CSRD and ESRS: Where BESS can fit in, and where it does not

Many companies are either already covered by the EU's rules on sustainability reporting, or on their way to becoming so. When reporting has to be put in place, a concrete question arises: What does a battery energy storage system (BESS) actually have to do with it, and how much can operational data from the system contribute?

This article is an explanation, not a compliance guide. We look at what CSRD and the related ESRS standards require, why the climate standard E1 is the relevant theme for a BESS system, and where BESS can realistically fit in as a data source and as infrastructure. Just as importantly, we look at where a battery falls short, and why the reporting itself requires the company's own adviser.

CSRD and ESRS in brief

CSRD is the abbreviation for Corporate Sustainability Reporting Directive, the EU's directive on corporate sustainability reporting. The directive expands the requirements so that large and listed companies must disclose information about the sustainability risks they face, and about their impact on people and the environment. A core purpose of the directive is to make sustainability information more comparable and reliable.

In Denmark, the rules are implemented in the Financial Statements Act (årsregnskabsloven), where sustainability reporting follows section 99 a and the European Sustainability Reporting Standards, ESRS. ESRS are EU regulations and therefore have direct effect. An explicit purpose of the rules is to direct financing toward sustainable companies and to counter greenwashing by making the information visible to investors and others. Erhvervsstyrelsen is the Danish Business Authority.

A central concept in the standards is double materiality. A company must assess both how sustainability matters affect the company financially, and how the company affects people and the environment. ESRS specifies the information a company must provide about its material impacts, risks and opportunities, and a materiality assessment is the starting point for the entire reporting. The assessment also covers the company's value chain, both upstream and downstream. That work sits with the company itself and its advisers, not with a hardware supplier.

E1 Climate change is the relevant theme

Among the topic-specific standards, it is the climate standard ESRS E1 Climate Change that is relevant for a BESS system. E1 covers climate change mitigation and climate adaptation, as well as energy-related matters to the extent they are relevant to climate.

The standard is built from several disclosure requirements. In short, they concern the company's plan to transition the business (transition plan), policies and actions on climate, targets, energy consumption and energy mix, and greenhouse gas emissions. Among the actions the standard mentions as decarbonisation levers are energy efficiency, electrification and use of renewable energy. This is where a battery system comes into play at all, but only as one possible element among many, and only for parts of the standard.

Where BESS data can fit in

One disclosure requirement in particular is where operational data from a BESS system can be relevant as input. That is E1-5 on energy consumption and energy mix. The purpose of the requirement is to provide an understanding of the company's total energy consumption in absolute value, improvement in energy efficiency, exposure to coal, oil and gas, and the share of renewable energy in the overall energy mix.

An industrial BESS system continuously produces operational data: energy throughput in kWh, charge and discharge cycles, State of Charge and availability. These are figures that describe how energy flows through the system over time. They can form a building block in the company's own picture of energy consumption and energy mix, in the same way as data from other meters and systems. We go into more detail on which data points can concretely be extracted in a separate article on ESG data and BESS.

Beyond data, a system can also fit in as infrastructure in the strategy itself. Battery storage provides flexibility that can shift consumption and production in time, and depending on grid connection and consumption profile, a system can support better utilisation of solar and wind on site. Such an investment can therefore be described as an element in the company's energy strategy and potentially in its transition plan. The point is that BESS appears here as a data source and as infrastructure, not as a finished compliance product.

Where BESS falls short

It is equally important to be clear about the boundaries. A battery system does not deliver a sustainability report, and operational data are not the same as an emissions inventory.

E1 requires, among other things, that the company accounts for its greenhouse gas emissions broken down into Scope 1, 2 and 3. That is an accounting exercise that rests on a method and on emission factors, and it covers far more than one system. Scope 3 and the value chain in particular reach into suppliers and customers, which a BESS system says nothing about. Operational data from a battery therefore cannot in themselves be converted into emission figures, and we do not currently provide a documented method for calculating CO₂ displacement.

The same applies to the double materiality assessment. Whether a climate matter is material for this particular company depends on the business, not on the hardware. A battery can supply data for a few lines in the overall picture, but it does not decide materiality, scope or the final wording in the report. The link between energy flexibility and Scope 2 in particular is a topic of its own, which we cover in an article aimed at finance and ESG.

In short, BESS can contribute bounded operational data and appear as infrastructure in an energy strategy. It cannot make a company CO₂-neutral, cover the value chain, or alone solve CSRD.

The risk of overclaiming

Because one of the purposes of the rules is precisely to counter greenwashing, there is a real risk in writing too much about a system in a sustainability note. A claim that a battery makes operations green or climate-neutral will rarely be documentable, and can therefore become a problem rather than a strength.

The sober approach is to keep the description to what can be documented: how much energy flows through the system, that it provides flexibility, and that it can support better utilisation of renewable energy under the right assumptions. Quantified climate claims, for example a specific number of tonnes of avoided CO₂, should only appear in the report if a method and a source sit behind them, and that assessment belongs with the company's own adviser. We go deeper into the typical pitfalls in an article on greenwashing and energy storage.

The rules are changing

An important caveat is that the frameworks for who must report, and how much, are under change. In 2025 the EU put forward a simplification package, and the Council gave the green light to the so-called stop-the-clock directive, which postpones application of the reporting requirements by two years for a group of companies that had not yet begun reporting. In parallel, the content of the standards themselves is being simplified, and the European Commission's timeline shows an ongoing process toward adoption of simplified ESRS standards.

The picture is also changing in Denmark. As a result of the simplification, fewer companies will be covered going forward, and only companies with more than 1,000 employees and more than around DKK 3,530 million in annual net turnover are expected to be covered from financial year 2027. A bill is expected to be presented in the autumn. That means a company's status can change, and that it is not a given whether and when one is covered.

That is precisely why external advice is usually necessary. An auditor or ESG adviser can clarify whether the company is covered, how the materiality assessment should be done, which data points are relevant, and how they should be measured and verified. That applies both to the basic clarification of scope and to the more technical questions of method and documentation. A hardware and data supplier can feed data into that work, but cannot take its place.

ZynexGroup's approach to system assessment

Our role is clearly bounded. We develop, deliver and optimise industrial BESS systems and make operational data available. We are not ESG advisers or CSRD consultants, and we do not produce sustainability reports for the customer. The contribution is hardware, commercial optimisation of the system's flexibility, and access to operational data that the customer and their own advisers can use in their own documentation.

Concretely, our platform can make operational data available: energy throughput in kWh, cycles, State of Charge, availability and overall market activity. That is operational and monitoring data, not ESG reporting. Responsibility for the materiality assessment, measurement method, wording and external verification sits with the company and its adviser. We stick to what we can document, and leave the compliance assessment to those who have that role. A broader overview of what one can realistically measure, report and communicate is in our overview of pragmatic sustainability with BESS.

Overall perspective

CSRD and ESRS are a shared framework for how companies report on sustainability, and the climate standard E1 is the place where a BESS system can become relevant. The relevance is, however, bounded: operational data can enter as input to energy consumption and energy mix, and the system can appear as infrastructure in an energy strategy. It cannot deliver an emissions inventory, a materiality assessment or the report itself.

For a company under or heading toward CSRD, the useful point is that a battery is a data source and a piece of infrastructure, not a compliance product. Combined with the fact that the rules continue to change, that means the reporting itself should happen in cooperation with the company's own adviser, while a supplier contributes operational data and hardware.

Get an assessment of your facility's potential

If you are considering a system and want to know which operational data it can feed into your own work, we are happy to have a data-based conversation. We start from your own information: grid connection, consumption profile and history. On that basis we make an initial assessment of whether there is a match, while the actual sustainability reporting continues to sit with you and your adviser. You are welcome to contact us.