European Sustainability Reporting Standards

5th Sep 2023

The Corporate Sustainability Reporting Directive (the “CSRD”) imposing a reporting obligation with respect to ESG matters on companies that fall within its scope entered into force on  5 January 2023 (for more information on this, read our legal update here). Following the entry into force of the CSRD, the European Commission adopted the European Sustainability Reporting Standards (“ESRS”) on 31 July 2023.

The ESRS are the standards in accordance with which companies falling within the scope of the CSRD will disclose and report their ESG information in their management reports, together with their financial statements.

The Commission adopted the ESRS as a delegated regulation (i.e. a regulation which is limited in what it can regulate, supplementing existing legislation on non-essential parts but not changing the essential elements of the same). They will be applicable to all member states and do not need to be transposed into national legislation.

The ESRS include 12 standards – 2 cross-cutting standards and 10 topic-specific ones, as follows:


  1. ESRS 1 – General Requirements

These explain the general reporting principles/concepts, such as:

  • double materiality = disclose how sustainability matters affect the company’s financial performance and position (‘financial’ materiality), as well as the company’s own positive or negative impact on people, the environment etc (‘impact’ materiality)
  • reporting boundaries = will be based on the financial statements but will also extend to the company’s value chain.
  1. ESRS 2 – General Disclosures

These specify essential information to be disclosed irrespective of which sustainability matter is being considered.


 These set disclosure requirements on governance, strategy, and impact, risk and opportunity management.  In addition, they are subject to a materiality assessment, i.e., the company may opt not to report information which is not relevant to its business/ activity.

Τhey are split as follows:


  1. ESRS E1 – Climate
  2. ESRS E2 – Pollution
  3. ESRS E3 – Water and marine resources
  4. ESRS E4 – Biodiversity and ecosystems
  5. ESRS E5 – Resource use and circular economy


  1. ESRS S1 – Own workforce
  2. ESRS S2 – Workers in the value chain
  3. ESRS S3 – Affected communities
  4. ESRS S4 – Consumers and end users


  1. ESRS G1 – Business conduct

This is the first set of standards published which is sector-agnostic and applies to all companies (falling within the scope of the CSRD). Additional sets that will include sector-specific standards, standards for SMEs and for non-EU parent companies will be adopted. The first of these additional standards are expected by the end of October 2023.

The implementation of the ESRS will be phased.

Assuming the European Parliament and the Council do not reject the delegated regulation, it will take effect as from 1 January 2024, i.e. disclosures in accordance with this first set of standards will be required for the 2024 financial year for the first category of in-scope companies, namely large public-interest companies and large companies listed on EU-regulated markets having more than 500 employees (i.e. those companies that are already subject to the Non-Financial Reporting Directive which the CSRD replaces).

The aim of the ESRS is to address the shortfalls in the quality of sustainability reporting thus far, such as the unavailability of reliable and comparable information to investors on the impact of companies on people and the environment, which in turn does not aid them to fund greener activities and projects. The coherence which the ESRS aims to achieve means that companies will not need to adopt several standards as they currently do of their own accord, therefore resulting in greater clarity and hopefully in lower reporting costs. It also means that we can expect more public accountability and transparency.

If your organisation falls within the scope and you would like to stay on top of all things ESG, please get in touch with our team to understand what your company will be required to disclose and how to prepare.


This legal update is for information purposes only and is not intended to constitute legal advice or be a substitute for reference to the detailed provisions of applicable laws and regulations.


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