CSRD & ESRS – Implications for the mechanical engineering sector

The essentials at a glance

The CSRD directive makes sustainability reporting mandatory for many companies. Businesses are required to disclose detailed ESG data—comparable to financial reporting.

What does this mean for mechanical engineering?
The mechanical and plant engineering sector is particularly affected by the CSRD because the industry:

• involves energy-intensive processes
• is integrated into complex supply chains
• faces increasing sustainability demands from customers and investors
• includes many mid-sized companies that fall under the CSRD reporting obligation

The framework for reporting is defined by the European Sustainability Reporting Standards (ESRS). These standards specify which data companies must collect and how it must be published—ensuring transparency and comparability of companies’ non-financial performance.‍

Which ESRS standards are relevant for the mechanical engineering sector?

The VDMA materiality benchmark highlights which ESRS standards and sustainability topics are particularly important for companies in the mechanical and plant engineering industry. It provides industry-specific guidance and helps companies focus on the most material topics:

• Climate change (ESRS E1): CO₂ reduction, decarbonization, climate risks
• Resource use and circular economy (ESRS E5): Material efficiency, recycling, sustainable production
• Own workforce (ESRS S1): Working conditions, health, safety
• Governance (ESRS G1): Supply chains, anti-corruption, EU taxonomy

A core element of the CSRD is the double materiality assessment. It ensures that companies assess not only which sustainability aspects are financially relevant to their business, but also how their business activities impact the environment and society.

Mechanical engineering companies should begin the materiality assessment now to identify their relevant ESRS topics early on and establish the necessary data collection processes.

The roadmap: How to successfully implement the CSRD

‍With a clear strategy and a structured process, the complex implementation of the CSRD can be managed efficiently. The following step-by-step plan is based on best practices and outlines the key milestones companies need to achieve before their first reporting deadline:

A streamlined CSRD project plan should ideally start 12 to 18 months before the first reporting year—illustrated here using the 2025 financial year as an example.

Synergies with the EU Taxonomy & Carbon Accounting

The CSRD complements existing sustainability regulations such as the EU Taxonomy and carbon accounting by providing a structured framework and placing them in a broader context. Close integration between these elements simplifies reporting and increases efficiency.

EU Taxonomy:
The EU Taxonomy defines which economic activities are considered sustainable—a key factor for investment decisions.

• The CSRD requires companies to disclose their taxonomy alignment
• Revenue, CapEx, and OpEx must be assessed in a sustainability context
• Sustainable companies benefit from improved financing conditions

Carbon Accounting:
The CSRD mandates detailed tracking of carbon emissions according to a standardized approach, specifically:

• Corporate Carbon Footprint (CCF): The company’s total carbon footprint, including the entire value chain
• Product Carbon Footprint (PCF): The carbon footprint of a specific product

As many mechanical engineering companies already collect CO₂ data, direct integration into CSRD reporting is a natural next step:

• Incorporate Scope 1–3 emissions directly into ESRS E1
• Systematically capture Scope 3 emissions across the value chain
• Avoid duplicate data collection and streamline processes for greater efficiency

CSRD in Germany – What to consider following the publication of the Omnibus proposal

The CSRD was adopted at the EU level in January 2023. Although national implementation was due by June 2024, it has not yet been completed in Germany.

On February 26, 2025, the European Commission published its proposal to simplify sustainability reporting obligations. This proposal is currently under discussion in the European Parliament and the Council of the EU and is expected to be adopted in summer 2025.

Even though the legal transposition of the CSRD in Germany is still pending, it is highly beneficial for companies to begin preparations now:

• Early planning prevents bottlenecks:
  Delaying the process risks time pressure and reporting errors. Companies already subject to reporting requirements often recommend creating a trial report ahead of the first mandatory reporting year to address potential delays in data collection.
• CSRD reporting will be mandatory for large companies by 2027:
  According to the Omnibus proposal, private EU companies with more than 1,000 employees and either over €50M in revenue or over €25M in total assets must submit their first CSRD report for the 2027 financial year—meaning data collection must be completed by early 2028. For capital market-oriented EU companies of this size, the CSRD requirements already apply.
• Auditors expect early involvement:
  Since CSRD reports must be audited, experts recommend starting with the double materiality assessment and data structuring now. Coordinating early with auditors helps establish audit-proof processes.
• Growing demand for ESG data from suppliers and customers:
  Regardless of legal obligations, customers, investors, and banks are increasingly requesting sustainability-related information. Companies that establish transparency early can gain a competitive advantage.

How Tanso supports the mechanical engineering sector in implementing the CSRD

Implementing CSRD reporting is a complex task—especially for mechanical engineering companies with intricate supply chains, global locations, and high requirements for carbon accounting. This is precisely where Tanso comes in.

With Tanso, companies benefit from a transparent and auditable data foundation for sustainability reporting. An integrated data model enables synergies across CCF, PCF, CSRD, and other regulatory frameworks, making data usage more efficient. Automated data collection optimizes recurring processes and significantly reduces manual effort—leading to considerable time and cost savings.

In addition, Tanso’s cross-industry mechanical engineering network provides access to in-depth expert knowledge and facilitates exchange with other companies.

Act now – Set the course for the future

The CSRD reporting obligation continues to affect numerous companies in the mechanical engineering sector. The entire process—from the double materiality assessment to data collection and final reporting—can take more than a year. Starting early is therefore essential to align regulatory requirements, customer expectations, and internal processes as efficiently as possible.

Checklist for mechanical engineering companies

✔️ Have we conducted a double materiality assessment?
✔️ Have all relevant data sources and processes been identified?
✔️ Do we have a tool for automated data collection?
✔️ Are our carbon footprints complete and audit-proof?
✔️ Can we fully document our supply chain and ESG data?