ESRS standards explained for businesses
Direct answer
The ESRS (European Sustainability Reporting Standards) are the European standards that set out how companies must report on sustainability under the CSRD. They were drawn up by EFRAG on behalf of the European Commission and consist of general standards plus topical standards for environment, social and governance. The core principle is double materiality: you report both your impact on people and the environment and the financial consequences for your company.
- Clear definition
- Data-driven assessment
- Risks and opportunities visible
- Practical next steps
ESRS standards explained: scattered information versus Energy Intelligence
More and more companies are legally required to account for their sustainability, not just their finances. The CSRD directive imposes that duty, but does not itself say what such a report looks like. The ESRS fill that in. For a finance lead or director drawing up a sustainability report for the first time, the ESRS are the reference work that determines which topics are covered and how you substantiate them.
- The ESRS determine the content of your sustainability report under the CSRD: which topics you address and which data you disclose.
- The structure has general, cross-cutting standards plus topical standards for environment (including E1 climate), social and governance.
- The standards are being simplified through the Omnibus package, with fewer mandatory datapoints and more flexibility, while the core is retained.
Insight
Traditional approach
Information is scattered across portals, documents, invoices or separate spreadsheets.
Modern approach
Data, context and interpretation are brought together into a clear decision picture.
Decision-making
Traditional approach
Choices are made based on averages, assumptions or occasional analyses.
Modern approach
Scenarios, KPIs and current measurement data make the trade-off more concrete and repeatable.
Follow-up
Traditional approach
Actions often stay non-committal or disappear into separate reports.
Modern approach
Follow-up actions, monitoring and reporting are linked to the same energy data.
What are the ESRS and who makes them?
The ESRS are the detailed European standards that set out how a company reports on sustainability under the CSRD. The CSRD is the law that imposes the duty; the ESRS determine the precise content. They were drawn up by EFRAG, an independent advisory body, on behalf of the European Commission, which then adopts the standards into legislation. Without common standards every company would report in its own way and reports would be incomparable. The ESRS ensure that investors, customers and regulators can place reports side by side. They prescribe both which topics you address and which concrete data you disclose alongside them.
- The CSRD is the obligation; the ESRS determine the content of the report.
- EFRAG draws up the standards on behalf of the European Commission.
- The European Commission adopts the standards into European legislation.
- The aim is comparable, reliable sustainability information across the EU.
How are the ESRS structured?
The ESRS have two layers. First there are general, cross-cutting standards that apply to every company: they set out the basic principles and describe the general information you always provide about your governance, strategy and approach. Alongside these are topical standards, divided across three areas. Environment covers climate change, referred to as E1, plus topics such as pollution, water, biodiversity and the circular economy. Social concerns your own workforce, workers in the value chain, affected communities and end-users. Governance concerns business conduct, such as business ethics. Which topical subjects you actually work out depends on your materiality assessment. Not every topic is relevant to every company.
- General standards apply to everyone and set out the basic principles.
- Environmental standards include climate (E1), pollution, water, biodiversity and the circular economy.
- Social standards cover own workforce, value chain workers, communities and users.
- Governance concerns business conduct, including business ethics.
- Your materiality assessment determines which topical subjects you work out.
What is double materiality and what is changing?
Double materiality is the principle that determines what you must report. You look from two sides. The first is impact materiality: what effect your company has on people and the environment. The second is financial materiality: what risks and opportunities sustainability matters create for your own results and position. If a topic is material from either side, you report on it. This prevents you from having to write about everything, while keeping the topics that genuinely matter. Important to know: the standards are being simplified. Through the so-called Omnibus package, the European Commission removes mandatory datapoints and builds in more flexibility and phased introduction, while the objectives are retained.
- Impact materiality looks at your effect on people and the environment.
- Financial materiality looks at risks and opportunities for your own company.
- A topic is reportable as soon as it is material from either side.
- Through the Omnibus package the standards are simplified with fewer mandatory datapoints.
- Always check the current version, as the precise requirements and timelines are still moving.
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