European Sustainability Reporting Standards Framework

In the European Union, companies must comply with the Corporate Sustainability Report Directive and report on sustainability in accordance with the European Sustainability Reporting Standards (ESRS) and its data points (DPs).

Developed by EFRAG and published in May 2024, the objective of ESRS is to provide investors with information to understand the sustainability impact of their investee companies.

EFRAG maintains a platform to respond to stakeholder questions about ESRS. These responses are known as explanations and EFRAG release explanations on a regular basis. For example, in December 2024, EFRAG released explanations for ESRS E1 Climate Change and ESRS E4 Biodiversity and ecosystems. For more information about the platform, see ESRS Q&A platform.

ESRS draws on other regulations like SFDR and Pillar 3 as well as other voluntary frameworks, such as International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI), which helps ensure a high degree of interoperability between EU and global standards to prevent unnecessary double reporting by companies.

For more information about the standards, the broader CSRD legislation, and support for ESRS in IBM® ESG Suite, see the What is the Corporate Sustainability Report Directive (CSRD)? pages on the IBM website.

ESRS standards

ESRS covers a comprehensive range of environmental, social, and governance (ESG) issues, including climate change, biodiversity, and human rights. The framework consists of 2 cross-cutting standards and 12 topical standards (see Figure 1).

ESRS includes:

Cross-cutting standards

Defines the general disclosures and requirements that apply across all topics, regardless of which topics are material. Cross-cutting standards are mandatory.

ESRS 1 - General requirements

Establishes the foundational principles and requirements that companies must adhere to when preparing their sustainability reports. The standard explains conventions for drafting responses, key terms, and general prerequisites for creating and presenting sustainability-related information.

ESRS 1 requires companies to explain their materiality assessment process, including the methodologies, assumptions, and results.

ESRS 1 provides several miscellaneous reporting requirements such as the level of detail to provide, the currency and units of measure to use, and the time horizons to use in targets.

ESRS 2 - General disclosures

Sets out disclosure requirements that organizations must follow at a general level across all material sustainability topics. All disclosures requirements in this standard are mandatory for organizations, regardless of the outcome of their materiality assessment.

Topical standards

Includes requirements under the environmental, social, and governance topics. An organization can choose to disclosure information that is relevant to their business operations.

If an organization deems that a topic not to be material during the materiality assessment, the organization does not need to disclosure information for that topic.

For a further information about each standard, refer to ESRS Topical standards.

Today, both cross-cutting and topical standards in ESRS are sector agnostic. The standards apply to all entities regardless of the sector in which they operate. Sector-specific standards are being developed.