What are the ESRS?

  • The ESRS are a set of sustainability reporting standards being developed by the European Financial Reporting Advisory Group (EFRAG) under the directive of the European Commission.
  • They aim to provide a comprehensive framework for companies and other entities to report on their environmental, social, and governance (ESG) impacts, risks, and opportunities.

How will the ESRS work?

  • The ESRS will consist of cross-cutting standards applicable to all sectors, as well as sector-specific standards tailored to different industries.
  • They will cover a wide range of sustainability topics, including climate change, biodiversity, human rights, and corporate governance.
  • The standards will specify disclosure requirements, metrics, and guidance for reporting entities to follow.
  • Implementation of the ESRS will likely be phased in, starting with large public-interest companies.

What is the current status?

  • EFRAG has been developing the ESRS since 2021, undergoing public consultations and revisions.
  • The first set of draft standards was released in April 2022, covering general principles, strategy, governance, and sector-agnostic disclosures.
  • Sector-specific standards for different industries are currently being developed.
  • The final ESRS are expected to be adopted by the European Commission in 2023 and become applicable in the following years.

References

  • European Sustainability Reporting Standards (ESRS) — UN ENVIRONMENT PROGRAMME FINANCE INITIATIVE On 5 January 2023, the Corporate Sustainability Reporting Directive (CSRD) entered into force. This new directive updates the rules concerning the social and environmental information that companies have to report. Companies subject to the CSRD will have to report according to Eu…
  • The first set of ESRS - the journey — EFRAG The reporting requirements will be phased in over time for different kinds of companies. The first companies will have to apply the standards in financial year 2024, for reports published in 2025. Listed SMEs are obliged to report as from 2026, with a further possibility of volun…
  • The Commission adopts the ESRS — European Commission The standards we have adopted today are ambitious and are an important tool underpinning the EU’s sustainable finance agenda. They strike the right balance between limiting the burden on reporting companies while at the same time enabling companies to show the efforts they are ma…