ESRS

European Sustainability Reporting Standards

With the EU’s new Corporate Sustainability Reporting Directive (CSRD) comes a need for more detailed reporting requirements. The practicalities of reporting and the metrics to be used are governed by the new EU sustainability standards ESRS, which stands for European Sustainability Reporting Standards.

ESRS reporting is mandatory for all companies covered by the CSRD. The report must be included in the management report and submitted in the ESEF format (European Single Electronic Format). Among other things, the standard requires more information than previously linked to environmental and social issues and corporate governance:

  • Environmental factors: including climate change adaptation and mitigation, resource use, circular economy, pollution, biodiversity, etc.
  • Social factors: including inclusion with opportunities and rights, good working conditions, human rights.
  • Governance: with management and supervisory bodies, business ethics, corporate culture, political commitment, internal controls, risk management systems, etc.

The basis of the ESRS is a double materiality analysis that aims to identify the areas of sustainability that are most important to the business and should therefore be reported. The analysis takes into account both the company’s impact on society and the environment, and its exposure to these factors.

To identify risks, impacts and opportunities that are either impactful and/or economically material, companies also need to assess critical dependencies and impacts in the value chain.

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