CSRD and ESRS S1 for HR: 15 social indicators you must report in 2026

The year 2026 marks a turning point where human capital management requires a radical shift from soft skills to hard analytics. Delivering flawless data for the annual non-financial report to the CFO's desk is no longer an option; it is a strict legal requirement. By implementing CSRD and ESRS S1 standards for HR, organizations must permanently move away from fragmented spreadsheets. Relying on outdated, incomplete HR systems for reporting processes now poses a direct operational risk that leads straight to a negative opinion from an external auditor.

Implementing CSRD and ESRS S1 for HR means transitioning from soft employer branding to hard human capital accounting. You must prove—with numbers—how your company treats its people. In this guide, I break down the 15 mandatory social indicators you must face this year. You will see concrete examples, useful tools, and learn which mistakes to avoid at all costs.

Understanding ESRS S1: What does the CSRD directive actually mean for HR?

ESRS S1 (Own Workforce) is a European sustainability reporting standard that requires companies to disclose detailed data regarding working conditions, equality, safety, and the human rights of their employees.

A few years ago, corporate social reports consisted mainly of photos of smiling employees planting trees. Today, to understand what ESG reportingactually is, we must view it like a balance sheet, but for human capital. Auditors aren't looking for intentions; they are looking for evidence.

Most companies commit a cardinal sin at the definition stage. ESRS S1 does not only apply to people on employment contracts. It also includes self-employed individuals (B2B), temporary workers, and contractors if your company controls their daily work. This is a massive shift in perspective. HR must work closely with procurement and legal departments to even begin mapping the population that needs to be covered by reporting.

Why employee data has become currency (2026 data)

Hard data from HR systems is currently the most important asset in the process of assessing a company's operational and reputational risk by investors, banks, and candidates themselves.

If you are still wondering what ESG is and why it is so important, let's look at the market. The myth of "doing ESG for the image" is dead. We are now playing for access to capital. A study conducted by Deloitte in the first half of 2026 shows that 72% of large enterprises in Central Europe noted significant gaps in the HR data necessary for reporting.

Meanwhile, an EY report (Q4 2025) indicates that banks are refusing preferential financing (so-called green loans) to companies that have a Gender Pay Gap exceeding the industry average by more than 5%. Job candidates are not idle either. As many as 81% of Gen Z and Millennial talent check an employer's equality policy before accepting an offer.

It is not enough to have data—you must be able to correlate it. High turnover combined with a lack of raises during inflationary times is a clear red flag for investors, signaling management issues.

15 Social Indicators (ESRS S1) that HR is responsible for

The ESRS S1 standard requires organizations to quantify 15 key areas of employment policy, ranging from employment structure and pay equity to occupational health and safety.

Let’s go through the specific metrics. I have divided them into four logical blocks to help you assemble the right project teams within your company.

1. Demographics, Structure, and Working Hours (The Foundations)

Before you start boasting about well-being strategies, an auditor will ask you to show the baseline. This is an area where HR and payroll systems are usually strongest, but the devil is in the details and the aforementioned non-standard employees.

• Employment structure (1): Breakdown by gender, age, geographic region, and contract type (full-time, B2B, service contract, internship).
• Employee turnover (2): Both voluntary and involuntary turnover should be calculated. A high voluntary turnover rate often points to flaws in organizational culture.
• Working hours (3): Overtime. If your IT team is constantly working overtime, an auditor will flag this as a burnout risk.
• Work flexibility (4): Availability of remote work, hybrid models, or flexible hours.
• External workers (5): All contractors and temporary agency workers whose daily work you manage.

Case Study: A well-known retail chain had to adjust its report by 30% when it turned out they hadn't included the working hours of temporary agency staff who managed their warehouses during peak season. The time-tracking system simply didn't account for them.

What to do tomorrow: Conduct an audit of your entry/exit systems with IT. Ensure that every person who has been on company premises for more than a week is tracked in some way.

Tools: Workday, SAP SuccessFactors, local Teta/Enova systems integrated with time and attendance readers.

2. Compensation and Social Equity (Time bombs)

This is the section that strikes the most fear into boards of directors. It uncovers what has been a taboo subject for years. ESG in HR – how to build transparency and good management practices is a text that does a great job of laying the groundwork for these changes, but here we are talking about hard math.

• Gender Pay Gap (6): The pay gap between women and men. Note: ESRS requires reporting the raw (unadjusted) gap, which often yields results in the 15-20% range to the disadvantage of women due to their lower representation in senior positions.
• Living Wage (7): Is the compensation of the lowest-paid employee (including benefits) enough to live a decent life in a given region? This is more than just the minimum wage.
• Representation gap in leadership (8): The percentage share of the underrepresented gender in top management.
• Social dialogue (9): The percentage of employees covered by collective bargaining agreements or represented by formal bodies (works councils, trade unions).

Case Study: A manufacturing company in the automotive industry had a major problem demonstrating a "Living Wage" for assembly line workers. The solution was to include the value of non-financial perks in the base compensation. Using a platform like Nais, where employees receive real, quantifiable funds for benefits tailored to their needs (shopping vouchers, medical care), allowed the company to increase the total value of the compensation package and meet the directive's requirements.

What to do tomorrow: Request an anonymized compensation report from the Payroll department, broken down by gender and position. Calculate the pay gap today so that the board has time for budget adjustments before the end of the year.

3. Health, Safety, and Well-being (Hidden costs)

This area verifies whether the company is exploiting its team in a way that threatens their physical and mental health.

• Workplace accidents (10): The frequency and severity rate of accidents. This also applies to external workers on your premises!
• Occupational diseases (11): Cases reported and documented in a given year.
• Health and safety training and prevention (12): Expenditure on safety improvements beyond statutory minimums.
• Work-life balance (WLB) (13): Policies guaranteeing the right to disconnect and supporting parental leave (especially for fathers).

Case Study: A financial corporation in Warsaw implemented a "Right to Disconnect" policy, blocking emails after 6:00 PM. However, an auditor checked cloud system logs and proved that employees were still working using private messaging apps. The policy existed only on paper.

What to do tomorrow: Review the accident register with your health and safety team (including near-misses). Implement a mechanism for anonymous reporting of work overload.

4. Development, Inclusion, and Human Rights (Organizational Culture)

The final section covers how you build an environment open to diversity and how you invest in the skills of the future.

• Training hours (14): Average number of training hours per employee, broken down by gender and job level.
• Employment of people with disabilities (15): Percentage of the workforce. This requirement necessitates the adaptation of workspaces and recruitment processes.
• (Additionally - incident context): Reporting of confirmed cases of discrimination or labor rights violations, along with corrective actions taken.

Case Study: I too often see clients where the training budget is "consumed" by a narrow group of managers (averaging 60 hours per year), while operational staff receive nothing (0 hours per year). The average looks good (e.g., 15 hours), but ESRS S1 requires showing the breakdown. That is when the massive inequality becomes visible, which HR then has to explain in detail in the report.

What to do tomorrow: Check your LMS (Learning Management System). Does every development initiative (including onboarding or on-the-job training) leave a digital footprint?

Tools: LMS platforms (Cornerstone, Moodle), gamification and employee benefits platforms (Nais).

The biggest HR mistakes when collecting data for ESG reporting

The main reason auditors reject reports is methodological errors, data inconsistency across different systems, and a lack of evidence that policies are actually being implemented rather than just written down in regulations.

Working on an ESG report exposes the operational weaknesses of HR departments. What do you need to watch out for?

• Data silos: The Excel file in the HR department says something different than the one in the recruitment department. An ESRS report must align with the financial report down to the last full-time equivalent (FTE). If your CFO reported personnel costs at level X and your FTE count doesn't justify it, you have a problem.
• HR greenwashing: Boasting about "fruit Thursdays" while the company has an 18% gender pay gap and zero social dialogue. An auditor will dismiss such an approach. Look for hard evidence.
• Focusing only on the past: ESRS S1 is not just a report on what has already happened. The standard requires you to describe future targets. You must show a plan to reduce the pay gap or turnover by a specific percentage over the coming years.
• Lack of digitalization for benefits and support: Spending employee budgets without the ability to measure satisfaction and participation is a mistake. Using systems like Nais allows you to generate a single, clear report on how funds have supported, for example, "work-life balance" (budgets for relaxation, sports) and incorporate this into the reporting matrix.

FAQ: Frequently Asked Questions

Do companies with fewer than 250 employees have to report under ESRS S1 in 2026?

Not directly. In 2026, the obligation applies to large companies (meeting 2 out of 3 criteria: >250 employees, >50 million EUR turnover, >25 million EUR balance sheet total). However, small companies in the supply chains of large corporations will be asked to provide simplified data.

How do you calculate the gender pay gap for reporting purposes?

You must compare the average gross hourly wage (including bonuses and allowances) of all men and all women in the organization. The result is expressed as a percentage of men's earnings.

Do initial OHS training sessions count toward training hours?

According to best auditing practices, no. Mandatory legal training (such as health and safety or fire safety) does not demonstrate professional development. You should report developmental training (upskilling, reskilling).

What is a "Living Wage" and where can I find its value for Poland?

It is a wage sufficient to cover basic living needs (housing, food, transport, health). Reference values are published by organizations such as the WageIndicator Foundation or the Fair Wage Network.

Do employee complaints from the "whistleblower" system have to be included in the report?

Yes. ESRS S1 requires reporting the number of confirmed incidents regarding discrimination or labor rights violations, as well as the status of any remedial actions.

Your action plan for the coming days

• Integrate your data: Estimate how many employees (including external and B2B contractors) will be covered by the report. Consolidate data from HRIS, payroll, and time-tracking systems into a single source of truth.
• Calculate the pay gap immediately: This is the metric that poses the greatest reputational risk. Run a cost simulation for adjusting the pay scale and present it to the board.
• Document your policies: Review your procedures. Ensure that work-life balance, diversity, and financial support initiatives are formalized.
• Automate what you can: Instead of distributing vouchers manually, move cafeteria and reward budgets to digital systems (like Nais) so you can report on these expenses with a single click.

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