CSRD-Reporting: German companies publish the longest and most detailed reports

• On average, 7 topics were identified as material
• Main topics are climate change (E1), own workforce (S1) and business conduct (G1)
• Average of 44 "Impacts, Risks and Opportunities" (IROs)
• German CSRD reports around 30 percent longer than the European average

Around 10,000 European companies reported for the 2024 financial year for the first time on the basis of the European Sustainability Reporting Standards (ESRS). Kirchhoff Consult analysed the implementation of the requirements in more than 100 reports* from 18 countries and 11 different sectors and found considerable variations in scope and granularity: For example, the reports of German companies significantly exceed the average text volume, although they do not report on comparatively more material topics.

As part of the double materiality analysis, an average of seven topics were identified as material across Europe. As expected, the main topics include climate change (E1), the company's own workforce (S1) and business conduct (G1). These three topics are present in most of the reports. However, information on resource use and circular economy (E5), the workers in the value chain (S2) and the impact of the company on consumers and end users (S4) are also topics that are essential in a broad industry environment. All other topics are more specific and are concentrated in the manufacturing sectors. The variance in the number of topics is high – just under 7 percent of the companies surveyed reported the complete ESRS set, i.e., ten topics. In some cases, reports were published based on only two material topics.

The presentation of the results of a CSRD materiality analysis is complex, which is why a significant number of European companies (60 percent) do not use charts. If graphical representations are used, the matrix remains the most common form. Some companies, however, have further adapted the matrix representation and linked it to the CSRD requirements in a targeted manner.

On average, 44 "Impacts, Risks and Opportunities" (IROs) were reported. Here, too, the number varies significantly between 10 and 140 IROs. 75 percent of the companies presented their IROs in (at least) a summarized overall overview. This can usually be found in the General Information section. 53 percent of companies also describe their IROs at the beginning of the respective chapter. This helps the reader understand why the following text is relevant and what topics are broadly covered.

The chapter on the EU taxonomy differs in structure from the rest of the CSRD report. Most companies (47 percent) place this chapter at the end of the environmental chapter to maintain a cohesive structure and logical theme sequence.

"Entity-Specific" Topics: Where does sustainability end?

The additional "Entity-Specific" topics can include individual key figures or entire subject areas. Half of the reports examined integrated such company-specific topics in the report. They are usually assigned to the existing essential topics or chapters. These topics show a high degree of variance – ranging from topics such as data protection and cyber security to taxes, innovation and risk management. In many cases, it is necessary to work out more clearly to what extent these topics address sustainability issues. Taxes and risk management, e.g., in other areas of the annual financial statements, are often sufficiently appreciated – an additional discussion in the sustainability report does not necessarily seem to make sense.

The scope of CSRD reports varies from 41 pages to 283 pages. On average, the length of CRSD reports is 130 pages. To make valid statements on the scope of the report, this analysis compared the number of PDF pages, recorded all the words of the reports and derived standard pages from them. The choice of report format and font size thus do not lead to any distortion of the observations.

Does "German thoroughness" lead to more extensive reports?

It is striking that German reports are significantly longer than the average CSRD report. While other European reports get by with an average of 116 pages, the average length of German reports is 148 pages, i.e., 27 percent more. At the same time, the number of material topics in German reports (7.5 on average) does not significantly exceed the number of material topics in the other European reports (6.7). In German reports, similar material topics are described in more depth.

"German companies have implemented the requirements of CSRD reporting with a lot of effort. In our view, this can be due to several reasons: On the one hand, sustainability management in German companies could already be very progressive, while simultaneously maintaining a high standard of transparency. We opine, however, that there is a likelihood that the high audit threshold for German companies drives this observation," says Julian von Pressentin, Director ESG/Sustainability at Kirchhoff Consult. "Another important point could be a lack of focus on essential information. This may be a starting point for reducing the complexity and scope of the reports."

With a larger sample size, this observation will be further investigated so that more reliable and statistically significant explanations for these test results can be identified.

Interoperability: CSRD report is also a GRI report

Other standard-setters were actively involved in the development of the ESRS: The ESRS contain references to GRI, IFRS or TCFD, among others. Together with GRI, EFRAG announced in 2024 that a CSRD report would also meet the requirements of reporting with reference to the GRI standards (reference option) – only a GRI index would have to be created in order to make good use of this interoperability.

Surprisingly, other frameworks have played only a minor role in CSRD reporting to date. For example, GRI is not mentioned in 66 percent of the reports examined, and an additional index is marginal. SASB and IFRS also play no relevant role in the sample examined. Only the Sustainable Development Goals (SDGs) and TCFD are regularly mentioned in the sustainability reports.

What happens next? CSRD not yet transposed into German law

The CSRD has still not been transposed into German law. This delay is associated with a high level of legal uncertainty for companies currently and soon subject to reporting obligations. A two-year postponement for companies not yet subject to reporting requirements seems most likely. In addition, the ESRS are to be revised by the end of October. The goal: a significant simplification.

"It is to be expected that legal uncertainties will remain for the time being. For the next reporting season, companies should focus primarily on setting up their reporting processes as efficiently and future-oriented as possible. This means reducing complexity without sacrificing transparency," says Claudia Herzog-Kamensky, Head of ESG/Sustainability at Kirchhoff Consult.

* Only reports from companies that have already reported fully in accordance with the ESRS were taken into account.