Aug 4, 2023

ESRS Simplified | Why, What and How of the European Sustainability Reporting Standard?



ESRS Simplified | Why, What and How of the European Sustainability Reporting Standard?

The Corporate Sustainable Reporting Directive (CSRD) is an updated version of the Non-Financial Reporting Directive (NFRD). The new directive focuses on ‘sustainability information’ and three main ‘sustainability matters’ - environmental, social, and governance. The CSRD is part of the European Green Deal strategy, which aims to make the EU more sustainable and resilient by implementing sustainable practices and providing companies with a framework to report their sustainability efforts. The European Sustainability Reporting Standards (ESRS) are a set of standards designed to help companies report sustainability-related information effectively and consistently according to the CSRD. The ESRS cover the full range of environmental, social, and governance issues, including climate change, biodiversity, and human rights. They provide information for investors to understand the sustainability impact of the companies in which they invest.


The EU Commission Corporate Sustainability Reporting website includes the main documents: Corporate Sustainable Reporting Directive (CSRD),

, Delegated Act, , Annex I – including 10 standards, , Annex II – including Glossary and Acronyms, .

The Act and Annexes are dated July 31st and ‘not in force until it is published in the Official Journal’.

EFRAG’s website

On October 25th, EFRAG published draft versions of some helpful documents and files. Currently, they can be found in the ‘Meetings’ section,

: [Draft] List of ESRS Data Points – Implementation Guidance (Excel), [Draft] List of ESRS Data Points methodology – Implementation Guidance (PDF), Implementation guidance for the materiality assessment, and Implementation guidance for value chain (VCIG). Note, that these documents will evolve, and some data points have already been added since the meeting. Additionally, EFRAG has some webinar videos concerning the draft versions of the standards.

Delegated Act

According to the Act, sustainability information concerning the following areas shall be reported in short, medium, and long-term time horizons:

  • business model and strategy,
  • time-bound targets
  • governance roles and responsibilities,
  • policies,
  • incentive schemes,
  • due diligence,
  • principal actual or potential adverse impacts,
  • actions taken concerning the above impacts,
  • principal risks, and
  • indicators relevant to the required disclosures.

The Standards

Annex I consists of all 12 cross-cutting and topical standards, which apply to all undertakings. The standards have been grouped in the following way: Cross-cutting standards: ESRS 1 – General Requirements ESRS 2 – General Disclosures (197 data points), Topical standards: Environment ESRS E1 – Climate (223 data points), ESRS E2 – Pollution (71 data points), ESRS E3 – Water and marine resources (51 data points), ESRS E4 – Biodiversity and ecosystems (122 data points), ESRS E5 – Resource use and circular economy (87 data points),

Topical standards: Social

ESRS S1 – Own workforce (202 data points), ESRS S2 – Workers in the value chain (70 data points), ESRS S3 – Affected communities (68 data points), ESRS S4 – Consumers and end users (67 data points),

Topical standards: Governance

ESRS G1 – Business conduct (55 data points). ESRS 1 – General Requirements As the name indicates, the standard provides general guidance and ‘specifies the sustainability information that an undertaking shall disclose in accordance with the directive’. It includes the following chapters: Categories of ESRS Standards – cross-cutting, topical and sector-specific categories, Qualitative characteristics of information – or principles of the reporting, Double materiality – impact and finance materiality, Due diligence – a reference to UN and OECD guidance, Value chain – ‘direct and indirect business relationships in the upstream and/or downstream value chain’, and Time horizons – short-, medium- and long-term. Additionally, it has seven annexes such as: A: Application Requirements - Entity-specific disclosures, B: Sustainability matters covered in the topical ESRS table, C: List of phased-in Disclosure Requirements table – possible to omit some disclosures, E: Steps for determining disclosures under ESRS – simple guide of the materiality assessment process. In addition, there are other chapters and annexes, which guide appropriate presentation and reporting of disclosures according to quality characteristics. This standard covers many of the same topics as GRI 1: Foundation 2021 (by the Global Reporting Initiative) and S1 – General Requirements for Disclosure of Sustainability-related Financial Information (by the International Sustainability Standards Board) standards. ESRS 2 – General Disclosures The Disclosure Requirements in this standard, ten topical standards and coming sector-specific ESRS are structured into the following reporting areas: Governance (GOV) - processes, controls and procedures, Strategy (SBM) - strategy and business model, Impact, risk and opportunity management (IRO) - and their materiality, and Metrics and targets (MT) – performance, targets and progress. In ESRS 2, there is one more area (Basis for preparation, BP) to consider when starting the reporting process. Furthermore, the standard has three important annexes: A: Application Requirements, B: List of data points table, and C: Disclosure and Application Requirements table. The structure of the standard leans heavily towards the ISSB standards and TFCD framework. In the GRI standards, this standard relates to the GRI 2: General Disclosures 2021 standard.


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