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. ESRS is commonly referred to as ESRS. The European Financial Reporting Advisory Group (EFRAG) officially adopted the ESRS as sustainability reporting standards in July 2023 for the implementation of the CSRD directive.
The ESRS consists of 12 standards encompassing the three domains of Environmental (E), Social (S), and Governance (G). The standards are divided into 2 cross-cutting standards (General Requirements, General Disclosures) and 10 topical standards (5 environmental, 4 social, 1 governance). The environmental standards address 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) addresses Business Conduct.
[ESRS(European Sustainability Reporting Standards) © ESG.ONL/ESG Today]
The scope of ESRS application is being expanded in phases. Among EU companies, it was first applied to listed large enterprises with 500 or more employees from 2024, and was expanded from 2025 to companies with 250 or more employees or €40 million or more in revenue. Listed SMEs were scheduled to become mandatorily subject to ESRS from 2026, but under the amended CSRD, they were excluded from mandatory application and converted to voluntary reporting. From 2029, subsidiaries or branches of non-EU companies with net revenue exceeding €150 million within the EU will also become subject to ESRS.
The core principle of ESRS is double materiality assessment. Items deemed not material through double materiality assessment may be omitted from disclosure, but certain items of ESRS 2 and Climate Change (E1) remain mandatory. EU companies are building internal data management systems to comply with ESRS disclosure obligations. This is becoming a catalyst for spreading ESG disclosure pressure across global supply chains.
by Editor O