ESRS

The European Sustainability Reporting Standards (ESRS) are the detailed disclosure rules that operationalise the EU's Corporate Sustainability Reporting Directive (CSRD). They specify the information in-scope companies must publish about sustainability risks, impacts, and opportunities, with the aim of giving investors, regulators, and civil society comparable, machine-readable data across the single market.

The standards were developed by the European Financial Reporting Advisory Group (EFRAG) and adopted by the European Commission as a Delegated Regulation in July 2023, applying to financial years starting on or after 1 January 2024 for the first wave of large public-interest entities already covered by the previous Non-Financial Reporting Directive.

The first set comprises 12 standards:

• Two cross-cutting standards — ESRS 1 (general requirements) and ESRS 2 (general disclosures).
• Five environmental standards — climate change (E1), pollution (E2), water and marine resources (E3), biodiversity and ecosystems (E4), and resource use and circular economy (E5).
• Four social standards — own workforce (S1), workers in the value chain (S2), affected communities (S3), and consumers and end-users (S4).
• One governance standard — business conduct (G1).

A defining feature is double materiality: companies must report both how sustainability matters affect their financial position (financial materiality) and how their own activities affect people and the environment (impact materiality). This distinguishes ESRS from the investor-focused IFRS S1/S2 standards issued by the ISSB, though EFRAG and the ISSB have published interoperability guidance to reduce duplicate reporting.

Phase-in applies progressively: large listed companies first, then other large undertakings, listed SMEs, and finally certain non-EU parent companies with significant EU turnover. In 2025 the Commission's Omnibus simplification package proposed narrowing scope and delaying timelines, and sector-specific standards originally planned have been postponed. Assurance is initially limited but is expected to move toward reasonable assurance over time.