Ørsted
Preparing for ESRS compliance through CDP: Ørsted's case study
Ørsted, a global green energy major, has been at the forefront of sustainability reporting since publishing its first sustainability report in 2006. With the introduction of the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD), Ørsted has taken proactive steps to ensure compliance and leverage the new standards to enhance its sustainability strategy, as Svend Brun Hansen, Senior Climate & Environment Manager, reveals.
Preparation efforts
In 2015, Ørsted shifted the responsibility for ESG accounting and reporting to our finance department. This alignment with financial processes, deadlines, and tools has been crucial in strengthening the company’s reporting framework.
Since 2016, Ørsted’s disclosure through CDP has been decisive in establishing a strong foundation for our climate reporting. CDP’s focus on detailed and accurate climate data has driven continuous improvements in Ørsted’s greenhouse gas disclosures, for example. As the CDP framework evolved, Ørsted adapted to new questions and criteria, preparing to meet the emerging requirements of the ESRS.
“Our preparation for the ESRS started in early 2022, shortly after the European Union announced the CSRD. Recognizing the strategic importance of early action, we launched an ESG development project aimed at aligning our reporting framework with the new requirements."
This project involved:
a comprehensive gap analysis to identify areas for improvement;
active participation in industry forums and engagement with trade associations and peers to exchange insights into ESRS implementation; and
the completion of a double materiality assessment based on the draft ESRS from November 2022.
In preparation for the 2024 CSRD reporting window, Ørsted developed new sustainability statements for its 2023 annual report, incorporating the fundamental structure of the ESRS a year ahead of the mandatory deadline.
Svend Brun Hansen explains that underpinning Ørsted’s reporting is a cross-functional approach to ESRS compliance. “This is led by the ESG and Accounting Reporting team in Finance, which ensures accurate ESG data integration into our financial reporting. The Global Sustainability department aligns our sustainability efforts with the ESRS requirements, while People & Culture (HR) focuses on the social aspects like diversity, inclusion, and employee well-being. Our Regulatory Affairs team monitors legislation and provides guidance to ensure compliance and awareness of regulations.”
Challenges and benefits
“One of the main challenges Ørsted faced was the continuously evolving guidance on ESRS requirements, which made it difficult to fully align reporting processes. Accurate and comprehensive data collection across various departments and systems also posed significant challenges. Specifically, measuring biodiversity impacts in marine environments for offshore wind projects required the development of a new biodiversity measurement framework.
Despite these challenges, we have observed several benefits from early preparation for ESRS compliance. Enhanced transparency and robust reporting have strengthened dialogue with investors, regulators, and other stakeholders. The development of a more structured reporting framework has ensured greater accuracy and consistency in sustainability disclosures.”
Ørsted anticipates that higher-quality ESG data will, in the long term:
improve planning and investment strategies;
facilitate access to sustainable financing; and
build stronger long-term trust with stakeholders.
Recommendations
Ørsted highlights three key takeaways from their ESRS reporting journey.
“Fostering cross-departmental collaboration is key to ensuring a comprehensive approach to ESG data collection and reporting. Adopting a data-driven and materiality-based approach will help focus on the most relevant ESG topics.
“Early learnings through collaboration and knowledge-sharing are invaluable. We encourage companies to invest time in benchmarking and engaging with peers to share experiences and learn from one another – industry networks can provide valuable insights and best practices.
“Our key message to companies that are starting their ESG reporting or are sceptical about disclosure requirements, is to see the ESRS as a valuable tool for gaining deeper insights into their business. We believe that sustainability and transparency are essential for creating long-term value and future-proofing the business, even for renewable energy developers.”
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