Real Estate investors are increasingly mandated to adhere to stringent reporting standards under the Corporate Sustainability Reporting Directive (CSRD). This directive not only enhances transparency in sustainability reporting but also demands a high level of accuracy and detail, making it crucial for organisations to commence their preparation early. The aim is to ensure your organisation is fully prepared and the risk of misreporting is minimised.

Here’s a step-by-step guide to help real estate investors navigate the complexities of CSRD compliance:

1. Double Materiality Assessment (DMA)

The first step in aligning with CSRD requirements is conducting a Double Materiality Assessment (DMA). This involves identifying and documenting the sustainability topics that are most significant to your business and its stakeholders. Given that the CSRD is a new requirement for many real estate companies, it is advisable to prioritise a shortlist of the most critical topics. This approach will help maintain focus on transparent reporting and prevent overwhelming the organisation.

For real estate companies, some of the likely topics might include issues such as:

Environmental

• Climate change
• Circular Economy
• Sustainable buildings

Social

• Own workforce
• Consumers and end users

Governance

• Business conduct

It’s important that these material topics are thoroughly documented following the European Sustainability Reporting Standards (ESRS) to ensure compliance and relevance.

2. Check Your CSRD Data Preparedness through a Gap Analysis

To effectively prepare for CSRD reporting, it is essential to understand the data you already gather, for other frameworks like GRESB, UN PRI, SASB, INREV or EPRA guidelines or the Global Reporting Initiative (GRI), for example. Conducting a gap analysis will highlight the data already available and identify what additional information needs to be collected. This step also involves aligning all stakeholders and ensuring they are aware of their roles in data collection and reporting processes.

This resource from EFRAG provides a list of all the ESRS data points.

3. Data Collection & Improvement

Once the gap analysis is complete, the next phase is to create a plan for collecting the missing data. It’s crucial to establish clear responsibilities for data management within your organisation to ensure that environmental, social, and governance (ESG) data is handled accurately and efficiently. Starting this data collection promptly can prevent bottlenecks and enhance the quality of the data reported.

Read more in our blog 'What is "data quality" and why is it important?'

4. Generate Preliminary CSRD Report

With all relevant data collected, your team can generate a preliminary CSRD report. This report should be integrated into the organisation’s annual report and prepared using a data platform like Scaler to ensure consistency and compliance with the CSRD’s formatting and content requirements. This preliminary report will serve as a basis for final adjustments before submission.

5. Manage Data Assurance

The final step involves coordinating the earlier steps with your selected auditor to manage data assurance effectively. This coordination is crucial as it can streamline the auditing process by reducing queries regarding data validity and organization. Arranging evidence and data systematically throughout the data collection phases will facilitate smoother audits and enhance the credibility of your CSRD reports.

6. Utilize the reported data to improve ESG performance

Leveraging the data from your CSRD-compliant reports can significantly enhance your company's ESG (Environmental, Social, Governance) performance. By thoroughly analyzing this reported data, you can identify key areas where improvements are needed and where strategic initiatives can be implemented. For instance, using this data to create net zero roadmaps for all your assets is a proactive step towards sustainability. These roadmaps not only outline clear paths to reducing carbon emissions but also demonstrate to shareholders and stakeholders your commitment to environmental stewardship. Additionally, continuously refining the quality of the data you report enhances transparency and builds trust by showing tangible progress in your ESG efforts. This ongoing improvement can attract more investors who are keen on sustainability, ultimately benefiting your company's reputation and financial performance.

Conclusion

For real estate investors, adapting to the CSRD’s requirements is not merely about compliance but also about seizing the opportunity to lead in sustainability within the industry. Starting these steps timely ensures your organisation is not only prepared but also positioned to benefit from enhanced investor confidence and stakeholder trust. By strategically approaching CSRD compliance, real estate firms can demonstrate their commitment to sustainable development and gain a competitive edge in the market.

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For which companies is CSRD mandatory?

The Corporate Sustainability Reporting Directive (CSRD) is required for large companies that are public interest entities with more than 500 employees. This includes listed companies, banks, and insurance companies. Additionally, the directive will expand to include all large companies (whether listed or not) that meet certain criteria regarding employee numbers, turnover, or balance sheet totals. Listed companies are expected to disclose their compliance with the CSRD starting in 2025, while large companies that meet the specified criteria will begin their disclosures in 2026. From 2026, it will also extend to include listed small and medium-sized enterprises (SMEs), though SMEs can opt out until 2028.

Please find more information in our blog 'Is your organization ready for CSRD?'