European sustainability reporting standards (ESRS)
In April 2021, the European Commission adopted a legislative proposal for a Corporate sustainability reporting directive (CSRD), requiring companies within its scope to report using a double materiality perspective in compliance with the European sustainability reporting standards (ESRS) adopted by the European Commission as delegated acts.
The objective of the ESRS is to specify the sustainability information that a company must disclose in its sustainability report. It is important to note that reporting in accordance with ESRS does not exempt companies from other obligations under Union law.
ESRS specifies the information that a company shall disclose about its material impacts, risks, and opportunities (IRO) in relation to environmental, social, and governance (ESG) sustainability matters. However, ESRS does not require companies to disclose information on ESG topics that the company has assessed as non-material (see Appendix E "Flowchart for determining disclosures under ESRS", ENG PDF file, page 37). The information disclosed in accordance with ESRS enables users of the sustainability statement to understand the company's material impacts on people and environment and the material effects of sustainability matters on the company's development, performance and position.
There are three categories of ESRS: (a) cross-cutting standards; (b) topical standards (Environmental, Social, and Governance standards); (c) sector-specific standards.
Cross-cutting standards and topical standards are sector-agnostic, meaning that they apply to all companies regardless of which sector or sectors the company operates in.
All topical standards include policies, actions and targets. You should pay attention to these details if you plan to include a specific standard in your sustainability report.
You can read the full ESRS description here. Different language versions are available.
Keep in mind that these descriptions are based on the ESRS, not the ESRS LSME* (listed small, medium enterprises). You can find more information about this here.
If you want to read more and better understand the sustainability report, check the section 'Sustainability reporting'. You may find the answers you are looking for on this topic.
*The ESRS LSME will be issued as a delegated act and will be effective on 1 January 2026 with the option to opt out for an additional two years.
ESRS 1 General requirements
ESRS 2 General disclosures
E1 Climate change
E2 Pollution
E3 Water and marine resources
E4 Biodiversity and ecosystems
E5 Resource use and circular economy
S1 Own workforce
S2 Workers in the value chain
S3 Affected communities
S4 Consumers and end-users
G1 Business conduct
All European sustainability reporting standards
ESRS 1 General requirements
ESRS 1 General requirements sets general principles to be applied when reporting according to ESRS and does not itself set specific disclosure requirements.
ESRS 2 General disclosures
ESRS 2 General disclosures specifies essential information to be disclosed irrespective of which sustainability matter is being considered. Mandatory for all companies under the CSRD scope.
E1 Climate change
ESRS E1 Climate change enables businesses to address climate change by reducing their GHG emissions
E2 Pollution
ESRS E2 Pollution specifies information to be disclosed about emissions into air, water and soil.
E3 Water and marine resources
ESRS E3 Water and marine resources sets disclosures about water consumption, withdrawal and discharges, and extraction and use of marine resources.
E4 Biodiversity and ecosystems
ESRS E4 Biodiversity and ecosystems enables us to discover systemic risks and remedial opportunities concerning biodiversity
E5 Resource use and circular economy
ESRS E5 Resource use and circular economy specifies information about material and waste flows disclosing the company's maturity for circular strategies.
S1 Own workforce
ESRS S1 Own workforce requires a detailed overview of human resources, including information about both employees and non-employees.
S2 Workers in the value chain
ESRS S2 Workers in the value chain demand information on working conditions, equal treatment and human rights in the material parts of the value chain.
S3 Affected communities
ESRS S3 Affected communities requires transparency about impacts on communities and indigenous people that are affected by the reporter's business activities through their own operations and value chain.
S4 Consumers and end-users
ESRS S4 Consumers and end users are required to assess and manage the company's impact on private consumers and end-users of its products and services.
G1 Business Conduct
ESRS G1 Business conduct focuses on business ethics and corporate culture, management of relationships with suppliers and exertion of political influence.
Why should you get involved?
Here are several compelling reasons why SMEs should engage in corporate sustainability reporting:1. Regulatory Compliance
Adherence to Standards
Many jurisdictions are increasingly mandating sustainability reporting. Compliance with frameworks like the Corporate Sustainability Reporting Directive (CSRD) and other regional standards is essential to avoid legal penalties.
2. Access to Finance
Attracting Investors
Sustainability reporting can make SMEs more attractive to investors who prioritize environmental, social, and governance (ESG) criteria. Transparent reporting can open doors to green finance and investment opportunities.
3. Competitive Advantage
Market Differentiation
By highlighting their sustainability efforts, SMEs can differentiate themselves from competitors, attract environmentally and socially conscious customers, and enhance their brand reputation.
4. Risk Management
Identifying and Mitigating Risks
Sustainability reporting helps SMEs identify potential environmental and social risks in their operations and supply chains, enabling them to mitigate these risks proactively.
5. Operational Efficiency
Improved Efficiency and Cost Savings
Reporting on sustainability can lead to better resource management, reduced waste, and energy savings, which can lower operational costs and improve efficiency.
6. Stakeholder Engagement
Enhanced Communication
Regular reporting fosters transparency and builds trust with stakeholders, including customers, employees, suppliers, and the community. It demonstrates the SME’s commitment to sustainable practices.
7. Future-proofing the Business
Long-term Viability
Sustainability reporting helps SMEs prepare for future regulatory changes and market demands. By embedding sustainability into their business model, SMEs can ensure long-term viability and resilience.
8. Reputation and Trust
Long-term Viability
Sustainability reporting helps SMEs prepare for future regulatory changes and market demands. By embedding sustainability into their business model, SMEs can ensure long-term viability and resilience.
9. Innovation
Encouraging Innovation
The process of sustainability reporting can drive innovation in products, services, and processes as SMEs seek new ways to reduce their environmental impact and improve social outcomes.
10. Global Trends and Consumer Preferences
Aligning with Global Trends
As global awareness and demand for sustainable practices grow, SMEs that report on their sustainability initiatives can better align with consumer preferences and global market trends.
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