ESRS

The European Sustainability Reporting Standards (ESRS) are a set of comprehensive sustainability reporting standards developed by the European Union to enhance transparency and consistency in environmental, social, and governance (ESG) disclosures. Adopted as part of the Corporate Sustainability Reporting Directive (CSRD), ESRS aim to improve investor and stakeholder confidence by providing standardized frameworks for companies to report on their sustainability impacts and risks.

The standards are designed to align with international best practices, including the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD), while addressing specific European regulatory needs. ESRS cover a wide range of topics, such as climate change, biodiversity, human rights, and supply chain sustainability, ensuring that companies disclose relevant information in a structured and comparable manner. They also emphasize the integration of sustainability into corporate strategy, governance, and risk management.

Implementation of ESRS is voluntary for non-EU companies with significant operations in the EU but becomes mandatory for all large and medium-sized companies within the European Union by 2024, with phased rollouts for smaller entities. The standards require companies to assess and disclose material sustainability impacts, ensuring that disclosures are relevant to stakeholders and aligned with real-world risks and opportunities. Additionally, ESRS include requirements for digital reporting, such as the use of XML schemas, to facilitate automated processing and comparison of sustainability data.

The European Commission and the European Financial Reporting Advisory Council (EFRAC) oversee the development and refinement of ESRS, collaborating with stakeholders to address emerging sustainability challenges. The standards are expected to contribute to a more sustainable and resilient European economy by fostering better decision-making and encouraging corporate accountability.