ESRS: European Sustainability Reporting Standards

Understanding ESRS disclosure requirements for CSRD compliance and comprehensive ESG reporting.

Section: StandardsTopics: ESRS,sustainability reporting,disclosure,CSRD,ESG standards
Illustration for ESRS: European Sustainability Reporting Standards

Overview

European Sustainability Reporting Standards (ESRS) are detailed disclosure standards developed by EFRAG for the CSRD. They provide comprehensive requirements for companies to report on environmental, social, and governance topics.

Structure

Standards Framework

CategoryStandardsTopics
Cross-cuttingESRS 1-2General principles, climate change
EnvironmentalESRS E1-E5Climate, pollution, water, biodiversity, circular economy
SocialESRS S1-S4Workforce, workers in value chain, communities, consumers
GovernanceESRS G1Business conduct

ESRS 1: General Requirements

  • Disclosure principles
  • Structure of sustainability statement
  • Preparation principles

ESRS 2: General Disclosures

  • Governance
  • Strategy
  • Impacts, risks, opportunities
  • Metrics and targets

Key Disclosures

ESRS E1: Climate Change

  • GHG emissions (Scope 1, 2, 3)
  • Climate transition plan
  • Energy consumption
  • Internal carbon price

ESRS E2: Pollution

  • Pollution-related emissions
  • Pollution incidents
  • Substances of concern

ESRS E3: Water

  • Water consumption
  • Water discharge
  • Water stress

ESRS E4: Biodiversity

  • Impacts on ecosystems
  • Policies on biodiversity
  • Dependencies on ecosystem services

ESRS E5: Resource Use

  • Resource inflows
  • Resource outflows
  • Waste

ESRS S1: Own Workforce

  • Working conditions
  • Equal treatment
  • Training
  • Work-life balance

ESRS S2: Workers in Value Chain

  • Working conditions
  • Social dialogue
  • Supply chain due diligence

ESRS S3: Communities

  • Local communities
  • Indigenous peoples
  • Social impact assessment

ESRS S4: Consumers

  • Consumer welfare
  • Consumer privacy
  • Product safety

ESRS G1: Business Conduct

  • Corporate culture
  • Anti-corruption
  • Political engagement

Reporting Requirements

Location

  • Part of management report
  • Digital tagging (ESEF)

Assurance

  • Limited assurance (initial)
  • Reasonable assurance (future)

Timeline

  • Same as financial statements
  • Published with annual report

Practical Guidance

Steps to Prepare

  1. Gap analysis: Current vs ESRS requirements
  2. Data systems: Collect required metrics
  3. Materiality: Double materiality assessment
  4. Governance: Assign responsibilities
  5. Assurance: Engage auditors

Data Requirements

  • Disaggregated data by country
  • Historical comparison (1 year, then 3)
  • Forward-looking information

Key Takeaways

  • ESRS provides comprehensive disclosure standards
  • Apply to all large companies under CSRD
  • Double materiality required
  • Significant data collection needed
  • Assurance requirements increasing
  • First reports due 2024/2025

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