ESRS explained: the EU sustainability reporting standards behind CSRD
ESRS explained: how the European Sustainability Reporting Standards shape CSRD reports, double materiality, climate evidence and Omnibus simplification.
European Sustainability Reporting Standards (ESRS) are the rulebook companies use when reporting under the Corporate Sustainability Reporting Directive (CSRD). CSRD decides who has to report. ESRS decides what the report has to contain, how material topics are judged and what evidence needs to sit behind the sustainability statement.
Information only
This guide is for general information only. It is not legal, accounting, assurance, regulatory, procurement, investment or financial advice. Sustainability reporting rules, European Union law, national implementation, assurance expectations and customer requirements can change. Check current official sources and professional advice before relying on this for compliance, reporting, finance, procurement or transaction decisions.
The most useful way to understand ESRS is not as a list of disclosure boxes. It is the evidence layer underneath a sustainability report. A company can say it has a climate plan, human rights policy, biodiversity risk process or supplier engagement programme. ESRS asks a harder question: what does the company actually disclose, why is the topic material, who owns the judgement and what data supports the claim?
That is why the simplification debate matters. In 2025, the European Financial Reporting Advisory Group (EFRAG) published revised exposure drafts that proposed cutting mandatory datapoints by 57%, reducing the full set of disclosures by 68% and shortening the standards by more than 55%. Those figures do not mean companies can ignore the current rules. They show the scale of the political and practical pressure around sustainability reporting: the European Union is trying to keep decision-useful disclosure while making the system less burdensome.
The reader question is therefore not just "what are ESRS?" It is "which sustainability information is robust enough to survive reporting, assurance, investor scrutiny and customer questions?"
Core test
ESRS turns sustainability from a narrative exercise into a control and evidence exercise. The strongest reports do not simply include more datapoints. They explain why each topic is material, how the company knows and what evidence supports the judgement.
Quick answer
| Question | Short answer |
|---|---|
| What are ESRS? | ESRS are the European Sustainability Reporting Standards used by companies reporting under CSRD. |
| Are ESRS the same as CSRD? | No. CSRD is the law. ESRS are the reporting standards that tell in-scope companies what sustainability information to disclose. |
| Who developed ESRS? | EFRAG, formerly the European Financial Reporting Advisory Group, develops ESRS drafts and technical advice for the European Commission. |
| What is the central concept? | Double materiality: companies assess both how sustainability issues affect the business financially and how the business affects people and the environment. |
| Why are ESRS changing? | The Omnibus simplification process, quick-fix relief and revised exposure drafts aim to reduce complexity while keeping useful sustainability information. |
Data checked
This article was checked on 20 June 2026 against the European Commission corporate sustainability reporting page, the ESRS delegated regulation, the Omnibus I package, the July 2025 ESRS quick-fix delegated act, EFRAG's revised ESRS exposure draft consultation and European Commission material on ESRS interoperability with international standards.
CSRD vs ESRS
CSRD and ESRS are often mentioned together, but they do different jobs. CSRD is the European Union directive that creates the reporting obligation. It sets the legal frame, including which companies are in scope, where the sustainability statement appears and how reporting connects to assurance and management reporting.
ESRS are the standards used inside that legal frame. They tell companies what to disclose about governance, strategy, impacts, risks, opportunities, policies, actions, metrics and targets. If CSRD is the gate, ESRS is the reporting architecture behind the gate.
| Term | Main job | Common mistake |
|---|---|---|
| CSRD | Creates the corporate sustainability reporting obligation in European Union law. | Assuming it is only a climate rule. It covers broader sustainability information. |
| ESRS | Sets the disclosure structure and evidence expectations for CSRD sustainability statements. | Treating the standards as a checklist that replaces judgement. |
| Double materiality | Determines which sustainability topics are material from impact and financial perspectives. | Reducing it to a simple stakeholder survey or heat map. |
| Assurance | Brings external review to sustainability information over time. | Preparing narrative without controls, owners and auditable data trails. |
The ESRS structure
The first set of ESRS is sector-agnostic. That means the standards apply across sectors rather than being written for one industry. The structure starts with cross-cutting standards, then moves through environmental, social and governance topics.
| ESRS group | Standards | What they cover |
|---|---|---|
| General standards | ESRS 1 and ESRS 2 | General requirements, disclosure principles, governance, strategy, materiality process, metrics and targets. |
| Environmental standards | ESRS E1 to E5 | Climate change, pollution, water and marine resources, biodiversity and ecosystems, and resource use and circular economy. |
| Social standards | ESRS S1 to S4 | Own workforce, workers in the value chain, affected communities, and consumers and end-users. |
| Governance standard | ESRS G1 | Business conduct, including corporate culture, supplier relationships, corruption, bribery and political engagement. |
The table can make ESRS look like a library shelf. In practice, it behaves more like a reporting control system. A company has to explain how it assessed impacts, risks and opportunities, which topics are material, what policies and actions exist, which targets are used and how metrics are produced.
Double materiality is the hinge
Double materiality is the idea that a topic can be material in two ways. First, it can be financially material because sustainability issues affect the company's cash flows, access to finance, strategy, costs, assets, liabilities or business model. Second, it can be impact material because the company affects people or the environment.
That matters because ESRS is not meant to be a blind data dump. The standards require companies to connect disclosure to a materiality assessment. A topic can be important because it creates financial exposure, because it creates significant external impact, or because both are true at once.
This is where many weak reports fail. They describe topics as important, but do not explain the assessment trail. A better report shows the method, evidence sources, stakeholder inputs, severity and likelihood judgements, financial exposure, governance sign-off and how the result affects disclosure choices.
Why ESRS E1 climate gets so much attention
ESRS covers far more than climate, but the climate standard receives disproportionate attention because it pulls together emissions, transition planning, climate risk, targets, energy use and value-chain data.
For a company, that can turn a climate section into a demanding evidence exercise. It is not enough to say there is a net zero ambition. Readers need to understand the emissions boundary, Scope 1, Scope 2 and relevant Scope 3 data, target coverage, reduction actions, capital allocation, assumptions and whether the transition plan has governance behind it.
| Climate disclosure area | What a reader should look for | Weak signal |
|---|---|---|
| Greenhouse gas emissions | Clear Scope 1, 2 and relevant Scope 3 boundaries, methods, base years and data quality. | Headline emissions numbers with little method, exclusion or uncertainty detail. |
| Transition plan | Actions, timing, assumptions, governance and connection to business strategy. | Long-term ambition with no near-term operational path. |
| Targets | Coverage, baseline, progress, target type, dependencies and restatement rules. | Targets that do not say what emissions scopes or business units are included. |
| Climate risks | Physical and transition risks, time horizons, scenario assumptions and financial effects where relevant. | Generic climate-risk language that could fit any company. |
The practical lesson is simple: ESRS E1 is not just a climate communications exercise. It is a test of whether climate data, strategy, risk management and financial planning are connected. For the detailed climate standard, read our guide to ESRS E1 climate change disclosure.
What Omnibus and quick-fix changes mean
The European Union has been simplifying parts of the sustainability reporting system through the Omnibus process. The direction is clear: reduce burden, focus direct reporting on larger companies and stop sustainability reporting requests from cascading unnecessarily onto smaller companies.
That does not make ESRS irrelevant. It changes the boundary between formal legal reporting, voluntary reporting and commercial data requests. Some companies may be outside direct CSRD scope but still face customer, lender or investor questions shaped by ESRS language. Larger companies may still need supplier data to support their own material value-chain disclosures.
| Change or process | What it does | Reader judgement |
|---|---|---|
| Stop-the-clock | Postpones certain CSRD reporting requirements for wave two and wave three companies. | A delay is not the same as a reason to ignore data readiness. |
| ESRS quick fix | Gives wave one companies additional relief for financial years 2025 and 2026 so they do not have to add certain new information compared with financial year 2024. | Useful relief, but not a replacement for understanding the underlying evidence system. |
| Broader ESRS simplification | Aims to reduce data requirements, clarify unclear provisions and improve consistency with other legislation. | Watch the final adopted standards, not only consultation headlines. |
| Value-chain burden guardrail | Seeks to stop large-company reporting from overloading smaller companies with excessive requests. | Smaller suppliers may still need proportionate evidence, especially on emissions, policies and risk controls. |
The danger is reading simplification as a retreat from evidence. A narrower or lighter regime can still demand better-quality information from companies that remain in scope. For smaller companies, the task may shift from formal ESRS reporting to a more proportionate evidence file that answers customer or finance questions without pretending to be a full CSRD report.
ESRS vs ISSB, GRI, CDP and VSME
ESRS sits inside a wider reporting landscape. The acronyms overlap, but they are not interchangeable. The cleanest way to separate them is to ask who the disclosure is for and what question it answers.
| Framework or channel | Main lens | How it relates to ESRS |
|---|---|---|
| ESRS | European Union double-materiality sustainability reporting under CSRD. | The formal standard set for companies reporting under CSRD. |
| ISSB | Investor-focused sustainability-related financial disclosure. | ESRS has been designed with interoperability in mind, but its double-materiality lens is broader. |
| GRI | Broad impact reporting for organisations and stakeholders. | ESRS draws from impact-reporting concepts and has areas of alignment with GRI. |
| CDP | Environmental disclosure requested by investors, customers and other market actors. | CDP responses should be consistent with ESRS evidence where the same emissions, risk or target information is used. |
| VSME | Voluntary sustainability reporting standard for smaller companies outside mandatory CSRD scope. | A proportionate route for smaller companies facing sustainability data requests, not a substitute for ESRS where CSRD applies. |
Interoperability helps, but it does not remove judgement. A company cannot simply paste the same paragraph into every framework and assume it has complied. It needs a controlled evidence base, then a careful mapping from that evidence into each reporting channel.
What companies should do now
The first move is scoping. A company needs to know whether it is directly in scope, indirectly exposed through group structure, or outside direct reporting but still likely to receive value-chain requests.
The second move is materiality. The company should not start by answering every datapoint. It should map impacts, risks and opportunities, assess material topics and document the judgement trail.
The third move is evidence ownership. For each material topic, someone needs to own the data, method, controls and sign-off. Climate data may sit with sustainability, energy, finance, procurement and operations. Workforce data may sit with human resources. Supplier information may sit with procurement or legal. ESRS pressure exposes those ownership gaps quickly.
The fourth move is consistency. The sustainability statement, CDP (formerly Carbon Disclosure Project) response, investor deck, customer questionnaire, website claims and transition plan should not tell five different stories. If they do, the issue is not only communications. It is evidence governance.
Common ESRS mistakes
The first mistake is treating ESRS as a static checklist. The standards require judgement. A checklist can help project management, but it cannot replace the materiality assessment, controls or disclosure decisions.
The second mistake is starting too late. Assurance-ready information needs owners, audit trails, version control, definitions, source systems and review points. Those cannot be built the week before publication.
The third mistake is separating sustainability from finance. ESRS reporting lives in the management report and needs governance. It is not only a sustainability-team document.
The fourth mistake is overloading suppliers. Large companies may need value-chain information, but indiscriminate questionnaires can create noise. Better requests explain the data need, boundary, format, timing and level of evidence expected.
The fifth mistake is assuming simplification removes scrutiny. If fewer companies report directly, the reports that remain may face more attention. A shorter standard can still produce sharper questions.
The practical judgement
ESRS is not the whole sustainability reporting universe, and it is not immune from political change. But it has already changed how companies think about sustainability evidence. It makes vague claims less comfortable because it asks companies to connect claims to materiality, governance, metrics, targets, actions and controls.
That is the central judgement: ESRS is where sustainability reporting becomes a test of evidence quality. The best companies will not read it as a form to fill in. They will read it as a map of where their sustainability data, governance and business decisions are strong enough, and where they are not.
What to watch next
The main signals are final simplified ESRS amendments, further Omnibus changes, European Commission guidance changes, assurance expectation shifts and material EFRAG updates to ESRS implementation support.
FAQ
Are ESRS mandatory?
ESRS are mandatory for companies that are required to report under CSRD, subject to the applicable scope, timing, national implementation and any transitional relief. Companies outside direct scope may still encounter ESRS-shaped data requests from larger customers, lenders or investors.
How many ESRS standards are there?
The first sector-agnostic set has 12 standards: two general standards, five environmental standards, four social standards and one governance standard.
What is the difference between ESRS and ISSB?
International Sustainability Standards Board (ISSB) standards focus on sustainability-related financial disclosures useful to capital providers. ESRS uses double materiality, so it also covers the company's impacts on people and the environment. There is overlap, especially on climate, but the reporting lens is not identical.
Does ESRS require Scope 3 emissions disclosure?
ESRS climate reporting can require relevant value-chain emissions information where climate is material and the disclosure applies. The practical point is that companies need a defensible method for Scope 1, Scope 2 and material Scope 3 data rather than only a headline carbon number.
Will Omnibus remove ESRS reporting?
No. The Omnibus process is about simplifying, delaying and narrowing parts of the regime, not removing the need for sustainability reporting altogether. The exact obligations depend on final legal text, timing and company scope.
Useful source links
- European Commission: corporate sustainability reporting
- EUR-Lex: European Sustainability Reporting Standards delegated regulation
- European Commission: Omnibus I simplification package
- European Commission: ESRS quick-fix delegated act
- EFRAG: revised ESRS exposure drafts and consultation
- European Commission: ESRS and ISSB interoperability guidance