ESRS xBRL Tagging: Everything You Need to Know About the New CSRD Reporting Format

ESRS XBRL tagging poses a major challenge for many companies. Starting in 2024/2025, all large companies and publicly traded SMEs in the EU will be required to submit their sustainability reports in XBRL format in accordance with the ESRS XBRL taxonomy. To this end, EFRAG developed the requirements that, in accordance with the CSRD, are to be applied to sustainability reporting. The following article addresses the key points and answers questions regarding the new taxonomy.

What is xBRL tagging, and what is it used for?

xBRL stands for “eXtensible Business Reporting Language” and is a specialized extension of XML (eXtensible Markup Language) used to make financial and sustainability data machine-readable and standardized. More specifically, the data is defined in a structured format as“tags,” similar to HTML for websites, but specifically designed for financial and non-financial reports. As a result, data is not presented in an unstructured format—as would be the case, for example, with continuous text or tables—but is instead displayed through intelligent xBRL tagging.

Latest News on Sustainability Reporting

In June 2024, the Global Reporting Initiative (GRI) published a draft of a new xBRL taxonomy aimed at standardizing sustainability reports and promoting interoperability between different reporting frameworks. The EU’s Corporate Sustainability Reporting Directive (CSRD) also requires companies to report their sustainability data in xBRL format. And as recently as August 2024, the EFRAG finalized the ESRS XBRL taxonomy, which is intended for use in sustainability reports under the CSRD. Recent developments show a clear trend toward greater digitization and standardization of sustainability reporting, with the xBRL format serving as the central tool.

The Use of xBRL Tagging in the ESRS/CSRD

EFRAG developed the ESRS XBRL taxonomy specifically for sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD). According to this taxonomy, all reporting companies must submit their reports in iXBRL (Inline XBRL) format. Compared to the XBRL format, the iXBRL format is not only machine-readable but also human-readable. This is made possible by integrating XBRL tags into a visually appealing HTML presentation. As a result, it is significantly more suitable as a reporting format than the XBRL format. For more information on the XBRL format, click here.

The Most Important Facts About ESRS xBRL Tagging at a Glance

ESRS xBRL tagging includes several new features and changes that are essential for successful reporting. These are the key aspects:

1. Hierarchical Structure: The data points and requirements are organized by levels. There are parent elements (“Parent”), which typically contain general information. They form the top level of the hierarchy. One level below are the child elements (“Child”). These are data elements that represent more specific information within a disclosure, such as specific key figures. The lowest level consists of the so-called “sub-children.” These contain even more specific data or explanations.
2. Modular Structure of the Standards: The ESRS xBRL Taxonomy is divided into various modules, each covering different areas of reporting. Each of these modules contains its own specific disclosure requirements, which are defined in the taxonomy as “elements.” The cross-cutting ESRS standards, for example, cover general requirements, including ESRS 1 and 2. In contrast, the Topical ESRS address specific sustainability topics, including the E, S, and G standards.
3. Data Points and Disclosure Elements: The taxonomy contains three types of data points that must be tagged.

• Narrative disclosure elements: Data points from blocks of text that represent qualitative data, such as descriptions, guidelines, or objectives.
• Numerical disclosure items: Data points containing quantitative data such as emissions levels, energy consumption, or headcount
• Semi-narrative disclosure elements: These include, for example, yes/no answers or predefined options

4. Hypercubes and Dimensions: By using dimensions, data can be further disaggregated (broken down), for example, by country, business unit, or greenhouse gas category. Hypercubes allow these dimensions to be combined in a structured tabular format for precise data collection without redundancies.

5. Flexibility for company-specific disclosures: The taxonomy allows for the disclosure of company-specific information. This enables companies to provide information that goes beyond the standard requirements.

Timeline for Implementation

These milestones provide an overview of how the introduction and implementation of the XBRL taxonomy will proceed in stages:

• February 2024: EFRAG released the draft taxonomy for public consultation. This is still a preliminary version intended to gather feedback from stakeholders.
• April 2024: The consultation on the draft taxonomy runs through April 8, 2024. Stakeholders, including companies, software providers, and users, are invited to provide feedback on the draft taxonomy. This feedback will be incorporated into the revision of the final version.
• 2nd–3rd Quarter of 2024: Following the public consultation, the final version of the ESRS XBRL taxonomy is expected. This final version will be revised based on feedback from the consultation.
• Q3–Q4 2024: The final XBRL taxonomy is to be incorporated into existing EU regulations by the European Commission through a delegatedact. This adjustment will be made through an amendment to the Regulation on the European Single Electronic Format (ESEF Regulation), which will be adopted by the European Commission.
• Starting in 2025: The XBRL taxonomy will become mandatory for companies subject to the Corporate Sustainability Reporting Directive (CSRD). Starting with the 2024 fiscal year (with the first reports due in 2025), these companies must prepare their sustainability reports digitally in XBRL format in accordance with the ESRS.

Preparing for xBRL Tagging

The new xBRL tagging offers a forward-looking solution for standardizing, ensuring comparability, and presenting future financial reports. As such, it offers significant benefits for both your company and your stakeholders. Do you need assistance with preparing for and implementing the ESRS-xBRL taxonomy? If so, please contact us to schedule a no-obligation consultation.