The European Sustainability Reporting Standards (ESRS) are the reporting standards that companies subject to the Corporate Sustainability Reporting Directive (CSRD) must comply with when disclosing ESG information. The European Financial Reporting Advisory Group (EFRAG) officially adopted ESRS as the sustainability reporting standard in July 2023, in order to implement the CSRD.
ESRS comprises 12 standards spanning three areas: Environmental (E), Social (S), and Governance (G). These are divided into two cross-cutting standards (General Requirements and General Disclosures) and ten topic-specific standards (five environmental, four social, and one governance). The environmental standards cover Climate Change (E1), Pollution (E2), Water and Marine Resources (E3), Biodiversity and Ecosystems (E4), and Resource Use and Circular Economy (E5). The social standards cover Own Workforce (S1), Workers in the Value Chain (S2), Affected Communities (S3), and Consumers and End-users (S4). The governance standard (G1) covers Business Conduct.
[ESRS — European Sustainability Reporting Standards ⓒESG.ONL]
The scope of ESRS application is being expanded in phases. Among EU-based companies, ESRS first applied to large listed companies with more than 500 employees from 2024, and was extended to companies with more than 250 employees or annual turnover exceeding EUR 40 million from 2025. Listed SMEs had been scheduled for mandatory ESRS application from 2026, but were excluded from mandatory scope under the revised CSRD and transitioned to voluntary reporting. From 2029, subsidiaries or branches of non-EU companies recording net turnover of EUR 150 million or more within the EU will also be brought within the scope of ESRS application.
The core principle of ESRS is the double materiality assessment. Topics assessed as non-material through the double materiality assessment may be omitted from disclosure — however, certain items under ESRS 2 and Climate Change (E1) are subject to mandatory disclosure. EU companies are building internal data management systems to comply with their ESRS disclosure obligations, and this is creating a ripple effect that is spreading ESG disclosure pressure across global supply chains.
[Reference Article] Net Zero
[Reference Article] Why Is Europe So Serious About ESG?