The ESRS are adopted by the European Commission in the form of delegated acts following scrutiny by the European Parliament and Council of the EU. The ESRS are based on technical advice (draft standards) prepared by the European Financial Reporting Advisory Group (EFRAG). Various EU bodies, including the European Supervisory Authorities, the European Central Bank, the Committee of European Auditing Oversight Bodies and the European Environment Agency, are consulted during the drafting process. The ESRS are due to be reviewed at least every three years.
Structure and double materiality lens
The ESRS cover four reporting areas (governance; strategy; impact, risk and opportunity management; metrics and targets). As mandated by the CSRD, the ESRS take a 'double materiality' perspective, requiring companies to assess and report on their impacts on people and the environment as well as on how governance, social and environmental issues create financial risks and opportunities for the company.
The first set of 12 sector-agnostic ESRS cover a full range of sustainability issues. They include two cross-cutting standards and ten topical standards covering environment, social and governance matters. The disclosure requirements and datapoints in the topical standards are generally subject to a materiality assessment.
A number of transitional and phase-in provisions for the ESRS reporting requirements are incorporated, including in relation to value chain information (including related metrics) and quantitative data on anticipated financial effects from environment-related risks. There are additional phase-ins for companies with fewer than 750 employees.
Cross-cutting ESRS
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ESRS 1 General Requirements
ESRS 1 sets the general principles to be applied when reporting in accordance with ESRS. It does not itself set specific disclosure requirements but covers topics such as the qualitative characteristics of information, the double materiality concept and the structure and presentation of sustainability statements. ESRS1 also mandates that disclosures made under the EU Taxonomy Regulation must be made in the sustainability statement.
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ESRS 2 General Disclosures
ESRS 2 sets out the general disclosure requirements at sector-agnostic level, covering environment, social and governance matters. It covers the four reporting areas (governance; strategy; impact, risk and opportunity management; metrics and targets).
It includes disclosure requirements on the basis of preparation of the sustainability statement and the double materiality assessment process, as well as minimum disclosures for policies, actions and targets to be applied at topical level. It also lists the datapoints across the sector agnostic standards that derive from other EU legislation.
Environmental ESRS
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ESRS E1 Climate
ESRS E1 sets out disclosure requirements specific to the topic of climate change. It aims to enable users of sustainability statements to understand how companies affect climate change as well as their mitigation and adaptation efforts. It also provides for disclosures on a company's material risks and opportunities relating to climate change and associated financial effects.
If a company concludes that climate change is not a material topic, it is still required to provide a detailed explanation of the conclusions of its materiality assessment with regard to climate change.
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ESRS E2 Pollution
ESRS E2 sets out disclosure requirements relating to how companies affect pollution of air, water, and soil, in terms of material positive and negative actual or potential impacts. It requires companies to disclose their actions, plans, risks, opportunities, and financial effects related to pollution and its prevention, control, elimination, or reduction.
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ESRS E3 Water and marine resources
ESRS E3 sets out disclosure requirements relating to how companies affect water and marine resources, in terms of material positive and negative actual or potential impacts. It requires companies to disclose their actions, plans, risks, opportunities, and financial effects related to the protection of water and marine resources.
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ESRS E4 Biodiversity and ecosystems
ESRS E4 sets out disclosure requirements relating to how companies affect biodiversity and ecosystems, in terms of material positive and negative actual or potential impacts. It requires companies to disclose their actions, plans, risks, opportunities, and financial effects related to the protection and restoration of biodiversity and ecosystems.
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ESRS E5 Resource use and circular economy
ESRS E5 sets out disclosure requirements relating to how companies affect resource use and the circular economy, in terms of material positive and negative actual or potential impacts. It requires companies to disclose their actions, plans, risks, opportunities, and financial effects related to resource use and the circular economy.
Social ESRS
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ESRS S1 Own workforce
ESRS S1 sets out disclosure requirements relating to how companies affect human rights and social impacts, in terms of material positive and negative actual or potential impacts. Own workforce covers employees and non-employee workers such as self-employed workers contracted by the company and agency workers. It addresses working conditions, equal opportunities and other worker-related rights. ESRS S1 requires companies to disclose their actions, plans, risks, opportunities, and financial effects related to the protection and promotion of human rights and social impacts.
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ESRS S2 Workers in the value chain
ESRS S2 sets out disclosure requirements relating to how companies affect workers in its value chain through their own operations as well as their upstream and downstream value chain, in terms of material positive and negative actual or potential impacts. It addresses working conditions, equal opportunities and other work-related rights. ESRS S2 requires companies to disclose their actions, plans, risks, opportunities, and financial effects relating to workers in their value chain.
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ESRS S3 Affected communities
ESRS S3 sets out disclosure requirements relating to how companies affect their local communities through their own operations as well as their upstream and downstream value chain, in terms of material positive and negative actual or potential impacts. It addresses economic, social and cultural rights, civil and political rights, and particular rights of indigenous peoples. ESRS S3 requires companies to disclose their actions, plans, risks, opportunities, and financial effects relating to affected communities.
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ESRS S4 Consumers and end users
ESRS S4 sets out disclosure requirements relating to how companies affect consumers and end-users of their products and/or services, in terms of material positive and negative actual or potential impacts. It addresses information, personal safety and social inclusion. ESRS S4 requires companies to disclose their actions, plans, risks, opportunities, and financial effects relating to consumers and end-users.
Governance ESRS
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ESRS G1 Business conduct
ESRS G1 sets out disclosure requirements focused on companies' business conduct. It addresses corporate culture, management of relationships with suppliers, corruption and bribery, political influence and lobbying, whistle-blowers, animal welfare and payment practices.
Standards under development
Small and Medium-sized Entities
Listed small and medium-sized entities (SMEs) falling within scope of the CSRD are not required to report sustainability information until financial years starting on or after 1 January 2026. A further two-year opt-out is available, provided their management reports include an explanation of why the required information is not given.
Listed SMEs will be able to apply proportionate standards rather than the full set of ESRS. The draft Listed SME standard (LSME) was issued for public consultation in early 2024 – alongside a draft standard for voluntary use by non-listed SMEs (VSME). The VSME takes a modular approach which aims to facilitate non-listed SMEs to report their sustainability information, including when requested by their customers, banks, investors or other stakeholders.
Sector-specific ESRS
The CSRD mandates the development of sector-specific ESRS to complement the information provided under the first set of sector-agnostic ESRS. The development of sector-specific standards has been postponed by two years, to give companies time to focus on implementing the first set of ESRS. Up to 40 standards could eventually be issued, taking into account existing standards and frameworks (ie, those issued by the Sustainability Accounting Standard Board and the Global Reporting Initiative).
EFRAG is expected to prioritise work on the general approach to sector-specific ESRS and the ESRS Sector classification approach. EFRAG is also continuing work on eight sector-specific standards including Oil and Gas; Coal, Quarries and Mining; Road Transport; Agriculture, Farming and Fisheries; Motor Vehicles; Energy Production and Utilities; Food and Beverages; and Textiles, Accessories, Footwear and Jewellery.
Work is then likely to focus on standards for Financial Institutions (Banking, Insurance and Capital markets).
ESRS for non-EU groups
The CSRD (Article 40a) provides that non-EU companies generating over €150m in the EU and that have at least one entity in the group in scope of the CSRD, or at least one EU branch with revenue of over €40m, shall publish sustainability-related information by 1 January 2028. The CSRD references the standards to be used by non-EU companies and provides for the use of equivalent standards, if so determined and agreed by the European Commission. EFRAG has been developing separate ESRS standards for such non-EU companies, with the adoption of these standards postponed by two years to June 2026. EFRAG is expected to deliver the draft standards by November 2025 and is likely to consult on exposure drafts in late 2024 or early 2025.
Interoperability with international standards
The CSRD requires the Commission and EFRAG to take 'account, to the greatest extent possible, of the work of global standard-setting initiatives'. Both have worked with the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) to increase interoperability. The GRI has served as an important reference point for the development of ESRS. EFRAG and GRI issued a joint statement on the level of interoperability in September 2023 and in November 2023, a GRI-ESRS Interoperability Index was published.
The ESRS and the first two ISSB standards have been developed in parallel, with efforts to ensure a high degree of alignment.
EFRAG and the ISSB are expected to publish an interoperability table on climate-related disclosures in their respective standards.
Sustainability Reporting XBRL Taxonomy
EFRAG has been tasked by the European Commission to also develop a draft XBRL taxonomy for ESRS, to be adopted by delegated act. This digital taxonomy should allow all reported information to be tagged in accordance with ESRS. It complements the creation of the European Single Access Point. The SR XBRL Taxonomy was issued by EFRAG for public consultation in February 2024 and is expected to be delivered as final advice to the Commission during the second half of 2024.
Additional resources
EFRAG is expected to periodically publish additional non-binding implementation guidance (IG) on the application of ESRS. The first three IGs will address issues relating to the materiality assessment (IG1); value chain (IG2) and provide a list of ESRS datapoints (IG3). The first set of IGs is due to be finalised in Q1 2024.
EFRAG's ESRS Q&A Platform provides stakeholders with the opportunity to submit technical questions to support implementation of ESRS. Quarterly technical explanations relating to some of the questions submitted are published by EFRAG.
Additional information
Learn more about the EU legal framework for sustainability reporting.
Overview of the CSRD
