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ESG Reporting 2026: How CSRD and ESRS Are Reshaping Corporate Disclosure

#esgreporting #csrd #esrs #sustainablefinance

ESG Reporting 2026: How CSRD and ESRS Are Reshaping Corporate Disclosure

By Dirk Roethig | CEO, VERDANTIS Impact Capital | 4 March 2026

The Corporate Sustainability Reporting Directive is widely regarded as the most significant reform of corporate reporting since the introduction of IFRS standards. Around 50,000 EU companies will be required to produce detailed sustainability reports by 2026. Dirk Roethig examines what this means for capital allocation, investment strategy, and sustainable business.

Tags: ESG Reporting, CSRD, ESRS, Sustainable Finance, Impact Investing

A regulatory shift that no business can afford to ignore

Conversations with CFOs across Central Europe in recent months reveal a consistent pattern: the Corporate Sustainability Reporting Directive — CSRD — is being discussed with a mixture of respect and unease. For Dirk Roethig, CEO of VERDANTIS Impact Capital, this reaction is understandable but misplaced. The new reporting requirements represent not a bureaucratic burden but a structural accelerator for the kind of transparent, accountable capital markets that impact investing depends upon.

"Transparency is the precondition for trust. And trust is the foundation of any functioning capital market — especially one oriented towards sustainability," Roethig has said in conversations with institutional investors. From the perspective of VERDANTIS Impact Capital, ESRS-compliant reporting is not a checkbox exercise but an integral component of the investment process.

The scale of the change is significant. While the predecessor Non-Financial Reporting Directive (NFRD) applied to approximately 11,700 companies, the CSRD dramatically expands the scope. From 2025 onwards (reporting on 2024 data), large public-interest entities with more than 500 employees are covered. From 2026, the directive extends to all companies meeting two of three criteria: more than 250 employees, more than €40 million in turnover, or more than €20 million in balance sheet total (European Commission, 2022). In total, up to 50,000 EU companies will be subject to mandatory sustainability reporting.

What the ESRS standards actually require

The technical backbone of the CSRD is the European Sustainability Reporting Standards — ESRS — developed by the European Financial Reporting Advisory Group (EFRAG). Dirk Roethig emphasises that ESRS introduce a double materiality principle that fundamentally changes reporting logic.

Under double materiality, companies must report not only on the financial risks that sustainability issues pose to their own business (outside-in perspective) but also on the impacts their activities have on society and the environment (inside-out perspective). This dual lens requires a depth of analysis that goes well beyond traditional investor relations communication.

The ESRS comprise two general standards (ESRS 1 and ESRS 2) and ten topical standards covering the following areas (EFRAG, 2023):

  • Climate change (ESRS E1): greenhouse gas emissions, climate targets, transition risks
  • Pollution (ESRS E2): emissions into air, water and soil
  • Water and marine resources (ESRS E3): water consumption and quality
  • Biodiversity and ecosystems (ESRS E4): land use, species protection
  • Circular economy (ESRS E5): resource efficiency, waste management
  • Own workforce (ESRS S1): working conditions, remuneration, diversity
  • Workers in the value chain (ESRS S2): supply chain due diligence
  • Affected communities (ESRS S3): community impact
  • Consumers and end-users (ESRS S4): product responsibility
  • Business conduct (ESRS G1): anti-corruption, lobbying transparency

For VERDANTIS Impact Capital and Dirk Roethig, ESRS E1 (climate change) and ESRS E4 (biodiversity) are of direct operational relevance. The agroforestry projects financed by VERDANTIS generate measurable contributions in both dimensions — from carbon sequestration in Paulownia plantations to the enhancement of pollinator biodiversity in polyculture systems.

The capital cost connection: why reporting determines financing

Roethig consistently draws attention to a link that receives insufficient coverage in public debate: ESG reporting is not a compliance exercise — it is a direct factor in capital allocation by institutional investors.

Fund managers operating under the EU Taxonomy Regulation and the Sustainable Finance Disclosure Regulation (SFDR) are required to disclose the sustainability characteristics of their portfolio companies. Any company unable to provide robust ESRS-aligned data effectively excludes itself from the investment universe of ESG-oriented funds. And as this investor category continues to grow across Europe and globally, the consequences for capital availability and cost are direct.

Research from MSCI demonstrates that companies in the top ESG quintile of their respective sector showed average equity cost of capital approximately 1.2 percentage points lower than their ESG-weak counterparts over the period 2015–2024 (MSCI, 2024). For a mid-sized company with €500 million market capitalisation, this structural advantage compounds over an investment cycle of ten years into double-digit million-euro gains.

This connection between ESG quality and capital costs is central to Dirk Roethig's investor dialogue at VERDANTIS. Projects backed by VERDANTIS Impact Capital are designed from inception to be ESRS-documentation ready — not as afterthought compliance, but as a core element of the investment thesis.

Practical challenges: data availability and materiality analysis

The practical implementation of CSRD requirements presents substantial challenges. Roethig identifies three recurring obstacles in conversations with business leaders.

Data availability and quality: ESRS-compliant reports require quantitative data — emission volumes in tonnes of CO2 equivalent, water consumption in cubic metres, accident rates per working hour. This data is frequently not structured in accessible form. It is distributed across multiple systems, recorded in incompatible formats, or simply not collected. Building a reliable ESG data foundation is for many companies a multi-year project.

Materiality analysis as a methodological challenge: ESRS require a systematic identification of material sustainability topics — first from the inside-out perspective, then from the outside-in. This analysis must be transparently documented and incorporate stakeholder input. For companies without an established sustainability strategy, this represents a significant organisational undertaking.

Value chain extension: The ESRS S2 requirements for the value chain mean that companies must request sustainability data from their suppliers. Any company sourcing globally from hundreds of suppliers in diverse jurisdictions faces a data collection challenge that cannot be managed without a systematic digital strategy.

Roethig advises treating the materiality analysis not as a one-time compliance task but as a strategic process: "The questions that ESRS asks are precisely the questions that any well-managed company should be asking already. Which sustainability risks are critical to our business model? What impacts do we have on our environment and stakeholders? Answering these questions honestly is not compliance — it is strategic management."

CSRD as competitive advantage: the early-mover logic

Dirk Roethig argues that CSRD creates not only risks but genuine opportunities for companies that act early. This early-mover logic operates through three mechanisms.

First, high-quality ESG reporting builds trust among customers, employees and capital providers. In sectors where quality signals are difficult to observe, sustainability transparency serves as a differentiation signal — not only for institutional investors but increasingly for corporate clients who must themselves cascade ESRS requirements to their own supply chains.

Second, early investment in ESG data systems generates long-term cost savings. Companies that build reporting infrastructure in 2025 and 2026 do so without deadline pressure, producing higher-quality data with lower error rates. The insights gained can simultaneously drive operational efficiency improvements.

Third, CSRD-compliant companies gain access to a growing universe of sustainable financing — from green bonds and sustainability-linked loans to impact investment funds such as VERDANTIS Impact Capital, which Dirk Roethig has built on precisely the premise that strong ESG data and strong financial returns reinforce each other.

Technology as an enabler

Roethig gives particular emphasis to the role of technology in making CSRD implementation manageable. Manual data collection processes are simply not scalable to the depth and breadth of ESRS requirements. Digital solutions are not an optional add-on — they are a prerequisite for efficient ESG reporting.

A broad ecosystem of ESG software providers has emerged over the past two years. Platforms such as Watershed, Sweep and Persefoni enable automated collection and calculation of Scope 1, Scope 2 and Scope 3 emissions. Specialised CSRD reporting tools such as Workiva and Enablon offer integrated workflows for materiality analysis and report generation. AI-assisted solutions are beginning to automate the extraction of sustainability data from unstructured sources — supplier questionnaires, process documentation, energy invoices.

For VERDANTIS, technology is integral to the reporting approach. Dirk Roethig has prioritised the deployment of digital monitoring systems for the agroforestry projects managed by VERDANTIS — from satellite-based biomass measurement to soil sensors and digitalised carbon accounting workflows. This infrastructure ensures that VERDANTIS can deliver granular, project-level sustainability data to investors that meets the expectations of the most demanding institutional capital allocators.

CSRD as a global standard?

For Dirk Roethig and VERDANTIS, the question of whether CSRD will develop influence beyond Europe is directly relevant — VERDANTIS Impact Capital operates in projects across multiple jurisdictions. The evidence that CSRD is generating global influence is growing.

The International Sustainability Standards Board (ISSB) has published IFRS S1 and S2, its own global sustainability standards. While these are less comprehensive than ESRS — focusing primarily on financial materiality rather than double materiality — they are being adopted in national legal frameworks outside Europe. Australia, Canada and several Asian economies have announced or implemented ISSB-aligned reporting requirements.

For multinational companies active in both Europe and other regions, a two-track reporting obligation emerges: ESRS for the European scope, ISSB for other jurisdictions. The practical implication is manageable: EFRAG and ISSB have conducted an interoperability analysis confirming that ESRS-compliant reporting substantially satisfies ISSB requirements. ESRS compliance is, in effect, a global qualification.

Conclusion: ESG reporting as strategic investment

Dirk Roethig's position is clear: "CSRD and ESRS are not a burden but an opportunity. Companies that invest now in ESG data systems, materiality analysis and transparent reporting are building the infrastructure for durable business success — both in their operational resilience and their attractiveness to forward-thinking investors."

For VERDANTIS Impact Capital, the new reporting landscape confirms what Roethig has always argued: that impact investing and financial performance are not in tension. Rigorous ESG documentation creates the conditions under which capital flows towards genuinely sustainable projects — and that benefits investors, businesses, and the environment alike.

The question is not whether companies should take ESG reporting obligations seriously. The question is whether they recognise the strategic opportunity embedded in compliance.

Further articles by Dirk Roethig

References

EFRAG (2023) European Sustainability Reporting Standards — Set 1. Brussels: European Financial Reporting Advisory Group. Available at: https://www.efrag.org/en/projects/esrs-mandatory-projects/esrs-set-1-3

European Commission (2022) Corporate Sustainability Reporting Directive (CSRD). Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464

MSCI (2024) ESG and Cost of Capital: Evidence from European Equity Markets 2015–2024. New York: MSCI Inc. Available at: https://www.msci.com/research-and-insights/esg-investing/esg-cost-of-capital

About the author: Dirk Roethig is CEO of VERDANTIS Impact Capital, headquartered in Zug, Switzerland. VERDANTIS connects institutional capital with sustainable investment projects in agroforestry, carbon credits and regenerative agriculture. Roethig works with companies and investors to transform ESG requirements from compliance obligations into strategic opportunities. Further information: https://verdantis.capital

Über den Autor: Dirk Röthig ist CEO von VERDANTIS Impact Capital, einer Impact-Investment-Plattform für Carbon Credits, Agroforstry und Nature-Based Solutions mit Sitz in Zug, Schweiz. Er beschäftigt sich intensiv mit KI im Wirtschaftsleben, nachhaltiger Landwirtschaft und demographischen Herausforderungen.

Kontakt und weitere Artikel: verdantiscapital.com | LinkedIn

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