassuringly simple: the Omnibus package gutted CSRD, our European subsidiaries fell out of scope, file closed. For the EU entities, broadly true. What it missed is that the obligation did not disappear — it moved up the corporate structure, to the non-EU parent.

    On 23 July 2026, EFRAG published the Exposure Draft of ESRS-40a — the sustainability reporting standard for certain non-EU undertakings — and opened a 100-day consultation running to 31 October 2026. It implements Article 40a of the Accounting Directive, and applies a test with nothing to do with how many people you employ in Europe. If your group sells enough into the EU, you report.

    What ESRS-40a actually is

    Articles 19a and 29a of the Accounting Directive catch EU companies and EU-parented groups. Article 40a is the extraterritorial arm: it catches groups headquartered outside the EU that do significant business inside it. ESRS-40a is the standard telling them what to disclose, and the logic is a level playing field — a US or Japanese group booking hundreds of millions in EU revenue competes with EU companies carrying a full ESRS burden.

    The scope test: run it before you do anything else

    The threshold is two-part, and both parts must be met. A third-country undertaking not listed on an EU regulated market is in scope if it meets:

    • Turnover test. Net turnover in the Union above €450 million in each of the last two consecutive financial years; and
    • Presence test. Either an EU branch with net turnover above €200 million in the preceding financial year, or it is the ultimate parent of EU subsidiaries with net turnover above €200 million in the preceding financial year.

    These behave differently from the tests your European finance team has been applying: no employee headcount criterion, no balance-sheet criterion. It is a revenue test measured at group level on turnover booked in the Union — so a group with modest European operations and a lean legal footprint can still clear the bar on distribution revenue alone.

    Who actually publishes the report

    The parent is the reporting undertaking, but it does not file. The report is published on the parent’s behalf by an EU subsidiary that would itself fall within CSRD scope, or by a large EU branch. That puts a European entity — often one with no sustainability function of its own — on the hook for making a group-level disclosure public. Flag it early to your European legal and finance leads: the people who sign and file are rarely the people who produce the data.

    What you report — and, importantly, what you don’t

    ESRS-40a is deliberately lighter than a full ESRS sustainability statement. The Article 40a report focuses on impacts — the effects of the group’s activities on people and the environment. It generally excludes the risk-and-opportunity architecture Articles 19a and 29a demand: resilience analysis, dependencies, and the financial-materiality half of double materiality sit outside its content.

    For teams that have watched EU peers build scenario analysis and transition plans, that is good news. But narrower is not easier — the hard part of ESRS-40a is not the disclosure list. It is the boundary.

    The “mixed approach” is the fight that decides your cost

    This is the detail that deserves attention during the consultation window. The draft requires a blend of EU-scoped and global-scoped information — some disclosures drawn from the group’s European activities, others from the group as a whole.

    EFRAG’s own Sustainability Reporting Board did not approve this comfortably. It released the Exposure Draft while recording reservations about the mixed approach, and Chair Kerstin Lopatta published a letter setting out those concerns before launch, noting the approach reflects a request from the European Commission. The objection is practical as much as legal: separating EU-related impacts from global ones is difficult, and in places arbitrary.

    For a reporting team, that is not standard-setting politics — it is the single biggest driver of your data-collection cost. A global-scope disclosure can usually be sourced from systems you already run. An EU-scope disclosure means carving European activity out of consolidated data — by site, by entity, by supplier — for metrics your systems were never designed to slice that way. Every requirement landing on the EU-scoped side adds a pipeline you do not have.

    Which is why the consultation matters. Feedback closes 31 October 2026 and EFRAG’s technical advice goes to the Commission in January 2027. After that, the boundary question is settled and you are implementing someone else’s answer.

    The timeline looks distant. It isn’t.

    Reporting becomes mandatory for financial years beginning on or after 1 January 2028, with first reports published in 2029. Three years is comfortable — right up until you work backwards.

    • 2029 — first report published.
    • FY2028 — the reporting year. Data must be complete, consistent and evidenced across twelve months, from day one.
    • FY2027 — the dry run: find the gaps in EU-scoped data and fix them. Anyone through a first ESRS cycle knows this year is not optional.
    • 2026–2027 — scoping, system selection, and getting European entities collecting data in a form that consolidates.

    That leaves roughly eighteen months of genuine slack, not three years — landing on organisations that spent the last year actively de-resourcing European sustainability compliance.

    Why the scope cut makes this more exposing, not less

    EFRAG has estimated that the Omnibus changes cut the number of non-EU companies in scope from roughly 10,000 to around 1,200 — a 90% reduction, reported as relief. Consider it from the other direction: the remaining population is small, large and identifiable. Any regulator, NGO or journalist can assemble a credible list of who should be reporting and check whether they did. In a group of 10,000, a thin disclosure is noise. In a group of 1,200, it is a story.

    This is the same pattern we described when the SEC’s climate rollback failed to free US multinationals: deregulation in one jurisdiction rarely reduces total disclosure obligation for a global group. It relocates it.

    What to do before 31 October

    • Run the test properly. Get an accurate group-level figure for net turnover in the Union for the last two financial years. Not EU-entity revenue — turnover generated in the Union, which can include sales routed through non-EU entities.
    • Identify the filer. Determine which EU subsidiary or branch would carry the publication obligation, and tell them now.
    • Respond to the consultation. If you are in scope, the mixed approach will shape your cost base for a decade. This is the last practical window to influence it.
    • Map EU-scoped data. Take a first pass at which impact metrics you could already report at EU boundary and which need new collection. That gap list is your 2027 project plan.
    • Do not rebuild in a silo. Much of what ESRS-40a asks for overlaps with what you already produce for CDP, ISSB-aligned reporting, or an EU subsidiary’s own CSRD timeline. One data layer with multiple outputs beats a separate European reporting exercise.

    One honest caveat: ESRS-40a is a draft, its content will change before the Commission’s delegated act, and the mixed approach may not survive in its current form. What will not change is the scope test and the FY2028 start date — those sit in the Directive, not the standard. You can wait on the detail. You cannot wait on knowing whether you are in.

    If your group clears the €450 million test, the work starts with knowing what you can already produce at EU boundary. Horizon ESG helps multinational teams collect sustainability data once and report it against multiple frameworks — so a new obligation becomes a mapping exercise, not a new programme. Book a free demo.

  • Data Centres Just Became an ESG Disclosure Risk

    On 14 July 2026, New York became the first US state to slam the brakes on data centre construction. Governor Kathy Hochul signed an executive order barring the Department of Environmental Conservation from issuing discretionary permits for new data centres above 50 MW of power demand for up to a year, while regulators write comprehensive standards from scratch. The trade press read it as an energy-and-AI story. For sustainability teams, it is something else entirely: the moment data centre energy stopped being a line in your Scope 2 footnote and became a strategic disclosure risk your climate reporting has to describe.

    If your business runs a material digital estate — and in 2026 most do — this is the clearest signal yet that compute energy is moving from an efficiency talking point to a permitting, siting, and transition-risk question. The reporting frameworks you already comply with anticipated this. Most disclosures have not caught up.

    What New York actually did

    The order does not ban data centres. It pauses discretionary environmental permitting for the largest facilities — those drawing more than 50 MW, roughly the scale of a hyperscale or large colocation site — for up to twelve months while the state builds a standing regulatory regime. The stated concern is straightforward: surging AI and cloud demand is loading the grid faster than New York can plan for, and the existing permitting process was never designed to weigh that.

    The specifics matter less than the precedent. A US state has now formally treated large-scale compute as an environmental externality worth constraining. That is exactly the kind of policy shift that climate-risk frameworks classify as a transition risk — a change in the regulatory environment that alters the cost, feasibility, or location of your operations. And New York is unlikely to be the last mover; when one jurisdiction sets a template, disclosure-conscious investors start asking every data-centre-intensive issuer the same questions.

    Why this is a disclosure problem, not just an energy one

    Here is the disconnect. Most companies account for data centre electricity as a Scope 2 emissions figure — a number to be measured, reduced, and reported. That framing is correct but incomplete. It captures what your compute emitted last year. It says nothing about whether you can build, power, or expand that compute next year.

    From Scope 2 line item to transition risk

    A permitting moratorium changes the calculus. If a company’s growth assumes new data centre capacity in a jurisdiction that has just paused approvals, that assumption now carries policy risk — potential delay, higher cost, or forced relocation. Under a climate-risk lens, that is a material forward-looking exposure, not a historical emissions total. The same logic extends to grid connection queues, rising industrial power prices, and local opposition, all of which are tightening in the markets where compute demand is highest.

    The physical-risk angle teams forget

    Transition risk is only half the picture. Large data centres are also water-intensive — cooling can consume millions of litres a year — and they concentrate that demand in specific locations. That exposes them to physical climate risk: drought, heat stress, and water-access restrictions that can throttle operations regardless of how clean the power is. A disclosure that reports Scope 2 emissions but ignores where the facilities sit and what they depend on is telling investors half a story.

    What ISSB S2 and ESRS E1 already require

    None of this requires a new rule. The two frameworks most reporters are already inside — IFRS S2 from the ISSB, and ESRS E1 under the CSRD — both demand exactly the forward-looking narrative that data centre exposure calls for.

    • IFRS S2 requires disclosure of the climate-related risks and opportunities that could reasonably affect your prospects, split into transition and physical risk, plus how they feed strategy, financial planning, and resilience under different scenarios. A permitting-constrained compute footprint is a textbook example of what S2 expects you to surface.
    • ESRS E1 requires a transition plan, disclosure of material physical and transition risks, and reporting of energy consumption and mix alongside gross Scopes 1, 2, and 3. The connective tissue between your energy dependency and your strategic resilience is precisely what E1’s risk disclosures are for.

    In other words, the standards already ask the question. New York just made it concrete. For teams still treating climate risk and carbon accounting as separate exercises, this is the argument for joining them up — a theme we explored in our look at how TCFD and CSRD climate disclosure align.

    What a defensible disclosure looks like

    Most current data centre disclosure is boilerplate: an efficiency metric, a PUE figure, maybe a renewable-energy commitment. That is not what a climate-risk framework is asking for. A disclosure that would survive scrutiny does four things:

    • Locates the exposure. Identify where your material compute capacity sits — owned, colocated, or cloud — and flag jurisdictions where permitting, grid access, or water stress is tightening. Generic group-level statements are not enough.
    • Connects energy to strategy. Explain how future capacity needs interact with transition risk. If growth depends on new facilities, say what a permitting delay would mean for the plan.
    • Treats water as a risk, not a footnote. Disclose cooling water dependency in high-stress locations as a physical risk with operational consequences, not just a sustainability metric.
    • Quantifies where it can. Move from “we are committed to efficiency” to ranges, timelines, and scenario-tested impacts. Frameworks reward specificity and penalise vagueness.

    The reporting teams that get ahead of this will not be the ones with the lowest emissions. They will be the ones who can show investors they understand where their digital infrastructure is exposed — and have a credible plan for it. Reliable, location-aware energy and emissions data is the foundation for that; measuring your Scope 1, 2 and 3 footprint accurately is the first step, but connecting it to forward-looking risk is what turns a number into a disclosure.

    Turning compute energy into an audit-ready climate disclosure starts with data you can trust. Horizon ESG helps reporting teams link emissions, energy, and transition-risk narrative in one place — so when the next New York arrives, your disclosure is already ready. Book a free demo to see how.

  • CSRD Value-Chain Cap: What You Can Still Ask Suppliers

    Update, 30 September 2026: Both delegated acts have now been published in the Official Journal (21 September 2026). The Voluntary Standard is Commission Delegated Regulation (EU) 2026/1560, in force since 24 September 2026, and the cap applies to financial years beginning on or after 1 January 2027. The scrutiny caveats below are resolved. For the supplier side, read the value chain cap is now law: what customers can require.

    Most of the coverage of the European Commission’s 3 July package led with the same number: a 60% cut in mandatory ESRS datapoints. That is the headline, and it is real. But buried in the second delegated act is a change that will reshape more programmes than the datapoint cut ever will - and almost nobody is briefing their procurement team on it.

    It is called the value-chain cap. In short: from financial year 2027, a CSRD-scope company will no longer be able to require its smaller suppliers to hand over sustainability data beyond a defined ceiling. If your supplier-engagement programme is built on a 200-question ESG questionnaire pushed down the chain, that programme now has a legal boundary running through the middle of it.

    What the Commission adopted on 3 July 2026

    The Commission adopted two delegated acts. The first is the revised set of European Sustainability Reporting Standards - the concrete landing of the Omnibus I simplification agenda. It cuts mandatory datapoints by over 60%, total datapoints by over 70%, and is expected to reduce reporting costs by more than 30% per company.

    The second is the one to read carefully: a Voluntary Sustainability Reporting Standard, built on the VSME, giving companies outside CSRD scope a single proportionate framework to report against. It is voluntary in the sense that no smaller company is obliged to use it. It is emphatically not voluntary in its effect on the companies above them in the chain - because it sets the ceiling.

    Both acts are now in a two-month scrutiny period before the European Parliament and Council, extendable by a further two months. If neither institution objects, they are published in the Official Journal and enter into force. That caveat matters, and we return to it at the end.

    The value-chain cap, precisely

    The cap protects companies with 1,000 employees or fewer that sit in the value chain of a CSRD reporter. Under the Omnibus I Directive, those companies are entitled to decline requests for sustainability information that go beyond what the Voluntary Standard covers. Micro-enterprises of ten employees or fewer get further relief on top. For CSRD-scope companies, the cap bites from financial year 2027.

    Read plainly, that inverts a decade of supplier-engagement practice. The implicit deal until now was that a large buyer could ask its suppliers for whatever its own reporting obligations demanded, and commercial leverage did the rest. From FY2027, the supplier has a statutory answer: no, and here is the standard that says so.

    Three things the cap does not do

    This is where the early commentary is getting it wrong, so it is worth being exact.

    • It caps what you can require, not what you can ask. The Commission has confirmed that a CSRD reporter may still request information beyond the cap - provided it clearly identifies which parts of the request exceed the cap and informs the supplier of their right to refuse. The cap creates a duty of transparency in the ask, not a prohibition on asking.
    • It applies only to CSRD reporting. The cap operates when fulfilling CSRD reporting obligations. It does not govern information you request for other purposes - commercial qualification, contractual assurance, product compliance, or your own risk management.
    • It does not stop a supplier volunteering more. Plenty of smaller suppliers will keep sharing data, because being easy to buy from is a competitive advantage. The cap removes the obligation, not the incentive.

    Together those three points reframe the cap. It is not a wall. It is a consent boundary - and crossing it now requires you to say out loud that you are crossing it.

    Where the cap collides with CSDDD

    Here is the tension nobody has resolved. The Corporate Sustainability Due Diligence Directive still requires in-scope companies to conduct risk-based human rights and environmental due diligence across their chain of activities - an approach Omnibus I preserved rather than narrowing to tier one. You cannot discharge a risk-based due-diligence obligation without information from the chain. Yet the ESRS package has just capped what you may require from a large part of that same chain.

    The reconciliation is in the scoping: the cap is tied to CSRD reporting obligations, and CSDDD due diligence is a separate legal duty. In principle, a due-diligence request is not a CSRD reporting request, and the cap does not extinguish it.

    In practice, that distinction is going to be tested hard - because it is usually the same supplier, receiving the same questionnaire, from the same buyer, in a single email. If your data requests do not distinguish their legal basis, you invite a supplier to refuse the whole thing on cap grounds, including the parts you are entitled to insist on. The operational bar for all of this is still being written: the Commission’s consultation on CSDDD implementation guidelines closes on 24 July 2026, with the guidelines expected in principle by July 2027. If your supplier programme is material to your business, that consultation is a genuine, closing opportunity to shape it.

    What to do in the next 90 days

    FY2027 sounds distant. It is not - supplier programmes have long lead times, and the contracts you sign this year will still be running when the cap bites.

    1. Re-baseline your supplier questionnaire against the Voluntary Standard. Every question you currently push down the chain now sorts into one of two buckets: inside the cap, or outside it. You cannot manage the boundary until you can see it.
    2. Get headcount into your supplier master data. The 1,000-employee line is now a legal boundary, and most procurement systems do not hold supplier headcount at all. This is the least glamorous item on the list and probably the one with the longest lead time.
    3. Redesign the ask, not just the question set. Beyond-cap requests need to be explicitly flagged as such, with the right to refuse stated. Build that into the template now rather than retrofitting it under deadline.
    4. Separate your legal bases. Split CSRD-reporting requests from due-diligence and commercial requests, and label them. This is the single change that most protects your CSDDD position.
    5. Plan for refusal. Assume a meaningful share of smaller suppliers will exercise the cap. That means leaning harder on estimation, sector averages and spend-based proxies for value-chain data - and being able to document why an estimate was used and how it was derived.

    Prepare - but do not decommission

    One final discipline. Both delegated acts are still in scrutiny, and the revised ESRS are set to apply to financial years beginning on or after 1 January 2027, with early application permitted. Nothing is in the Official Journal yet.

    So the correct posture is prepare, don’t freeze - and above all, don’t switch anything off. The most expensive mistake available right now is to read “60% fewer datapoints” as permission to dismantle data pipelines that a scrutiny objection, an early-adoption decision, or an investor’s own SFDR-driven data request could make you rebuild in eighteen months. Simplification is not the same as less work. A 70% datapoint cut creates a migration project before it creates a saving.

    The companies that will handle this well are the ones that can see, in one place, which datapoints they collect, which regime each one serves, and where in the value chain it came from. That is a data-architecture question long before it is a compliance one - and it is exactly what our CSRD readiness checklist is built to help you work through. If you would like to see how Horizon ESG maps a single data foundation across CSRD, CSDDD and the voluntary standard, book a short demo - we will walk your own supplier data through it.

  • Nature Disclosure Is Coming: Get TNFD-Ready by October

    Climate has dominated sustainability disclosure for a decade. Nature is next, and the timetable is now firm. During its June 2026 conference, the IFRS Foundation confirmed that the International Sustainability Standards Board (ISSB) will publish its nature-related disclosure proposals as an exposure draft in October 2026, timed to land ahead of the year’s biodiversity COP. For reporting teams that have spent two years building climate data pipelines, this is the signal to start scoping the next frontier before it becomes mandatory.

    The proposals will take the form of an IFRS Practice Statement rather than a new standalone standard, a route the ISSB agreed in April 2026. That structural choice matters, and it draws heavily on a framework many sustainability teams already recognise: the Taskforce on Nature-related Financial Disclosures (TNFD). Here is what is coming, why it consolidates TNFD as the global baseline, and the practical groundwork worth doing now.

    What the ISSB actually announced

    The October exposure draft will not be a tenth topical standard sitting alongside IFRS S1 and S2. Instead, it will be an IFRS Practice Statement — guidance that helps companies apply the existing ISSB standards, together with the SASB Standards, to nature-related topics. In plain terms, it explains how to surface material nature information using the machinery investors already understand, rather than asking preparers to learn an entirely separate rulebook.

    The scope spans the nature topics that most often drive financial risk: land use, water, pollution, resource use, and biodiversity. These are the areas where dependencies on natural systems — reliable water, healthy soil, stable ecosystems — and impacts on them can translate into cost, disruption, or lost access to markets and finance. And crucially, the ISSB has confirmed the proposals will draw directly on the TNFD framework, giving early TNFD adopters a genuine head start.

    One point deserves emphasis: an exposure draft is a consultation, not a final requirement. The October text will open a comment window before anything is finalised. That is time to prepare, not a reason to wait.

    Why TNFD is becoming the baseline

    TNFD published its final recommendations in September 2023, deliberately mirroring the four-pillar structure — Governance, Strategy, Risk and Impact Management, and Metrics and Targets — that the market already knew from the Task Force on Climate-related Financial Disclosures. That familiarity was the point. Anyone who has produced climate disclosure recognises the shape of a TNFD report immediately.

    The ISSB’s decision to build its nature guidance on TNFD follows the same path climate took. The TCFD recommendations were absorbed into IFRS S2 and the TCFD itself wound down, with its monitoring role passing to the IFRS Foundation. Nature is now travelling that route: a voluntary framework maturing into the reference point for a global, investor-focused standard. For preparers, that convergence is good news — it means the effort you put into TNFD-aligned work is unlikely to be wasted when the ISSB text lands.

    It also connects to obligations some companies already face. Under the CSRD, ESRS E4 requires disclosure on biodiversity and ecosystems where material, so EU-scope reporters are not starting from zero. If you are still mapping what “material” means across environmental and social topics, our guide to double materiality under CSRD is a useful companion, because nature dependencies and impacts sit squarely inside that assessment.

    What nature disclosure asks of you

    Nature reporting differs from climate reporting in one important respect. Greenhouse gases are broadly comparable wherever they are emitted, so a tonne of CO2e is a tonne of CO2e. Nature is local: the same activity can be immaterial at one site and severe at another, depending on the ecosystem around it. That is why TNFD frames the work through its LEAP approach — Locate, Evaluate, Assess, Prepare — which pushes teams to start from where they operate and interface with nature.

    • Locate your interface with nature — the sites, assets, and supply-chain nodes that sit in or near sensitive ecosystems and water-stressed areas.
    • Evaluate your dependencies and impacts at those locations, from water abstraction to land-use change.
    • Assess the resulting risks and opportunities in financial terms your board and investors can act on.
    • Prepare to respond and report, aligning the output with the four disclosure pillars.

    The practical implication is that location-level data — not just enterprise totals — becomes the raw material of a credible nature disclosure. Teams used to reporting a single group emissions figure will need to think at the level of individual sites and suppliers.

    How to get TNFD-ready before October

    You do not need to wait for the exposure draft to make progress. A focused scoping exercise now will make the eventual reporting far less painful:

    • Run a first-pass location screen. Map your operational sites and material suppliers against water stress and biodiversity-sensitivity data to see where nature risk concentrates.
    • Reuse your climate governance. The board oversight and risk processes you built for climate extend naturally to nature; you are adding a topic, not rebuilding the structure.
    • Fold nature into your materiality assessment. Treat dependencies and impacts on nature as candidate material topics in your next review rather than a separate, bolt-on exercise.
    • Audit your data foundations. Location-level, supplier-level detail is harder to assemble than a single carbon figure. Knowing where those gaps are now is worth more than a polished narrative later.
    • Track the convergence. Watch how the ISSB draft aligns with TNFD and ESRS E4 so you build once and disclose against several frameworks.

    Because the ISSB is building on structures the market already uses, the teams that stay closest to their climate disciplines will adapt fastest. If your climate reporting still leans on TCFD-era foundations, our explainer on how TCFD and CSRD align is a helpful reference point for understanding how these frameworks fit together.

    The bottom line

    Nature disclosure is following the same trajectory climate did: a voluntary framework, growing adoption, then absorption into the ISSB baseline. The October exposure draft is the moment that trajectory becomes concrete. Companies that begin locating their nature interface and tightening their data now will meet it as a manageable extension of existing work — not a standing start.

    Horizon ESG is an audit-ready ESG reporting platform that helps reporting teams manage climate, CSRD, and emerging nature requirements in one place, so location-level and supplier data feed straight into disclosure rather than living in scattered spreadsheets. Book a short demo to see how we can help you get ahead of the ISSB timeline with clarity.

  • SEC Climate Rollback Won’t Free US Multinationals

    The headlines are tempting: the SEC is moving to scrap the climate-disclosure rules it adopted in 2024, and some commentators have read that as the end of mandatory climate reporting for US companies. For any business with revenue in California or operations in Europe, the opposite is closer to the truth. The federal rule was only ever one of several overlapping regimes — and the others are advancing, not retreating.

    If your reporting plan hinges on the SEC standing down, this is the moment to stress-test it. Below is what is actually happening in Washington, why it changes less than it appears to, and what reporting teams should do while the noise settles.

    What the SEC is actually doing

    On 3 June 2026, the SEC’s proposed rescission of its 2024 climate-related disclosure rules was published in the Federal Register, opening a comment period that runs through 3 August 2026. Two points are easy to miss in the headlines. First, this is a proposal in its comment window, not a settled outcome. Second, the plan is to eliminate the dedicated framework rather than replace it — reverting issuers to principles-based, materiality-focused disclosure under existing securities law. The Commission has pointed to compliance savings of roughly $4.9bn a year.

    Removing a prescriptive rulebook is not the same as removing the obligation to disclose. Material climate risks that affect a reasonable investor’s decision can still require disclosure under long-standing materiality principles. What changes is the how and the how much — not the underlying duty. And for most multinationals, the SEC was never the binding constraint anyway.

    Why “no SEC rule” doesn’t mean “no disclosure”

    Three other regimes keep mandatory climate and greenhouse-gas disclosure firmly alive for US companies of any size that trade across state or national borders. None of them depend on the SEC.

    California: the de facto US standard

    California’s climate-disclosure laws reach far beyond the state’s borders because they apply to companies “doing business in California,” regardless of where they are headquartered. Two statutes matter:

    • SB 253 (Climate Corporate Data Accountability Act) requires companies with total annual revenues above $1bn to report Scope 1, Scope 2 and, in a later phase, Scope 3 greenhouse-gas emissions.
    • SB 261 (Climate-Related Financial Risk Act) requires companies with revenues above $500m to publish a climate-related financial-risk report aligned with the TCFD recommendations.

    Because the revenue thresholds are low relative to the size of a typical multinational, the practical effect is that a large share of US companies that would have reported to the SEC are captured by California instead — and California explicitly requires Scope 3, which the federal approach was always more cautious about. For most large filers, the toughest disclosure bar in the US now sits in Sacramento, not at the SEC.

    The EU: CSRD reaches across the Atlantic

    The EU’s Corporate Sustainability Reporting Directive pulls in non-EU groups through their European operations. A US parent with substantial EU subsidiaries or branches can fall directly within scope, and even companies that sit outside mandatory scope routinely receive value-chain data requests from European customers who need the numbers for their own ESRS reports. The recent “Omnibus” simplification narrowed who must report at the top of the chain, but it did not switch off the demand for emissions and sustainability data flowing down global supply chains.

    In other words, even a US company with no EU listing can find itself assembling ESRS-grade data because a major European buyer asks for it. If you sell into Europe, CSRD is part of your reality whether or not your own name is on a filing.

    The UK: anti-greenwashing and SDR

    For US groups with UK-regulated financial arms, the FCA’s Sustainability Disclosure Requirements regime adds a third layer. Its anti-greenwashing rule applies to all FCA-authorised firms, and from 30 June 2026 the remaining in-scope asset managers above £5bn in assets must publish entity-level disclosures. The throughline is consistent: any claim you make about sustainability has to be substantiated, and the supporting data has to exist.

    Fragmentation, not freedom

    The real consequence of the SEC’s retreat is not less work — it is less harmonisation. A single US-federal climate rule would at least have given multinationals one reference point that broadly tracked the global ISSB and EU baselines. Without it, a company can find itself reconciling California’s emissions thresholds, the EU’s double-materiality model, and the UK’s disclosure expectations, each with its own scope, boundary and timing.

    That is an argument for building disclosure on a single, well-governed dataset rather than chasing each regime with a separate project. The metrics underneath — Scope 1, 2 and 3 emissions, climate risk, governance and targets — overlap heavily. The expensive mistake is collecting them three times.

    What reporting teams should do now

    • Map your real obligations, not the federal one. Test your revenue and operations against California’s SB 253 and SB 261 thresholds and against EU value-chain exposure before assuming the SEC change lets you scale back.
    • Keep your GHG inventory live. Scope 1, 2 and 3 data feeds California, CSRD and customer requests alike, so a robust carbon accounting foundation is the one investment that pays off under every regime.
    • Build once, report many times. Structure your data so a single source can be mapped to multiple frameworks rather than rebuilt for each.
    • Watch the comment window, but don’t wait on it. The SEC proposal closes for comment on 3 August 2026; nothing about that date pauses California or Europe.

    The companies that handle this period well will be the ones that treated the SEC rule as one input among several, not the keystone. The disclosure expectation has not gone away — it has simply spread out, and it now rewards teams with clean, reusable data more than ever.

    Reporting under more than one rulebook? Horizon ESG helps teams collect emissions and sustainability data once and map it to CSRD, California and other frameworks from a single source. See how it works.

  • ESRS 2.0: Should You Early-Adopt for FY2026?

    For two years, CSRD preparers have built data pipelines, mapped value chains, and wrestled with more than a thousand ESRS datapoints. That groundwork is about to shift. The European Commission is expected to adopt a simplified set of European Sustainability Reporting Standards - informally “ESRS 2.0” - by delegated act in late June or early July 2026, following a public consultation that closed on 3 June. EFRAG’s advice cuts mandatory datapoints by roughly 61% and removes voluntary datapoints altogether.

    Crucially, the revised standards allow voluntary early adoption from financial year 2026, becoming mandatory only for financial years beginning on or after 1 January 2027. That leaves teams with a genuine decision to make now: keep building to the old standard, or pivot to the lighter regime a year early? This guide walks through what is changing and how to weigh the choice with clarity rather than guesswork.

    What ESRS 2.0 actually changes

    The revision is a simplification exercise, not a rewrite of the directive. Three changes matter most for reporting teams:

    • A ~61% cut in mandatory datapoints, with all voluntary datapoints removed. The aim is to concentrate disclosure on what is decision-useful and drop the long tail of marginal metrics.
    • A “top-down” approach to materiality. Rather than testing each datapoint from the bottom up, teams start from the sustainability matters that are material to the business and work down to the disclosures that follow - reducing the assessment burden that has dominated first-cycle projects.
    • Fair presentation applied to the statement as a whole, rather than to each individual datapoint. This is a meaningful audit and governance shift: the question becomes whether the report as a whole gives a true and fair view, not whether every line item is independently perfect.

    The companion Voluntary SME standard (VSME) is on the same adoption track. It underpins the “value-chain cap,” which limits what CSRD reporters can demand from counterparties with 1,000 or fewer employees - directly relevant if your Scope 3 and supply-chain data depend on smaller suppliers.

    The timeline you are actually working against

    Two dates frame the decision. After the Commission adopts the delegated act, a scrutiny period of up to four months by the European Parliament and Council must conclude before the standards are published in the Official Journal. So while the substance is effectively settled, formal finality arrives later in 2026. Early adoption applies from FY2026; mandatory application begins for financial years starting on or after 1 January 2027.

    This sits on top of the February 2026 Omnibus changes, which narrowed mandatory scope to companies with more than 1,000 employees and more than €450m turnover. Many mid-caps that were preparing to report are now outside mandatory scope entirely - yet still face value-chain data requests from larger customers. If that is you, the early-adoption question is less “must we?” and more “what is the most efficient basis to respond on?” For the fuller picture, see our CSRD timeline for 2025-2028.

    The case for early-adopting ESRS 2.0 for FY2026

    • You report on the lighter regime sooner. If your first mandatory report is FY2027 anyway, early adoption lets your FY2026 disclosure - voluntary or value-chain-driven - use the reduced datapoint set rather than the legacy one.
    • You avoid building data flows you are about to retire. Continuing to engineer collection for datapoints that the revision deletes is sunk cost. Pausing those builds now protects budget and analyst time.
    • Top-down materiality is cheaper to run. Re-scoping your materiality assessment around the new model can shrink the single most expensive part of a first cycle.
    • You signal maturity. A clean, focused report aligned to the final standards reads better to investors and assurance providers than an over-stuffed one built to a superseded draft.

    The case for waiting

    • The act is not yet final. Until the scrutiny period concludes and the text is published in the Official Journal, detail can still move. Building to a near-final draft carries some rework risk.
    • Mid-cycle re-scoping has its own cost. If you are deep into an old-ESRS data build with assurance lined up, switching frameworks mid-stream can create more disruption than it saves.
    • Comparability gaps. Reporting on a different basis from peers for one year can complicate year-on-year and benchmark comparisons until everyone converges in FY2027.
    • Internal readiness. Top-down materiality is conceptually simpler but demands confident judgement about what is material. Teams that built bottom-up muscle memory may need time to adjust.

    How to decide: a practical filter

    Work through four questions in order:

    1. When is your first mandatory report? If FY2027, early adoption mainly affects voluntary or value-chain disclosure in FY2026 - lower stakes, easier to trial. If you are still in mandatory scope for FY2026, the calculus is sharper.
    2. How far is your data build? Early-stage projects can pivot to the reduced set cheaply. Near-complete builds with assurance booked may be better finished as planned.
    3. How exposed are you to value-chain requests? If larger customers are asking for data, aligning early to the final standards - and the VSME value-chain cap - can simplify what you owe them.
    4. Can your assurance provider support it? Confirm they are comfortable giving assurance on an early-adopted basis before you commit. The new statement-level fair-presentation model is worth discussing with them directly.

    Whichever way you lean, the foundational work does not change: a defensible double materiality assessment still anchors the report, and your underlying data still needs to be traceable and audit-ready. For a fuller walkthrough of the standards themselves, see our complete ESRS reporting guide.

    The bottom line

    ESRS 2.0 is the most consequential operational change for CSRD preparers since the directive itself. For most teams whose first mandatory report is FY2027 - and especially those early in their data build or responding to value-chain requests - early adoption is the more efficient path, provided your assurance provider is on board. Teams deep into a near-complete old-ESRS cycle have a stronger case to finish as planned and converge in FY2027. Either way, decide deliberately now rather than drifting into the deadline.

    Horizon ESG helps reporting teams navigate ESG complexity with clarity - including scoping and collecting against the right datapoint set the first time. If you are weighing your ESRS 2.0 options, see how our CSRD reporting software keeps your data audit-ready whichever basis you report on.

  • CSRD Software Comparison: What to Look For

    CSRD Software Comparison: What to Look For

    Update, 30 September 2026: This comparison was written before the Omnibus I Directive came into force on 18 March 2026. CSRD now applies only to companies with more than 1,000 employees and more than EUR 450m net turnover, both tests together, so far fewer companies are in scope than the introduction below suggests. The selection criteria still hold. For named vendors side by side, see our comparison of eight ESG reporting platforms.

    Why CSRD Software Selection Matters Now

    The Corporate Sustainability Reporting Directive is reshaping how European and international companies disclose sustainability information. With the first wave of reporting obligations already underway and subsequent waves bringing thousands more companies into scope, choosing the right CSRD software is one of the most consequential technology decisions your organisation will make in 2026.

    This guide provides a structured framework for comparing CSRD software options based on the capabilities that genuinely matter for compliance, efficiency, and long-term value.

    Core Capabilities Every CSRD Platform Needs

    Full ESRS Coverage

    The European Sustainability Reporting Standards are the backbone of CSRD compliance. Your software must cover all twelve standards - the cross-cutting standards (ESRS 1 and ESRS 2) as well as the topical standards spanning environmental (E1 through E5), social (S1 through S4), and governance (G1). Partial coverage creates gaps that auditors will flag. Review our detailed breakdown of CSRD requirements to understand the full scope of what your software must address.

    Double Materiality Assessment Support

    CSRD requires organisations to conduct a double materiality assessment - evaluating both financial materiality (how sustainability issues affect the business) and impact materiality (how the business affects people and the environment). The best platforms provide structured workflows for stakeholder engagement, materiality mapping, and threshold setting, rather than leaving you to manage this critical process in standalone documents.

    Data Point Management

    CSRD reporting involves over one thousand individual data points. Your software should map each data point to the relevant ESRS standard, track completion status, assign ownership to data contributors across the organisation, and flag mandatory versus voluntary disclosures based on your materiality results. Without this granular management layer, teams lose track of requirements and deadlines.

    Feature Comparison Framework

    When evaluating multiple platforms, use this framework to score each option consistently:

    1. Regulatory Intelligence

    How quickly does the platform incorporate regulatory updates? ESRS standards are still evolving, with sector-specific standards and SME standards in development. Platforms that maintain a dedicated regulatory team and push updates automatically score highest in this category.

    2. Workflow and Collaboration

    CSRD reporting involves dozens of contributors across departments. Evaluate task assignment, approval workflows, role-based access controls, and notification systems. The platform should make it easy for non-sustainability staff to contribute data without extensive training.

    3. Assurance Readiness

    Limited assurance is already required, with reasonable assurance on the horizon. Your software must maintain a complete audit trail - every data entry, edit, approval, and source document should be logged with timestamps and user attribution. Some platforms offer auditor portals that give external assurance providers direct read-only access, significantly reducing audit preparation time.

    4. Integration Capabilities

    CSRD data comes from ERP systems, HR platforms, energy management tools, procurement databases, and more. Evaluate the breadth and depth of available integrations, API flexibility, and whether the vendor supports custom connectors for proprietary systems.

    5. Reporting Output

    The platform should generate XHTML-tagged reports compatible with the European Single Electronic Format. Evaluate the quality of narrative templates, data visualisations, and the ability to export reports in multiple formats for different audiences - regulators, investors, and internal stakeholders.

    What Separates Good CSRD Software from Great

    Good software checks the compliance boxes. Great software accelerates your entire sustainability programme. Look for platforms that connect CSRD reporting to operational improvement - using the data you collect not just for disclosure but for identifying reduction opportunities, benchmarking performance, and supporting strategic decisions.

    Dedicated CSRD reporting software should also handle the transition from voluntary to mandatory reporting gracefully, allowing organisations that previously reported under GRI or TCFD to map existing data to ESRS requirements without starting from scratch.

    Evaluation Process Best Practices

    • Define your scope first. Know which ESRS standards apply based on your materiality assessment before evaluating software.
    • Involve IT early. Integration requirements and security reviews take time - start these conversations during the evaluation, not after selection.
    • Request a proof of concept. Load real data into the platform and test end-to-end workflows for at least one reporting topic.
    • Check the vendor roadmap. Ask about plans for sector-specific ESRS standards, AI capabilities, and assurance features.
    • Talk to existing customers. References from organisations with similar complexity and reporting obligations are invaluable.

    Timeline Considerations

    Implementation timelines for CSRD software typically range from six to sixteen weeks depending on organisational complexity, data source integration, and internal readiness. Start your evaluation at least six months before your first reporting deadline to allow for selection, implementation, data migration, and team training.

    Related reading: How to Choose ESG Reporting Software, Best ESG Reporting Software 2026: Buyer’s Guide, ESRS Reporting Guide, and Automated ESG Reporting with AI.

    Take the Next Step

    Choosing CSRD software is a decision that will shape your compliance programme for years. Make it with clarity. Book a demo of Horizon ESG to see how our platform delivers full ESRS coverage, double materiality support, assurance-ready audit trails, and seamless integration - purpose-built for CSRD compliance.

  • How to Choose ESG Reporting Software in 2026

    How to Choose ESG Reporting Software in 2026

    Why Choosing the Right ESG Software Matters

    ESG reporting is no longer optional for most organisations. Regulatory pressure from frameworks like CSRD, investor expectations, and supply-chain requirements mean that every company needs a reliable system for collecting, managing, and disclosing sustainability data. Choosing the wrong platform wastes budget, creates compliance risks, and frustrates teams. Choosing the right one accelerates your entire sustainability programme.

    This guide walks you through the key criteria for evaluating ESG reporting software so you can make a confident, informed decision in 2026.

    Essential Features to Look For

    1. Framework Coverage

    Your software should support the reporting frameworks that matter to your business - CSRD and ESRS, GRI, ISSB, TCFD, CDP, and any sector-specific standards. Look for platforms that update their framework libraries as standards evolve, rather than requiring manual template changes. A platform built around best-practice ESG reporting will handle multiple frameworks simultaneously without duplicating data entry.

    2. Data Collection and Integration

    Manual data entry is the bottleneck in most ESG programmes. Evaluate whether the platform can connect to your existing systems - ERP, HR, energy management, procurement - via API or direct integration. Automated data ingestion from utility invoices, spreadsheets, and IoT sensors saves significant time and reduces errors.

    3. Audit Trail and Assurance Readiness

    As limited and reasonable assurance requirements expand under CSRD, your software must maintain a complete audit trail. Every data point should be traceable to its source, with timestamps, user attribution, and change logs. If an auditor cannot follow the data lineage, your platform is not fit for purpose.

    4. Carbon and Emissions Calculations

    Scope 1, 2, and 3 emissions calculations are at the heart of environmental reporting. The software should include up-to-date emission factor databases, support location-based and market-based methods, and handle complex Scope 3 categories like purchased goods, business travel, and employee commuting.

    5. AI and Automation Capabilities

    Modern platforms use artificial intelligence for emission factor matching, gap detection, anomaly flagging, and even narrative drafting. These capabilities can reduce reporting effort by up to seventy percent, freeing your sustainability team to focus on strategy rather than data wrangling.

    Red Flags When Evaluating Vendors

    • No live demo available. Any credible vendor should let you test the platform with your own data before committing.
    • Pricing opacity. If a vendor cannot give you a clear breakdown of licence fees, implementation costs, and ongoing support charges, proceed with caution.
    • Lock-in tactics. Ask about data export. If you cannot extract your raw data in standard formats at any time, the platform is holding your data hostage.
    • Slow update cycles. Regulatory landscapes change rapidly. Vendors that update frameworks annually rather than quarterly will leave you exposed.
    • No customer references. Ask for case studies or references from organisations similar to yours in size and sector.

    Questions to Ask Every Vendor

    Prepare a structured evaluation scorecard and ask each vendor the same set of questions. Here are the most important ones:

    1. Which reporting frameworks do you support out of the box, and how quickly do you incorporate updates?
    2. How does your platform handle data from multiple subsidiaries, geographies, and business units?
    3. What integrations are available, and what is the typical implementation timeline?
    4. How do you ensure data security and privacy, especially for sensitive employee or supply-chain data?
    5. What does your assurance and audit support look like - can auditors access the platform directly?
    6. What training and onboarding support do you provide?
    7. What is the total cost of ownership over three years, including implementation, licences, support, and upgrades?

    How to Run a Successful Pilot

    Before signing a multi-year contract, run a focused pilot. Select one business unit or one reporting framework and test the platform for four to six weeks. Evaluate data import, user experience, report output quality, and vendor responsiveness. Involve both your sustainability team and your IT department to test integrations and security requirements.

    A good pilot reveals whether the vendor’s promises match reality. Check our pricing page to understand how Horizon ESG structures its plans so you can compare costs transparently.

    Total Cost of Ownership Considerations

    The sticker price of ESG software is only part of the equation. Factor in implementation and configuration costs, internal staff time for setup and training, ongoing subscription or licence fees, the cost of integrations or custom development, and the hidden cost of manual workarounds if the platform falls short. A platform that costs more upfront but eliminates spreadsheet-based processes and reduces audit preparation time often delivers a lower total cost of ownership over three to five years.

    Making Your Final Decision

    Shortlist two or three vendors. Score each against your requirements matrix. Weight the criteria that matter most to your organisation - framework coverage, ease of use, scalability, or integration depth. Involve key stakeholders from sustainability, finance, IT, and executive leadership in the final decision.

    The right ESG reporting software becomes the backbone of your sustainability programme, enabling accurate disclosure, efficient operations, and strategic insight. Take the time to choose well.

    Related reading: Best ESG Reporting Software 2026: Buyer’s Guide, CSRD Software Comparison, Automated ESG Reporting with AI, and ESG Data Management: Beyond Spreadsheets.

    See Horizon ESG in Action

    Ready to evaluate a platform built for modern ESG reporting? Book a free demo of Horizon ESG and see how our platform handles framework coverage, automated data collection, carbon calculations, and assurance-ready reporting - all in one place.

Book Your Free Demo