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cbs.zero: What are the European Sustainability Reporting Standards (ESRS)?

With the European Green Deal, the EU is committed to achieving a climate-neutral continent by 2050, while simultaneously fulfilling additional sustainability objectives in the environmental, social, and governance domains. The ESRS (European Sustainability Reporting Standards) set clear and precise standards for corporate sustainability reporting in the European Union, as mandated by the CSRD framework. Its ultimate goal is to ensure that sustainability information is easily comprehensible, pertinent, and comparable.

The European Sustainability Reporting Standards (ESRS) not only consider general requirements, but also central aspects such as environmental, social, and governance factors. The CSRD provides a framework for sustainability reporting, while the specific implementation is carried out through delegated regulations by the European Commission. It is mandatory for all reporting companies to apply the ESRS, which are tailored to the requirements of the CSRD. The ESRS currently consist of Set 1, which includes the first 12 ESRS, with additional industry-specific and SME standards to be published at a later date. There are currently approx. 826 mandatory disclosures and approx. 257 optional disclosures. Out of the mandatory disclosures, 649 are subject to materiality considerations. These disclosures should only be applied if the aspect is deemed material in terms of opportunities and risks for the company and/or the environmental impact of business operations.

The ESRS have extensive requirements, so timely engagement is necessary. A thorough materiality assessment involving relevant stakeholders is also required. Meeting the requirements necessitates adjusting or developing information and monitoring systems.

Structure and Content of ESRS

On December 22, 2023, the delegated legal act regarding ESRS Set 1 – the European Sustainability Reporting Standards (ESRS) – was published in the Official Journal of the European Union under Delegated Regulation (EU) 2023/2772. These twelve ESRS already provide comprehensive regulation (a total of 284 densely printed pages) for the basic design of the required sustainability declaration.

The introduction of the industry-specific standards has been delayed by two years and is now expected to be introduced no earlier than 2025. Industry-specific standards and two SME standards have been postponed. The SME standards have also been delayed, with one standard intended as a requirement for capital market-oriented SMEs, which will be subject to reporting from 2026 onwards. The other standard is meant to serve as a guideline for SMEs that are not directly obligated to report.

The need for further development has already been suggested in the published standards, particularly in the social standards, where parameters and metrics for reporting are still lacking. The standards will undergo continuous revision, similar to the International Financial Reporting Standards (IFRS).

ESRS are based on existing frameworks and regulations

ESRS development considered various existing standards from different initiatives, including voluntary guidelines and indications for states such as the OECD Guidelines for Multinational Enterprises or the UN Guiding Principles on Business and Human Rights. Existing regulations were also incorporated as much as possible.

The EU Taxonomy Regulation, in effect since 2022, applies to select non-financial companies and carries implications beyond sustainable financing regulations for banks and insurance companies. It is set to be linked with the European Corporate Sustainability Due Diligence Directive (CSDDD), pending final adoption. Under this directive, companies are required to identify and mitigate their negative impacts on human rights and the environment, which is similar to the Supply Chain Due Diligence Act (LkSG).

However, the directive has more extensive requirements than the LkSG, including specific environmental obligations such as meeting the 1.5-degree climate target. The new due diligence obligations apply to the entire value chain, including upstream business relationships with suppliers and downstream activities such as distribution or recycling. Business relationships must be terminated as a last resort if adverse impacts on human rights or the environment cannot be avoided or mitigated, similar to the LkSG. It is crucial to integrate these new due diligence obligations into corporate policy and risk management to ensure compliance and accountability.

The target groups of the various regulations differ from each other, which can lead to requirements being imposed in the ESRS for which there is actually no obligation. It is important to ensure that regulations are not implemented through the back door.

Alignment with International Sustainability Reporting Standards

The ESRS align with internationally recognized norms for sustainability reporting. On June 26, 2023, the International Sustainability Standards Board (ISSB) published the standards IFRS S1 ‘General Requirements for Disclosure of Sustainability-related Financial Information’ and IFRS S2 ‘Disclosure of Climate-related Information’. These standards were developed after a thorough consultation and revision phase, in collaboration with many relevant previous initiatives.

These standards aim to facilitate globally consistent reporting on sustainability-related risks and opportunities, and although compliance with these standards remains voluntary, they are not to be overlooked.

The IFRS S1 provides a set of disclosure requirements that enable companies, particularly investors, to be informed about sustainability-related risks and opportunities they face in the short, medium, and long term. The EU requires double materiality, which involves considering the environmental impact of business activities and including more stakeholders. However, in practice, the impacts usually affect the company, so the differences in standards are not significant. The ISSB primarily focuses on the recipients of the IFRS, which are the current and potential capital providers. It highlights the significance of identifying risks and opportunities for the reporting company.

Presently, climate-related disclosures are mandated only by IFRS S2, while other sustainability topics are yet to be included. Both standards incorporate only the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). The ESRS has been partially aligned with the ISSB, as demanded by many parties. Therefore, internationally operating companies may need to adhere to different frameworks.


The ESFRS present companies with an increasing number of challenges. If you have any questions about ESFRS or need support in translating the reporting requirements into a technological architecture, please do not hesitate to contact us. We will be happy to help you prepare and take advantage of the opportunities that sustainability offers. With cbs.zero, we are helping companies transition to sustainable and future-proof organizations. We offer our customers tangible approaches to measuring, analyzing, and reducing their carbon footprint.


Alexander Neske