European Sustainability Reporting Standards (ESRS)

The European Sustainability Reporting Standards (ESRS) are a set of sustainability reporting standards developed by the European Financial Reporting Advisory Group (EFRAG) to guide companies in disclosing their Environmental, Social, and Governance (ESG) performance. These standards are essential for companies under the EU's Corporate Sustainability Reporting Directive (CSRD), aiming to enhance transparency and accountability in sustainability matters.

The ESRS adopts a "double materiality" approach, requiring companies to report both:

  • Impact Materiality: Disclosures on how a company's activities impact the environment, society, and the economy.
  • Financial Materiality: Reporting on how sustainability issues affect a company's financial position and performance.

Key components of the ESRS include:

  • General Requirements (ESRS 1): Outlining principles for preparing sustainability reports, including reporting boundaries and double materiality assessments.
  • Sector-Specific Standards: Providing tailored reporting requirements for specific industries to ensure relevant and comparable disclosures.
  • Alignment with Global Standards: The ESRS aligns with other global frameworks, such as the Global Reporting Initiative (GRI) and the International Sustainability Standards Board (ISSB).

The ESRS is a key element of the EU's broader sustainability agenda, particularly the Corporate Sustainability Reporting Directive (CSRD), which aims to ensure that large companies provide high-quality, consistent sustainability information that is essential for achieving the EU's climate and social goals.

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