ESRS — European Sustainability Reporting Standards
To encourage companies to disclose comparable and reliable information on all material sustainability-related topics, the legislative proposal for a Corporate Sustainability Reporting Directive (CSRD) requires companies within its scope to use European Sustainability Reporting Standards (ESRS) that specify the information to be reported and, when relevant, the structure in which that information should be reported.
The ESRS aims to integrate a comprehensive range of nonfinancial environmental, social, and governance (ESG) data into a company’s financial reports and risk management processes. Required ESG reporting includes risks, opportunities, and performance metrics, as well as accompanying management commentary on the company’s ESG strategy and performance.
To increase the accuracy, consistency, and reliability of sustainability reporting, ESRS imposes an assurance requirement on sustainability reporting. In-scope companies will be required to seek limited assurance over their reported sustainability information initially, with potential phase-in of reasonable assurance over time.
The reporting requirements will be phased in over time for different kinds of companies. The first companies will have to apply the standards in financial year 2024, for reports published in 2025.
Download the ESRS from the EFRAG Web site.
Recent developments
On July 31, 2023, the European Commission adopted the Delegated Act on the first set of ESRS. Adoption of ESRS by Delegated Act is mandated by the co-legislators in the Corporate Sustainability Reporting Directive (CSRD - Directive (EU) 2022/2464) adopted in December 2022. The Delegated Act and annexes were published in the Official Journal in December 2023.
In April 2021, the European Commission adopted a legislative proposal for a Corporate Sustainability Reporting Directive (CSRD) that requires companies within its scope to report using a double materiality perspective in compliance with European Sustainability Reporting Standards (ESRS) adopted by the European Commission as delegated acts. Under the proposed CSRD, the European Financial Reporting Advisory Group (EFRAG) was appointed technical adviser to the European Commission developing draft ESRS.