XBRL and CSRD Reporting: What You Need to Know (And Why It Matters)

If you have started preparing for CSRD reporting, you have probably heard about XBRL—likely accompanied by a sense of mild confusion. What is it? How does it fit into ESG reporting? And most importantly, should you be worried about it? Don’t panic, we’ll get you up to speed.

What Is XBRL Exactly?

XBRL (eXtensible Business Reporting Language) is the global standard for digital reporting, enabling business information to be computer-readable. This allows for easier discovery, access, and analysis of business data.

Think of XBRL as a smart, structured way of tagging all the important bits in your CSRD report—figures, narratives, tables—so that software can read and understand them. It is like adding helpful post-it notes to every important detail, ensuring nothing gets lost in translation.

Then there’s iXBRL (Inline XBRL), which takes things one step further. While XBRL tags sit quietly in the background, iXBRL brings them to life in the form of an interactive report. This means being able to click on a section of a report and see exactly what disclosure requirement it links to, without losing the visual layout. For an example of how iXBRL works in practice, take a look at this report.

Financial Reporting vs. ESG Reporting: XBRL's New Challenge

In financial reporting, the XBRL format has been used for a while now, and the process is fairly straightforward. You finish the report and add the tags at the end. But CSRD reporting is a different story. The scope is much broader, with around ten times more data points to manage. And while financial reporting tags a few key figures, ESG reporting requires tagging every narrative answer, figure, and table—down to the last cell. Additionally, the XBRL tagging applies to the ESRS, but also to the EU Taxonomy.

For ESG reporting under the CSRD, the timeline is also different. EFRAG handed over the first version of the XBRL taxonomy for the ESRS and the Article 8 EU Taxonomy to the European Securities and Markets Authority (ESMA) in August 2024. While we know that the iXBRL tagging will be required at the earliest for the reporting year 2026 (on 2025 data), the exact date and requirements still need to be provided by ESMA by creating a Regulatory Technical Standard (RTS) for tagging sustainability statements. The European Commission will adopt the final RTS through a Delegated Act, amending the Commission Delegated Regulation (EU) 2019/815, which governs the European Single Electronic Format (ESEF). 

The additional time might sound reassuring, but starting early is key to managing the complexity of ESG data. It is said that ESMA might have already discussed the timeline for mandatory iXBRL reporting, soon to be published.

A few resources to get started on CSRD

- The CSRD Essentials ebook
- CSRD Checklist: 10 Steps to Reach Compliance
- Carbon Accounting in CSRD: Your Path to E1 Compliance

Advantages of the XBRL Format

So why was the XBRL introduced? We will now explore the main advantages for your organisation and your stakeholders. 

• Data quality: XBRL enhances the quality and accuracy of reported data by eliminating the need for manual re-entry, and reducing the risk of errors in the process.
• Standardisation: As XBRL provides very detailed data models and standardised taxonomies, it ensures that data is reported in a consistent format across your group.
• Comparability: The data is not only standardised within your group but also across industries and geographies. This makes it easier for you and your stakeholders to compare companies and assess performance against standardised criteria, promoting transparency and accountability.
• Regulatory Compliance: Ultimately, companies will have to adopt XBRL because it is mandated by regulatory authorities. As compliance with XBRL becomes a legal requirement, organisations will need to implement it to meet reporting obligations and avoid potential penalties.
  
  

Shortcomings of the XBRL Format

While XBRL offers significant benefits, there are a few potential shortcomings worth noting:

• Complexity: Implementing XBRL can be complex, especially for organisations unfamiliar with the technical requirements. Developing the necessary expertise and adapting internal processes to align with XBRL taxonomies can require time and resources if not done with the right tools.
• Initial Costs & Learning Curve: The initial setup costs for XBRL, including training, and possibly hiring specialists, can be substantial, especially if XBRL is not integrated into your reporting software. Smaller organisations may find this investment challenging, even though it leads to long-term efficiencies.
• Dependence on Taxonomy Updates: XBRL taxonomies evolve, and organisations must stay current with these changes. This means regularly updating systems and processes to remain compliant with the latest standards, which can add to the maintenance burden if not properly managed.
• Data Overload: While XBRL enables the reporting of detailed data, the granularity of the information can lead to overwhelming amounts of data being collected and analysed. If not managed properly, this can complicate the extraction of meaningful insights for stakeholders.
  
  

Waiting Until the End to Add XBRL Tags? Not the Best Idea

If you wait until your report is done before thinking about XBRL, you could find yourself in a difficult situation. Manually tagging 2,000+ data points, including individual cells in tables, is not only tedious but also prone to errors. 

At Greenomy, we take a different approach. We believe that XBRL should be integrated from the start. And, this is how our solution was built, allowing you to streamline the whole process and avoid last-minute headaches. Here’s how we do it:

Step 1: ESRS Scoping and Gap Analysis

We start by aligning your reporting with the latest version of the XBRL taxonomy right from the beginning. Based on your Double Materiality Assessment results, the material XBRL data points are automatically filtered so that your data providers can analyse data availability and know what data to collect. 

Step 2: AI-Enhanced Data Collection

Once you know what information you need, it is time to gather the data. With Greenomy, each legal entity can upload its policies and data, which our AI-powered advisor, Artemis, summarises into a group-level disclosure. Artemis also helps you re-write your answers into a coherent text. In the platform, everything is tracked and validated, making the audit process smoother and more transparent. It is like having someone quietly organising everything behind the scenes, ensuring nothing is overlooked.

Step 3: iXBRL Report Generation

Finally, when all your data is collected and your narrative is ready, you can generate the report in iXBRL format. We have integrated iXBRL functionalities through our partners, such as Pomelo Paradigm, so your report can be exported with all the required tags, ready for publication.

How to Comply with XBRL for ESG Reporting?

Incorporating XBRL into your reporting process from the outset saves you time, effort, and possibly a few headaches down the line. At Greenomy, we have specifically designed our solution to align with the XBRL format, making it easy to tag data digitally and reduce the reporting burden.

Incidentally, Robin Dierckx, Head of Tech at Greenomy, is actively involved in EFRAG’s Digital Reporting Consultative Forum, which plays a critical role in shaping the ESRS XBRL taxonomy. As a result, Greenomy is not just following the developments, but is part of the conversation, ensuring that our platform remains aligned with the latest standards and best practices.

Discover Greenomy's innovative ESG solution to streamline data capturing and reporting for long-term efficiency. In combination with our Sustainability Advisory services, where our experts guide you in starting your CSRD/EU Taxonomy reporting journey, Greenomy empowers you to achieve long-term reporting independence. Book a demo for more information.