XBRL, or eXtensible Business Reporting Language, is recognised as the global standard for digital reporting.
According to Greenomy, this system facilitates the computer-readable format of business information, streamlining the discovery, access, and analysis of data. XBRL works by intelligently tagging essential components in reports, such as figures, narratives, and tables, ensuring that no crucial information is lost during data handling.
Building upon XBRL, Inline XBRL (iXBRL) offers an interactive layer to reporting by allowing users to directly interact with tagged sections of a report. This interactive feature enables viewers to understand the connectivity of data to specific disclosure requirements seamlessly, preserving the visual layout of the original document. iXBRL has been particularly transformative in making reports not just readable but also navigable.
Historically, XBRL has been adept at handling financial reporting, where the tagging of key figures is done post-report preparation. However, the Corporate Sustainability Reporting Directive (CSRD) has expanded the scope significantly, necessitating the tagging of an extensive range of data points including every narrative, figure, and cell within tables.
This broad scope is required not just for ESRS but also aligns with the EU Taxonomy, introducing complexities in managing voluminous ESG data.
The European Financial Reporting Advisory Group (EFRAG) handed over the initial XBRL taxonomy for ESRS and the Article 8 EU Taxonomy to the European Securities and Markets Authority (ESMA) in August 2024. While mandatory iXBRL tagging will begin for reports of 2025, the exact requirements are still under development, to be finalized by ESMA through a Regulatory Technical Standard (RTS). Early preparation for these changes is advised to manage the anticipated complexity effectively.
XBRL offers significant benefits including improved data quality through reduced manual entry errors, enhanced standardisation across reporting, and better comparability across industries and regions. These factors collectively enhance transparency and support regulatory compliance.
Nevertheless, the adoption of XBRL is not without challenges. Organizations may face difficulties due to the technical nature of XBRL implementation, substantial initial costs, ongoing taxonomy updates, and the potential for data overload which may overwhelm traditional processing capabilities.
Greenomy advocates for integrating XBRL from the onset of the reporting process rather than as an afterthought. Their approach includes preliminary scoping and gap analysis based on a Double Materiality Assessment, followed by AI-enhanced data collection, and culminating in the generation of iXBRL reports. This proactive strategy simplifies compliance and ensures the accuracy and efficiency of reports.
Greenomy’s commitment to simplifying XBRL compliance is evident in their design and operational philosophy, which aligns with the latest standards and practices in digital reporting. Robin Dierckx, Head of Tech at Greenomy, plays an active role in EFRAG’s Digital Reporting Consultative Forum, ensuring that Greenomy’s solutions are always at the forefront of XBRL technology and compliance standards.
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