In January 2025, the first major European companies published their sustainability reports under the new CSRD format. In 2026, it’s mid-sized enterprises’ turn. And for many of them, the wake-up call is brutal: the required data—scope 1-3 carbon emissions, social indicators, governance policies—isn’t sitting in a spreadsheet, but scattered across ten different systems.
The ERP, through its central position in the information system, is the natural candidate to structure, consolidate, and ensure the reliability of this data. But you still need to know which modules to activate, which complementary tools to connect, and where to start.
This guide details CSRD obligations, the ERP’s role in sustainability reporting, and proposes a five-step methodology to prepare your system before the regulatory deadline.
CSRD: Regulatory Overview and Timeline
The Corporate Sustainability Reporting Directive (CSRD) replaces the NFRD directive and significantly expands the scope of companies subject to non-financial reporting. Adopted in December 2022, it requires publication of a sustainability report compliant with ESRS (European Sustainability Reporting Standards) developed by EFRAG.
Who’s Affected and When?
The implementation timeline is progressive:
- Financial year 2024 (publication 2025): companies already subject to NFRD—large listed companies with over 500 employees.
- Financial year 2025 (publication 2026): all large companies meeting two of three criteria—over 250 employees, €50M turnover, €25M balance sheet total.
- Financial year 2026 (publication 2027): listed SMEs (with two-year deferral option).
- Financial year 2028 (publication 2029): European subsidiaries of non-EU groups exceeding €150M EU turnover.
For a typical European mid-market company—400 employees, €80M turnover—the deadline is financial year 2025, with first report published in 2026. Time is running short.
What CSRD Concretely Requires
The report must cover twelve thematic ESRS standards, grouped into three pillars:
- Environment (E1-E5): climate change, pollution, water and marine resources, biodiversity, circular economy.
- Social (S1-S4): own workforce, value chain workers, affected communities, consumers and end-users.
- Governance (G1): business conduct, anti-corruption, lobbying.
The report must be audited by an independent third party and integrated into the company’s management report—not in a separate document. The required assurance level progresses from “limited” to “reasonable” by 2028, meaning traceability and data reliability requirements comparable to financial information.
Why ERP is Central to CSRD Reporting
Many companies’ reflex is to treat CSRD reporting as an isolated CSR project, assigned to the sustainability department with a shared Excel file. This approach might work for the first report, but it doesn’t hold up against increasing reliability requirements.
ERP Already Centralizes Much of the Required Data
A modern ERP natively contains data essential for CSRD reporting:
- Financial data: purchases by supplier and category (basis for upstream scope 3 emissions calculation), investments, environmental provisions.
- Logistics data: site energy consumption, transport distances, raw material volumes.
- HR data: headcount, turnover, training, gender pay gap, workplace accidents.
- Procurement data: supplier qualification, certifications, supply chain traceability.
The problem isn’t absence of data, but fragmentation. Electricity consumption is in facilities management, training hours in the HR module, material purchases in supply chain. The ERP is the only system capable of consolidating these flows without manual re-entry.
Auditability as the Decisive Argument
With the move to reasonable assurance planned for 2028, every ESG data point must be traceable to its source, with modification history. An Excel spreadsheet doesn’t provide this audit trail. An ERP does—provided ESG data flows through it with the same rigor as accounting data.
ESG Data to Collect: Mapping by Pillar
Before configuring anything in the ERP, you must precisely identify which data to collect. Here’s a structured mapping by ESRS pillar.
Environment
| Data | Typical ERP Source | ESRS Standard |
|---|---|---|
| GHG emissions scope 1 (direct combustion) | Asset management / maintenance module | E1 |
| GHG emissions scope 2 (purchased energy) | Procurement / facilities management | E1 |
| GHG emissions scope 3 (value chain) | Supplier procurement + logistics | E1 |
| Water consumption | Facilities management / production | E3 |
| Waste generated and recycling rates | Production / quality | E5 |
| Raw material consumption | Supply chain / production | E5 |
Social
| Data | Typical ERP Source | ESRS Standard |
|---|---|---|
| Headcount by contract type, gender, age | HR module | S1 |
| Turnover and recruitment | HR module | S1 |
| Training hours by category | HR / training module | S1 |
| Gender pay gap | Payroll | S1 |
| Workplace accidents (frequency/severity rates) | HSE / HR | S1 |
| Supplier ESG assessment | Procurement / SRM | S2 |
Governance
| Data | Typical ERP Source | ESRS Standard |
|---|---|---|
| Anti-corruption policy | GRC / compliance | G1 |
| Reported incidents (ethics alerts) | GRC / workflow | G1 |
| Ethics training for employees | HR / training | G1 |
ERP Modules for Sustainability Reporting: What Tier 1 Vendors Offer
Major vendors have invested heavily in dedicated sustainability modules since CSRD adoption.
SAP Sustainability Control Tower
SAP offers the market’s most integrated solution with its Sustainability Control Tower, available in S/4HANA Cloud. The module centralizes carbon data (scopes 1, 2, and 3), social and governance indicators in a unified dashboard. Key strengths:
- SAP Sustainability Footprint Management: automated product-by-product carbon footprint calculation using real S/4HANA supply chain data.
- Green Ledger: a parallel accounting ledger that records environmental flows with the same rigor as financial flows—complete audit trail.
- Native ESRS integration: pre-configured reporting templates aligned with all twelve standards.
Limitation: cost. SAP Sustainability Control Tower is a significant additional license, and deployment assumes S/4HANA already in place. For a mid-market company running SAP ECC, migration to S/4HANA remains a prerequisite.
IFS Cloud — Integrated ESG Module
IFS has integrated ESG capabilities directly into IFS Cloud, without a separate module. The approach differs from SAP: rather than a centralized dashboard, IFS injects ESG indicators into existing business processes—asset management, maintenance, supply chain.
Key strengths for industrial companies:
- Carbon emissions tracking related to maintenance and asset management (very detailed scope 1 and 2).
- Raw material traceability and supplier certifications integrated into procurement module.
- Reporting compliant with European taxonomies.
IFS is particularly relevant for industrial and technical services companies, sectors where scope 1 emissions constitute a significant portion of the carbon footprint.
Unit4 — ESG Reporting for Service Organizations
Unit4 targets service companies, public sector, and non-profits. Its ESG module focuses on social indicators—logical for organizations whose direct environmental footprint is limited, but whose S1 (own workforce) challenges are central.
Key features: HR dashboards enriched with ESRS indicators, diversity and inclusion tracking, automated gender pay gap calculation. For carbon emissions, Unit4 relies on integrations with specialized tools rather than a native module.
Mid-Market ERP: How Microsoft Dynamics and Oracle NetSuite Adapt
Mid-market companies don’t all run on SAP or IFS. Two mid-market players deserve particular attention for their pragmatic CSRD approach.
Microsoft Dynamics 365 — Sustainability through Power Platform
Microsoft has chosen a platform approach. Dynamics 365 doesn’t have a dedicated ESG module but leverages the Power Platform ecosystem to build customized sustainability solutions:
- Power BI sustainability templates for ESRS-compliant reporting.
- Power Apps for mobile ESG data collection.
- Azure IoT integration for real-time energy and waste monitoring.
This approach is less integrated than SAP but more flexible for companies wanting to customize their ESG data collection to specific industry needs.
Oracle NetSuite — Cloud-Native ESG
Oracle NetSuite has integrated ESG capabilities into its cloud platform with particular focus on supply chain transparency—crucial for scope 3 calculation:
- Supplier ESG scorecards integrated into procurement workflows.
- Carbon footprint tracking by product and business unit.
- Native ESRS reporting with audit trail compliance.
NetSuite’s advantage: being cloud-native from the start, ESG modules benefit from the same scalability and integration as financial modules.
Integration with Specialized ESG Tools
Regardless of ERP, most companies will need a specialized tool for carbon calculation and CSRD report generation. Here are key players and their ERP integration levels.
Sustainability Cloud Platforms
Microsoft Sustainability Manager integrates natively with Dynamics 365 and offers connectors for SAP and Oracle. Its strength lies in data unification: it can aggregate ESG data from multiple sources (ERP, IoT sensors, external databases) and apply consistent calculation methodologies.
Workiva specializes in ESG reporting and audit compliance. Used by many large corporations for TCFD and now CSRD reporting, it offers robust ERP integration via APIs and supports the entire audit trail required by regulations.
Carbon Accounting Specialists
Persefoni targets large enterprises and mid-market companies with a comprehensive carbon management platform: carbon footprint, decarbonization plan, CSRD reporting. Its advantage: granularity. Persefoni enables scope 3 calculation by individual supplier by integrating emission data provided by each partner.
Plan A is the reference platform in Germany and Benelux, with strong presence in manufacturing. It offers complete CSRD reporting, including ESRS standards and European taxonomy. Its calculation engine is TÜV certified.
ERP Integration: Native connectors for SAP and Microsoft Dynamics. Open API for other systems. Plan A stands out for its ability to integrate physical data (kWh, tons, liters) directly from ERP production modules, significantly improving scope 1 and 2 accuracy.
Supplier Assessment
EcoVadis isn’t strictly a CSRD reporting tool but its supplier ESG assessment platform has become quasi-essential for S2 pillar (value chain workers) and upstream scope 3. Integration with SAP Ariba, Coupa, and Oracle procurement modules is native. For other ERPs, EcoVadis scores can be imported via API into supplier master data.
Methodology: 5 Steps to Prepare Your ERP for CSRD Reporting
Step 1 — Conduct Double Materiality Assessment
Before touching the ERP, identify which ESRS standards are material for your company. CSRD doesn’t require reporting on all twelve standards—only those material from impact perspective (your impact on environment and society) and financial perspective (impact of ESG issues on your company).
A manufacturing mid-market company will likely report on E1 (climate), E5 (circular economy), S1 (workforce), and G1 (governance). A service company will focus on S1 and G1. This analysis directly determines which data to collect in the ERP.
Step 2 — Map Existing Data in ERP
For each material ESRS standard, list required data points and identify which are already available in ERP, which need enrichment, and which must be collected elsewhere.
Specifically, create a four-column table: ESRS indicator, current source, quality (reliable / approximate / absent), required action. This diagnostic reveals the gap between what the ERP already contains and what CSRD requires.
Step 3 — Configure ESG Data Flows in ERP
Three types of actions are typically needed:
- Enrich existing data: add custom fields (supplier emission factor, environmental certification, waste category) to existing master data—suppliers, items, sites.
- Automate collection: configure interfaces with energy meters, waste management systems, HR tools for social data.
- Structure traceability: enable audit logs on critical ESG fields to guarantee the audit trail required by independent auditors.
Step 4 — Connect ESG Reporting Tool
Choose the ESG tool suited to your size and ERP (see previous section). Configure automated data flows between ERP and ESG tool:
- Daily or weekly export of procurement, HR, and production data.
- Import of emission factors and supplier scores.
- Synchronization of master data (chart of accounts, supplier nomenclature) to ensure consistency.
Plan for at least three months of reconciliation: compare data calculated by ESG tool with manual estimates and identify discrepancies.
Step 5 — Test Report and Prepare Audit
Generate a “dry run” CSRD report on current financial year, even if incomplete. Submit it to cross-functional internal review (finance, CSR, operations) and identify gaps. Engage a pre-audit with your independent auditor to validate methodology and traceability before official publication.
Companies that succeeded in their first CSRD publication in 2025 had all performed at least one complete dry run a year before deadline.
Case Study: Mid-Market Industrial Company Facing CSRD
Let’s take the case of a European mid-market industrial company—600 employees, €120M turnover, four production sites in Europe. The company runs on SAP ECC with S/4HANA migration planned for 2027.
Initial Assessment (T-18 months)
Double materiality analysis identifies five material standards: E1 (climate), E3 (water), E5 (circular economy), S1 (workforce), and G1 (governance). ERP data diagnostic reveals 60% of E1 and S1 indicators already available in SAP ECC, but scattered across different transactions without consolidation.
Missing data: upstream scope 3 emissions (no emission factors associated with suppliers), water consumption by site (manual tracking on spreadsheets), waste recycling rates (data in waste contractor’s system, not in SAP).
Implementation (T-12 to T-6 months)
The company chooses not to wait for S/4HANA migration. It deploys three actions on SAP ECC:
- Supplier master data enrichment: addition of custom fields for emission factor (tCO₂e/k€) and EcoVadis score, populated by quarterly import.
- Energy meter interface: connection of utility meters and gas readings to SAP production orders, enabling consumption breakdown by production line.
- Sustainability platform connection: automated extraction of purchase ledger entries to specialized carbon platform for scope 3 calculation using spend-based method.
For social data, SAP HCM module already provides headcount, turnover, and workplace accidents. Training hours require enrichment of infotypes.
Results
First dry run at T-6 months covers 85% of required indicators. Remaining 15% (mainly downstream scope 3 and biodiversity indicators) are subject to documented estimates, accepted by auditor in pre-audit phase.
Total project cost: €180k over 18 months, including €80k for ESG tool and connectors, €60k methodological consulting, and €40k internal SAP configuration. A significant investment, but nowhere near the penalties planned for non-compliance—and an investment that will be amortized during S/4HANA migration, as ESG data flows will be directly picked up in Sustainability Control Tower.
Key Takeaways
CSRD isn’t just another reporting exercise to assign to the CSR department. It’s a transformation of enterprise data management that touches finance, procurement, production, and HR—exactly an ERP’s scope.
Companies that approach CSRD as an ERP project—with the same methodological rigor as a migration or module deployment—are those that succeed in compliance within deadline and budget.
For mid-market companies subject to the 2026 deadline, action time is now. Start with double materiality analysis, map your ERP data, and engage dialogue with your auditor. The first report won’t be perfect—but it must exist.
For further reading: consult our complete ERP implementation guide for 2026 and our analysis of ERP project ROI to size your investment.
