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On 21 April 2021, The European Commission adopted a legislative proposal for a Corporate Sustainability Reporting Directive (CSRD). One of the key provisions of the CSRD is that companies in scope would have to report in compliance with European sustainability reporting standards (ESRS) adopted by the European Commission as delegated acts, on the basis of technical advice provided by the European Financial Reporting Advisory Group (EFRAG). If you are wondering when your company should start reporting on CSRD, please take a short survey to find out here
The first delegated act - European Sustainability Reporting Standards (ESRS) sets out cross-cutting standards and standards for the disclosure of environmental, social, and governance information under the Corporate Sustainability Reporting Directive (CSRD). The feedback period runs from 09 June 2023 to 07 July 2023.
This act supplements the Accounting Directive as amended by the Corporate Sustainability Reporting Directive, which requires large companies and listed companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment. Link
Disclosure on material topics: ESRS specifies the information that an undertaking shall disclose about its material impacts, risks, and opportunities in relation to environmental, social, and governance sustainability matters. ESRS does not require undertakings to disclose any information on environmental, social, and governance topics covered by ESRS that the undertaking has assessed as non-material
The structure of the draft ESRS:
ESRS 1 General requirements
ESRS 2 General disclosures
ESRS E1 Climate change
ESRS E2 Pollution
ESRS E3 Water and marine resources
ESRS E4 Biodiversity and Ecosystems
ESRS E5 Resource Use and circular economy
ESRS S1 Own workforce
ESRS S2 Workers in the value chain
ESRS S3 Affected communities
ESRS S4 Consumers and end-users
ESRS G1 Business conduct
Inclusion of Appendix C: List of phased-in Disclosure Requirements:
ESRS E1-6 : Undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year (on a consolidated basis where applicable) may omit the datapoints on scope 3 emissions and total GHG emissions for the first year of preparation of their sustainability statement.
ESRS E1-9: Anticipated financial effects from material physical and transition risks and potential climate- related opportunities: The undertaking may omit the information prescribed by ESRS E1-9 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E1-9 by reporting only qualitative disclosures for the first three years of preparation of its sustainability statement, if it is impracticable to prepare quantitative disclosures.
ESRS E2-6: Anticipated financial effects from pollution-related impacts, risks and opportunities: The undertaking may omit the information prescribed by ESRS E2-6 for the first year of preparation of its sustainability statement. Except for the information prescribed by paragraph 38(b) on the operating and capital expenditures occurred in the reporting period in conjunction with major incidents and deposits, the undertaking may comply with ESRS E2-6 by reporting only qualitative disclosures, for the first three years of preparation of its sustainability statement.
ESRS E3-5: Anticipated financial effects from water and marine resources-related impacts, risks and opportunities: The undertaking may omit the information prescribed by ESRS E3-5 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E3-5 by reporting only qualitative disclosures, for the first three years of preparation of its sustainability statement.
ESRS E4: Undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year (on a consolidated basis where applicable) may omit the information specified in the disclosure requirements of ESRS E4 for the first 2 years of preparation of their sustainability statement.
ESRS E4-6: The undertaking may omit the information prescribed by ESRS E4-6 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E4-6 by reporting only qualitative disclosures, for the first three years of preparation of its sustainability statement.
ESRS E5-6: The undertaking may omit the information prescribed by ESRS E5-6 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E5-6 by reporting only qualitative disclosures, for the first three years of preparation of its sustainability statement.
ESRS S1: Undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year (on a consolidated basis where applicable) may omit the information specified in the disclosure requirements of ESRS S1 for the first year of preparation of their sustainability statement.
ESRS S1-7: The undertaking may omit reporting for all datapoints in this Disclosure. Requirement for the first year of preparation of its sustainability statements.
ESRS S1-8: The undertaking may omit this Disclosure Requirement with regard to its own employees in non-EEA countries for the first year of preparation of its sustainability statement.
ESRS S1-11: The undertaking may omit the information prescribed by ESRS S1-11for the first year of preparation of its sustainability statement.
ESRS S1-12: The undertaking may omit the information prescribed by ESRS S1-12 for the first year of preparation of its sustainability statement.
ESRS S1-14: The undertaking may omit the data points on cases of work-related ill-health and on number of days lost to injuries, accidents, fatalities and work-related ill health for the first year of preparation of its sustainability statement. The undertaking may omit reporting on non-employees for the first year of preparation of its sustainability statement.
ESRS S1-15: The undertaking may omit the information prescribed by ESRS S1-15 for the first year of preparation of its sustainability statement.
ESRS S2: Undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year may omit the information specified in the disclosure requirements of ESRS S2 for the first 2 years of preparation of their sustainability statement.
ESRS S3: Undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year (on a consolidated basis where applicable) may omit the information specified in the disclosure requirements of ESRS S3 for the first 2 years of preparation of their sustainability statement.
ESRS S4: Undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year (on a consolidated basis where applicable) may omit the information specified in the disclosure requirements of ESRS S4 for the first 2 years of preparation of their sustainability statement.
Materiality Assessment Map in Appendix E: Flowchart for determining disclosures under ESRS:
Below is a list of how GC Insights' ESG Materiality Framework map to the latest ESRS topics. If companies are wondering how they could prepare to adopt the ESRS as a first step towards full-compliance under CSRD, please contact us for more insights.
Read more on our previous updates on EU ESRS under CSRD: https://www.gc-insights.com/report/updates-on-eu-csrd%3A-efrag’s-draft-european-sustainability-reporting-standards