ESRS explained simply: What companies need to know now about the new EU sustainability standards
The ESRS (European Sustainability Reporting Standards) are an important element in the ESG area. In this article you will find out exactly what it is, whether it affects your company and how you can implement it optimally.
What are the European Sustainability Reporting Standards (ESRS)?
The European Sustainability Reporting Standards (ESRS) are a binding set of reporting requirements for sustainability information in the EU. They were developed by the European Financial Reporting Advisory Group (EFRAG) on behalf of the European Commission and form the technical framework for implementing the Corporate Sustainability Reporting Directive (CSRD).
The objective is clearly defined: companies should disclose environmental, social, and governance (ESG) information in a comparable, reliable, and detailed manner. For the first time, this raises sustainability reporting to a similar level as financial reporting.
Structure and content of the ESRS: This is what companies have to report
The ESRS have a modular structure. On the one hand, there are general requirements that include: Reporting principles that define the reporting structure and requirements for materiality analysis. On the other hand, there are topic-specific standards that describe in detail which sustainability aspects must be reported – for example on climate, environment, employees or human rights impacts.
The standards include both qualitative requirements, such as reporting principles, reporting periods or perspectives, as well as extensive quantitative data points, for example on Scope 1, Scope 2 and Scope 3 emissions or energy consumption. In addition, the ESRS contain clear disclosure requirements for the value chain and define how risks, opportunities and impacts along the supply chains must be presented. A technical accompanying document supplements the standards with a complete list of all data points and explains which information must always be reported and which is only mandatory if it is material.
Scope: Which companies do the EU Sustainability Reporting Standards apply to?
The ESRS apply to all companies covered by the CSRD. These primarily include large companies and capital market-oriented companies that are gradually growing into reporting requirements. Non-EU companies can also be affected if they have significant business activities within the EU. The new rules significantly expand the circle of companies required to report compared to the previous NFRD.
What do the ESRS regulate?
The 12 standards at a glance
The ESRS consists of 12 standards, divided into two overarching cross-sectional standards and ten thematic standards from the areas of environmental, social and governance.
Cross-sectional standards (cross-cutting):
Thematic Standards (Topical):
Environment (E):
Social (S):
Governance (G):
These standards together form the mandatory framework for sustainability reporting according to CSRD. While ESRS 1 and 2 provide the basic pillars, the thematic standards determine which content must be disclosed in detail.
All about CSRD and ESRS
In our free German webinar recording you will find out all the important information about CSRD reporting!
What do you have to report? The principle of double materiality
The central mechanism of the ESRS is double materiality. Companies must evaluate every sustainability issue from two perspectives:
1. Impact Materiality
This is about what actual or potential impact the company has on the environment and society – such as CO₂ emissions, biodiversity impacts, working conditions or human rights risks in the supply chain.
2. Financial Materiality
This perspective looks at how sustainability issues can financially impact the company itself. Examples include regulatory requirements, physical climate risks, energy prices, reputational risks or value chain dependencies.
A topic is subject to reporting as soon as at least one of the two perspectives classifies it as material. If you would like to find out more about the double materiality analysis, we recommend our blog post.
Regardless of materiality, certain information is always mandatory. This includes important disclosures from ESRS 2, in particular:
Impact on companies and their reporting – what can realistically be expected now
The implementation of the ESRS is a comprehensive transformation project that requires investments and new structures in many areas. In particular, companies should expect the following impacts:
1. Higher data overhead
The ESRS requires a variety of new data points, including ESG KPIs, emissions data (Scope 1-3), supply chain information, biodiversity metrics and rich social and governance data.
2. Building new processes and governance structures
Roles and responsibilities must be clearly defined. Sustainability is becoming more closely linked to strategy, business model and risk management. Regular data validation and internal reviews become necessary.
3. Need for a resilient IT infrastructure
Many companies need new or expanded systems such as ESG reporting software, data platforms, interfaces to ERP, HR and purchasing systems, as well as documentation and audit trails.
4. External audit obligation (assurance)
Sustainability reports will be audited externally in the future – initially with “limited assurance”, later possibly with a higher level of auditing. Companies must therefore provide verifiable data and documentation.
5. Strategic opportunities
Transparency creates competitive advantages: better reputation, easier access to sustainable financing, increased stakeholder trust and better long-term risk and future planning.
ESG at a glance
With a holistic software solution, you can manage ESG particularly efficiently and effectively!
Preparing for the ESRS: First steps for companies
In order to implement the ESRS requirements efficiently, companies should proceed in a structured manner. The most important starting points:
- Pilot reports & audit readiness: Create a prototype of the sustainability report as a test and have it checked internally or externally.
- Scope check & gap analysis: Check whether your company is subject to CSRD. Then identify which data points, processes and systems are already in place and which are missing.
- Materiality analysis: Carry out double materiality methodically and documented – it is the central basis for all further reporting obligations.
- Data map & IT architecture: Analyze which systems provide data (ERP, HR, energy meters, supplier portals) and how missing values can be collected.
- Governance & Responsibilities: Define roles, determine data owners and create a reporting calendar.
- Supplier management: Set up processes to collect supply chain data, for example through questionnaires, audits or contractual requirements.
- Training & Communication: Train employees and management and involve stakeholders such as customers, investors and suppliers at an early stage.
Conclusion: The ESRS as an opportunity for a transparent and sustainable economy
The ESRS mark a big step towards transparent, responsible and comparable sustainability reporting in the EU. The requirements are demanding, but at the same time open up enormous opportunities for companies: more transparency, improved control ability, increased credibility, better access to sustainable financing and, in the long term, greater competitiveness.
Companies that begin implementation early on secure clear advantages. The ESRS are not just a legal obligation, but a strategic framework for sustainable business.
Frequently asked questions about ESRS
Yes. The ESRS provides a clear structure with defined data points and reporting requirements. This means companies know what data is needed. However, the standards do not provide the data automatically – processes, IT systems and supplier management must be adapted. Many companies use the ESRS datapoints as a checklist for data collection.
The ESRS have been binding for all companies in the CSRD scope since the end of 2023. Some information is mandatory regardless of the materiality analysis (e.g. certain basic and governance information). According to EFRAG, around 161 data points must always be reported, others only if they are essential.
Note: The EU is continually simplifying the requirements (e.g. through changes from 2025). Current delegated acts and EFRAG publications should therefore be regularly reviewed.
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