The difference between ESG and CSRD: What you need to know
Sustainability and responsible business practices are becoming increasingly important for companies worldwide. Two key terms in this context are ESG (Environmental, Social, Governance) and CSRD (Corporate Sustainability Reporting Directive). But what exactly is the difference between the two? And how can companies prepare? We explain it in this blog.
What is ESG?
ESG is a voluntary framework that helps companies assess and report their impact in the areas of environment, society, and governance. It provides insights into how sustainably a company operates and enables transparent communication with stakeholders. The idea is that by reporting on these themes, companies become more aware of their impact — and act accordingly.
ESG is structured around three pillars:
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Environmental (E): COâ‚‚ emissions, energy usage, water consumption, and waste management
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Social (S): Working conditions, diversity, supply chain transparency
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Governance (G): Board structure, ethics, and regulatory compliance
A key aspect of ESG is that it remains voluntary for many companies. It’s often used to demonstrate sustainability efforts to investors and customers.
🔗 More information on ESG and its impact can be found via Wolters Kluwer.
What is CSRD?
Where ESG provides a voluntary framework, the CSRD takes things a step further. The CSRD is a European directive that obliges companies to report extensively on their sustainability activities. Its goal? To integrate sustainability into core business operations and enhance transparency.
The CSRD uses the European Sustainability Reporting Standards (ESRS) and requires detailed data in the following areas:
Environmental (E):
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COâ‚‚ emissions: Scope 1 (direct), Scope 2 (indirect from energy), and in some cases Scope 3 (supply chain)
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Energy use: By source (electricity, gas, renewable) and efficiency improvements
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Water consumption: Volumes, reuse, and discharge
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Waste management: Reuse, recycling rates, and circularity
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Biodiversity: Impact and protective measures
Social (S):
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Employee data and working conditions
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Workforce diversity and inclusion
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Community impact and supply chain transparency
Governance (G):
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Board structure and decision-making processes
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Integrity, compliance, and anti-corruption measures
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Transparency towards stakeholders
Key difference: Unlike ESG, the CSRD is legally mandatory for large companies within the EU. Starting in 2024, organizations must comply, depending on their size and turnover.
🔗 More information about the CSRD and its regulatory details can be found on the European Commission website.
Impact of CSRD on Businesses
The introduction of the CSRD has major implications for businesses. The most notable impacts include:
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Broader reporting requirements: Companies must report far more extensively than before
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Increased transparency: Sustainability data becomes as important as financial data
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Stricter enforcement and compliance: Non-compliance may result in audits or sanctions
To prepare, businesses must develop a strategy to manage their sustainability data. This means investing in data analysis, reporting processes, and IT systems.
How Can Aurum Help?
Aurum already provides a strong foundation for reporting environment-related data. With our technology, we currently monitor:
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COâ‚‚ emissions (Scope 1 and 2)
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Energy usage by source (electricity, gas, and renewable energy)
This directly supports the environmental dimension of both ESG and CSRD — making our solutions highly relevant for companies that are required to report under the new directive.
Conclusion: Building Transparency Together
ESG and CSRD are closely connected. ESG offers the framework to shape sustainability initiatives; CSRD makes this framework mandatory for EU companies. With our technology, Aurum helps organizations easily comply with these new reporting obligations.
📊 Curious how we can help your company with ESG and CSRD reporting? Schedule a demo
