EU CSRD | ESRS

CSRD and ESRS

Our quick summary to navigate the ever confusing alphabet soup of EU regulations.

Beginning in 2025, the European Union will enforce a mandate requiring large, publicly traded companies to provide comprehensive disclosures concerning the risks and opportunities associated with their Environmental, Social, and Governance (ESG) practices.

The CSRD is underpinned by the Environmental, Social, and Governance Reporting Standards (ESRS) package, which outlines the specific requirements for companies in terms of disclosure and reporting procedures. This package includes the European Commission's Delegated Act, which sets forth two overarching standards and an additional ten sustainability standards for the disclosure of ESG-related information. These standards will become legally binding across the EU from January 1, 2024.

What is the CSRD and ESRS?

This directive, named the Corporate Sustainability Reporting Directive (CSRD), supersedes the EU's prior ESG reporting framework, the NFRD, with a more extensive and rigorous approach. The CSRD expands the scope of sustainability reporting beyond solely carbon emissions to encompass broader areas such as pollution, water usage, waste management, and biodiversity conservation. Its aim is to evaluate the impact of corporate actions on both society and the environment.

The ESRS package, sometimes referred to as the initial set of ESRS, also includes two appendices. Appendix I presents the revised 12 ESRS, while Appendix II offers a compilation of acronyms and a glossary of terms.

The 12 ESRS encompass various dimensions:

Cross-Cutting Standards:

  1. ESRS 1 – General Requirements

  2. ESRS 2 – General Disclosures

Environmental Standards:

  1. ESRS E1 – Climate Change

  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

Social Standards:

  1. ESRS S1 – Own Workforce

  2. ESRS S2 – Work in the Value Chain

  3. ESRS S3 – Affected Communities

  4. ESRS S4 – Consumers and End-Users

Governance Standards:

  1. ESRS G1 – Business Conduct

These standards are closely aligned with the structure of the Task Force on Climate-related Financial Disclosures (TCFD), with the objective of enhancing transparency and accountability in corporate sustainability reporting.

Gary Low