The Corporate Sustainability Reporting Directive (CSRD) requires European companies to publish an annual sustainability report on environmental, social and governance (ESG) issues.

The CSRD Sustainability Report is a document of over 100 pages that must be published in XHTML format, including embedded tags. Tags are used to describe the information included in the report for easier comparison.

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Why is tagging important?

One of the objectives of the CSRD regulation is to facilitate the comparability and transparency of non-financial reports (known as "sustainability reports") at the European level. To this end, Europe requires harmonization of reporting standards. Indeed, it is difficult to compare companies' performance without knowing where to find the information in their annual reports.

Since 2022, universal registration documents (DEU) must adopt the iXBRL format, i.e. a single HTML version enriched with XBRL tags.

With XBRL tags, data is more easily identified and reports can be read by machines, not humans (source.)

The DEU, or Universal Registration Document ( URD ), is a financial tool intended for shareholders, investors, and financial analysts. It must be published annually and filed with the Autorité des Marchés Financiers by companies listed on a regulated market. As part of the CSRD, the sustainability report must be annexed to the universal registration document.

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Who defined the CSRD markup?

The European Financial Reporting Advisory Group (EFRAG) was mandated by the European Commission to develop the XBRL structure for ESRS.

As a reminder: the ESRS (European Sustainability Reporting Standards) represent sustainability standards. They take the form of twelve documents: two general documents and ten thematic documents. To learn more about EFRAG and the ESRS, see our dedicated article.

The final structure will be validated by the European Securities and Markets Authority (ESMA) in 2024. Based on this structure, ESMA will develop draft Regulatory Technical Standards (RTS) that will specify the electronic reporting format to be used. The technical standards will ultimately be adopted by the European Commission through a delegated act amending the European Single Electronic Format (ESEF) regulation.

The European Single Electronic Format (ESEF) is the electronic reporting format in which European listed companies must prepare their annual financial reports in order to facilitate the accessibility, analysis and comparability of financial data.

In short, once ESMA validates the technical standards, the European Commission will adopt them by amending the existing ESEF regulations.

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Concretely, what does the tagging look like in the CSRD?

In the Taxonomy proposed by EFRAG, the sustainability report can include more than 4,000 tags (4,252 to be exact) that must be applied to the various elements of the report. These tags must be provided in XBRL format.

In short, companies must provide two documents: an XHTML web file and a file containing all the XBRL tags.

To get a sample tagged report, request one right here.

Please note that we are talking about the XBRL taxonomy of the report, not to be confused with the European taxonomy. The XBRL taxonomy is the equivalent of the structure of the report, while the European taxonomy refers to the classification of economic activities with a favorable impact on the environment. Its objective is to direct investments towards "green" activities.

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The tools

To tag a sustainability report, a company can use several tools. There are open-source tools like Arelle that allow you to manually tag your report. The advantage is that it's a free solution.

There are tools like Kiosk that offer sustainability reporting software focused on the XBRL taxonomy. This means that tagging is natively integrated into the software and the tags are applied automatically when generating the sustainability report. The advantage is that with Kiosk's tool, you'll never need to apply tags manually or use a paid tool to do so.

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Conclusion

In short, the XBRL taxonomy allows companies to better structure their sustainability reporting and allows readers to benefit from digital tags for simplified access to ESRS information. Tagging a sustainability report is an essential step in CSRD compliance for companies. It allows companies to adhere to a common reporting framework and allows readers to compare companies with each other.

However, this is a repetitive and uninteresting task that requires companies to repeat the same operation thousands of times. Thanks to tools like Kiosk, companies can save up to 5 months on producing their sustainability report in regulatory format.