ESRS

European Sustainability Reporting Standards

The ESRS form the mandatory framework for the sustainability reporting of companies that fall within the scope of the Corporate Sustainability Reporting Directive (CSRD). They specify the requirements of the CSRD and define the content, structure and logic of the sustainability statement. The CSRD provides the legal framework, while the ESRS set out the technical standards within that framework. In other words, the ESRS do not answer the question of who must report, but above all how reporting must be done.

The ESRS at a glance

The ESRS were created to harmonise sustainability reporting across Europe and make it more comparable. They define which sustainability information companies must disclose according to the principle of double materiality in order to make the impacts, risks and opportunities of their material sustainability topics transparent and to present their efforts in the areas of environmental, social and governance matters in a way that is understandable, comparable and auditable. Reporting is provided in a dedicated sustainability section within the management report and is designed to meet the requirements of European regulation.

Target group and scope of application of the ESRS

The ESRS are intended for companies that are required to provide sustainability reporting under the CSRD. At their core, this applies to companies and parent companies of large groups with more than 1,000 employees and net turnover of more than EUR 450 million. You can find out which companies are currently actually subject to reporting requirements and from when the relevant requirements apply in our insight article on the CSRD.

Their relevance for your company

The ESRS are more than a formal reporting standard. They create a common language for sustainability information and enable investors, banks, customers, authorities and other stakeholders to better assess a company’s sustainability performance. At the same time, they require companies to integrate sustainability systematically into governance, strategy, risk and opportunity management, as well as metrics and target-setting systems.

For companies, this means that reporting under the ESRS is not just a disclosure requirement, but also a management tool. Companies that identify their material topics properly, build reliable data foundations and clearly assign responsibilities create the basis for better decision-making, greater transparency and credible communication with the capital market and other stakeholder groups. In addition, sustainability reporting is embedded in the management report and is subject to external audit or assurance.

Structure and content of the ESRS

The ESRS comprise twelve standards. Two of these are general, cross-cutting standards, while a further ten are topic-specific standards covering environmental, social and governance matters. ESRS 1 describes the structure of the framework, the underlying concepts and the general requirements for the preparation and presentation of sustainability-related information. ESRS 2 sets out the general disclosures, covering areas such as governance, strategy, management of impacts, risks and opportunities, as well as metrics and targets.

The topic-specific standards build on these general requirements. However, full reporting is not required under every individual topic standard, but rather on the basis of the double materiality assessment. If a sustainability topic is classified as material, the relevant disclosure requirements of the respective thematic ESRS must be fulfilled. Where the existing standards are not sufficient for a material company-specific topic, additional company-specific disclosures are required.

Overview of the standards

Cross-Cutting Standards

ESRS 1: General requirements
ESRS 2: General disclosures

Environmental Standards

ESRS E1: Climate change
ESRS E2: Pollution
ESRS E3: Water and marine resources
ESRS E4: Biodiversity and ecosystems
ESRS E5: Resource use and circular economy

Social Standards

ESRS S1: Own workforce
ESRS S2: Workers in the value chain
ESRS S3: Affected communities
ESRS S4: Consumers and end-users

Governance Standard

ESRS G1: Business conduct

At the core of the ESRS is the principle of double materiality. Companies must assess which sustainability topics are material from the perspective of impact materiality — that is, in terms of their impacts on the environment and people — as well as from the perspective of financial materiality — that is, in terms of risks and opportunities for the company’s economic development.

One important point is this: ESRS 2 must always be disclosed, regardless of the outcome of the materiality assessment. The thematic standards then apply where a topic has been identified as material. This avoids unnecessary reporting burden on the one hand, while on the other hand requiring a methodologically sound materiality process.

Distinction from other reporting standards

ESRS vs. VSME

The ESRS are the mandatory reporting framework for companies within the scope of the CSRD. The VSME, by contrast, is a voluntary standard for smaller companies that do not fall under the CSRD but still want to disclose sustainability information in a structured way. While the ESRS go much deeper into governance, strategy, materiality, metrics, targets and actions, the VSME is deliberately leaner and more focused on proportionate requirements for smaller companies.

ESRS vs. GRI

The ESRS are embedded in EU regulation. The GRI Standards, by contrast, are an internationally used voluntary framework for sustainability reporting. When developing the ESRS, considerable attention was paid to interoperability with the GRI Standards in order to avoid duplicate reporting.

One important difference, however, lies in materiality: while the ESRS are based on double materiality and therefore take into account both impacts on the environment and people and the financial risks and opportunities for the company, GRI places impact materiality — that is, a company’s material impacts on the economy, the environment and people — at the centre.

Your next steps

1. Clarify reporting obligations and level of ambition

First, assess whether your company is currently subject to reporting requirements under the CSRD or whether you want to prepare substantively for requirements coming from the value chain, banks or investors. This will determine how closely you should already align with the ESRS today.

2. Set up double materiality in a structured way

Gain an overview of your material sustainability topics. The key is not to include as many topics as possible, but to assess systematically which impacts, risks and opportunities are truly material for your company, because this is what determines the specific scope of the report.

3. Define data, processes and responsibilities

Define early on which data is needed, who provides it internally, how it is reviewed and where gaps still exist. Especially under the ESRS, a robust process is essential because the requirements feed into the management report and must be auditable.

How our services support you

We support you in implementing the ESRS within your company in a practical way and with a clear project-based approach. Together, we determine which requirements are relevant for your company, how double materiality should be properly documented and how the regulatory requirements can be translated into an actionable data collection process and reporting structure.

We then support you with the substantive development, the establishment of robust processes and the preparation of a consistent, transparent report. Our goal is not only to meet regulatory requirements formally, but also to create real added value for management, transparency and positioning.