The European Commission has adopted the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD). Some key points include:

1.The standards cover the full range of environmental, social, and governance issues (e.g. climate change, biodiversity, human rights) and they provide information to understand the sustainability impact of companies.

2.ESRS include the ESRS 1 (General Requirements) with the general principles to be applied when reporting according to ESRS (does not itself set specific disclosure requirements), and ESRS 2 (General Disclosures), which specifies essential information to be disclosed and is mandatory for all companies under the CSRD scope. All other 10 standards (E1-E5, S1-S4, G1) and the individual disclosure requirements and datapoints within them are subject to a materiality assessment. This means that the company will report only relevant information and may omit the information in question that is not relevant (i.e. material) for its business model and activity.

3.The first companies will have to apply the standards in financial year 2024, for reports published in 2025. Listed SMEs are obliged to report as from 2026, with a further possibility of voluntary opt-out until 2028, and will be able to report according to separate, proportionate standards that the European Financial Reporting Advisory Group (EFRAG) will develop in the future.

The official adoption can be found here and in case you have any questions you can also contact us.