The introduction of the CSRD (Corporate Sustainability Reporting Directive) clarified the “if” of reporting. The ESRS (European Sustainability Reporting Standards) now clarify the “how.” They are the technical framework that ensures that sustainability reports in the EU will be as comparable and reliable as financial reports in the future.
For companies, this means an end to prose and marketing statements. Instead, hard data points, clear strategies, and a standardized structure are required. But how are these standards structured and what do they mean in practice?
The architecture of the ESRS: A modular system
The ESRS should not be understood as a single, huge block, but as a modular system. Currently, the cross-sector standards (Set 1) are available, which apply to all industries regardless of sector. Sector-specific standards and standards for SMEs will follow later.
The structure is divided into three levels:
1. Cross-cutting standards
These two standards form the foundation and framework for all other topics.
- ESRS 1 (General Requirements): No specific data is requested here; instead, the principles are defined. This concerns concepts such as double materiality, reporting boundaries, and data quality.
- ESRS 2 (General Disclosures): This standard is the only one that is always mandatory, regardless of the outcome of your materiality analysis. Here, companies must disclose:
- What governance structures and strategies look like in relation to sustainability.
- How risks and opportunities are managed.
2. Topical Standards
These standards cover the three ESG pillars. Which of these must be reported depends on your materiality analysis.
E – Environment:
- E1: Climate change (CO₂ emissions, energy consumption – material for almost all companies)
- E2: Environmental pollution
- E3: Water and marine resources
- E4: Biodiversity and ecosystems
- E5: Resource use and circular economy
S – Social:
- S1: Own workforce (working conditions, equal opportunities)
- S2: Workforce in the value chain
- S3: Affected communities
- S4: Consumers and end users
G – Governance:
- G1: Corporate policy (anti-corruption, bribery, payment practices)
Here is a structured and technically sound article on the topic of ESRS (European Sustainability Reporting Standards), which is ideal for your website (e.g., eco-vox). It explains the complex architecture of the standards in an understandable way and highlights the practical consequences.
ESRS at a glance: The blueprint for your sustainability report
With the introduction of the CSRD (Corporate Sustainability Reporting Directive), the “if” of reporting has been clarified. The ESRS (European Sustainability Reporting Standards) now clarify the “how.” They are the technical framework that ensures that sustainability reports in the EU will be as comparable and reliable as financial reports in the future.
For companies, this means no more prose and marketing statements. Instead, hard data points, clear strategies, and a standardized structure are required. But how are these standards structured and what do they mean in practice?
The architecture of the ESRS: A modular system
The ESRS should not be understood as a single, huge block, but as a modular system. Currently, the cross-sector standards (Set 1) are available, which apply to all industries. Sector-specific standards and standards for SMEs will follow later.
The structure is divided into three levels:
1. Cross-cutting standards
These two standards form the foundation and framework for all other topics.
- ESRS 1 (General Requirements): No specific data is requested here; instead, the principles are defined. This concerns concepts such as double materiality, reporting boundaries, and data quality.
- ESRS 2 (General Disclosures): This standard is the only one that is always mandatory, regardless of the outcome of your materiality analysis. Here, companies must disclose:
- What governance structures and strategies look like in relation to sustainability.
- How risks and opportunities are managed.
2. Topical Standards
These standards cover the three ESG pillars. Which of these must be reported depends on your materiality analysis.
E – Environment:
- E1: Climate change (CO₂ emissions, energy consumption – material for almost all companies)
- E2: Environmental pollution
- E3: Water and marine resources
- E4: Biodiversity and ecosystems
- E5: Resource use and circular economy
S – Social:
- S1: Own workforce (working conditions, equal opportunities)
- S2: Workforce in the value chain
- S3: Affected communities
- S4: Consumers and end users
G – Governance:
- G1: Corporate policy (anti-corruption, bribery, payment practices)
The core mechanism: double materiality
The ESRS require companies to report not simply everything, but only what is relevant (“material”). This is determined by the principle of double materiality, which is defined in ESRS 1:
- Impact Materiality (Inside-Out): What impact does your company have on people and the environment? (e.g., water consumption in a water-scarce region).
- Financial Materiality (Outside-In): What sustainability risks and opportunities have a financial impact on your company? (e.g., commodity price fluctuations due to climate change).
Important: An issue is reportable as soon as it is material in one of the two dimensions.
Here is a structured and technically sound article on the topic of ESRS (European Sustainability Reporting Standards), which is ideal for your website (e.g., eco-vox). It explains the complex architecture of the standards in an understandable way and highlights the practical consequences.
ESRS at a glance: The blueprint for your sustainability report
With the introduction of the CSRD (Corporate Sustainability Reporting Directive), the “if” of reporting has been clarified. The ESRS (European Sustainability Reporting Standards) now clarify the “how.” They are the technical rules that ensure that sustainability reports in the EU will be as comparable and reliable as financial reports in the future.
For companies, this means no more prose and marketing statements. Instead, hard data points, clear strategies, and a standardized structure are required. But how are these standards structured and what do they mean in practice?
The architecture of the ESRS: A modular system
The ESRS should not be understood as a single, huge block, but as a modular system. Currently, the cross-sector standards (Set 1) are available, which apply to all industries. Sector-specific standards and standards for SMEs will follow later.
The structure is divided into three levels:
1. Cross-cutting standards
These two standards form the foundation and framework for all other topics.
- ESRS 1 (General Requirements): No specific data is requested here; instead, the principles are defined. This concerns concepts such as double materiality, reporting boundaries, and data quality.
- ESRS 2 (General Disclosures): This standard is the only one that is always mandatory, regardless of the outcome of your materiality analysis. Here, companies must disclose:
- What governance structures and strategies look like in relation to sustainability.
- How risks and opportunities are managed.
2. Topical Standards
These standards cover the three ESG pillars. Which of these must be reported depends on your materiality analysis.
E – Environment:
- E1: Climate change (CO₂ emissions, energy consumption – material for almost all companies)
- E2: Environmental pollution
- E3: Water and marine resources
- E4: Biodiversity and ecosystems
- E5: Resource use and circular economy
S – Social:
- S1: Own workforce (working conditions, equal opportunities)
- S2: Workforce in the value chain
- S3: Affected communities
- S4: Consumers and end users
G – Governance:
- G1: Corporate policy (anti-corruption, bribery, payment practices)
The core mechanism: double materiality
The ESRS require companies to report not simply everything, but only what is relevant (“material”). This is determined by the principle of double materiality, which is defined in ESRS 1:
- Impact Materiality (Inside-Out): What impact does your company have on people and the environment? (e.g., water consumption in a water-scarce region).
- Financial Materiality (Outside-In): What sustainability risks and opportunities have a financial impact on your company? (e.g., commodity price fluctuations due to climate change).
Important: An issue is reportable as soon as it is material in one of the two dimensions.
Practical significance for the sustainability report
The transition from voluntary standards (such as GRI) to the mandatory ESRS is a culture shock for many companies.
1. Data graveyards vs. strategy
The ESRS covers over 1,000 potential data points. The challenge lies not only in collecting the data, but also in consolidating it. Companies need robust IT systems to record data (e.g., energy consumption at all locations) in an audit-proof manner. Excel quickly reaches its limits here.
2. A look at the value chain
The reporting obligation does not end at the factory gate. For topics such as Scope 3 emissions (E1) or labor in the value chain (S2), companies must obtain information from suppliers and service providers. This requires a completely new approach to supplier management.
3. Audit requirement (limited assurance)
In the future, the sustainability report will be part of the management report and must be audited externally (initially with limited assurance, later with reasonable assurance). This means that processes and data sources must be documented and traceable.
Preparation is everything
The ESRS are complex, but they also offer an opportunity: they make sustainability manageable. Those who start now to carry out a thorough materiality analysis and identify data gaps (gap analysis) will not be overwhelmed by the effort in 2025.
Our recommendation: Don’t start by trying to collect data points. Start with the question: What is material for us? Because that defines the scope of your report.