European Sustainability Reporting Standards

Are you ready for the ESRS reporting framework? Companies must start preparing now to align with CSRD’s detailed ESG reporting requirements. Follow our weekly series for deeper insights into compliance and best practices!

1. What is ESRS?
   • A set of mandatory reporting standards developed by the European Financial Reporting Advisory Group (EFRAG) to guide companies in their sustainability disclosures.
   • Ensures alignment with global ESG frameworks, such as TCFD (Task Force on Climate-related Financial Disclosures) and GRI (Global Reporting Initiative).
   • Covers a wide range of ESG topics, from climate change to social responsibility and governance integrity.
2. ESRS Structure: Two Key Categories

   General Standards

   • ESRS 1: General principles for sustainability reporting.
   • ESRS 2: Mandatory disclosures on governance, strategy, risk management, and materiality assessment.

   Topical Standards (ESG-Specific Reporting)

   • Environmental: Climate change, pollution, water, biodiversity, and resource use.
   • Social: Workforce, affected communities, consumers, and human rights.
   • Governance: Business conduct, ethics, and compliance.
3. What Makes ESRS Different?
   • Comprehensive: Covers all sustainability dimensions with a mandatory baseline.
   • Integrated with Double Materiality: Companies must assess and report on both financial and impact materiality.
   • Digital Reporting-Ready: Designed for machine-readable sustainability disclosures, ensuring accessibility.
4. Who Needs to Report Under ESRS?

• All companies covered by CSRD must comply, including large EU companies, listed SMEs, and certain non-EU firms with significant EU presence.

Coming Next Week:

CSRD Assurance Requirements – What You Need to Know About External Verification: CSRD introduces mandatory assurance for sustainability reports, ensuring that ESG disclosures are audited and verified just like financial statements. Next week, we’ll explore assurance levels, key requirements, and how businesses can prepare for independent verification.