ESRS main requirements


    Structure of the standards

    The sector-agnostic component of the ESRS articulates around two types of standards – cross-cutting and topical ones. The former set, in a way, the conceptual framework of the ESRS. The latter are structured in three pillars – environment, social and governance related standards. Those pillars include individual standards on different topics which should be read against the backdrop of the requirements outlined in the cross-cutting ones.

    The other prongs of the ESRS framework, yet to come, are the sector-specific standards (applicable depending on the industry in which a company operates) or the standards specific for certain types of entities, i.e. SMEs or non-EU entities falling within the scope of the CSRD.

    Major concepts

    The CSRD is a far-reaching piece of legislation and, together with the underlying ESRS, it introduces a comprehensive array of reporting requirements involving numerous concepts, both new and familiar, but somehow revisited. Among these, some are worth being spelled out, in particular:

    Double materiality

    Materiality assessments is the cornerstone of the sustainability reporting under the CSRD, and it manifests two dimensions, which are susceptible to be interdependent:

    • Impact materiality: a sustainability matter pertaining to the reporting entity could create actual or potential positive or negative impacts on people or the environment, and
    • Financial materiality: a sustainability matter could be material from a financial perspective if it produces or could produce financial effects on the reporting entity.

    Value chain

    Building on the EC’s guidance related to the NFRD1, another prominent aspect of reporting under the CSRD is the scope to be covered, which, for several disclosure requirements, extends beyond the financial consolidation perimeter, to upstream and downstream value chain2. Whereas sustainability information is not necessarily required for each component of the value chain, material impacts, risks and opportunities connected with a reporting entity through its direct and indirect business relationships along its value chain are to be encompassed. Business actors included in the value chain are, for instance, key suppliers, customers, distribution channels and end-users.

    1 Refer to paragraph 2.2 of the 2019 Guidance, paragraph 3.1 of the 2017 Guidance and Recitals 6 and 8 of the NFRD.

    2 For temporary exemptions resulting from the phase-in measures of the CSRD as regards the value chain, please refer to Section “Scope of application“.

    Transition plans

    Whereas transition plans correspond to a climate change specific concept, it seems to emerge as one of the most salient points of the CSRD in light of the public focus on the dramatic consequences of global warming. Reporting entities are expected to disclose their transition plans for climate change mitigation3. The goal of disclosing a transition plan is to allow users of the sustainability reports to gain an understanding of the reporting entity’s mitigation endeavours to ensure that its strategy and business model are compatible with the transition to a sustainable economy and with curbing global warming to 1.5 °C in line with the Paris Agreement as well as with the objective of achieving climate neutrality by 2050.

    3 If a reporting entity does not have a transition plan in place, it should indicate whether and, if so, when it envisages to adopt one.

    Alignment with other sustainability reporting standards

    Whereas the ESRS represent probably the most comprehensive and granular sustainability reporting framework at this stage, it is worth stressing to what extent it is aligned and compatible with the spirit of other internationally recognised frameworks addressing similar topics.

    Among the latter, the most prominent example is the Sustainability Disclosure standards developed by the International Sustainability Standards Board (ISSB), which can reasonably be expected to become the global baseline. Albeit for the time being the ISSB has only issued two standards, i.e. IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosure, a convergence process has already been initiated in order to ensure alignment and interoperability of both frameworks to the greatest extent possible, in particular as regards the overlapping climate disclosure standards, and bearing in mind the uneven progress status of both frameworks. A key conceptual difference between the ESRS and the ISSB Standards is the concept of “impact materiality”, which is not covered in the ambit of the ISSB’s mandate. Having said that, one might wonder whether the practical consequences of the aforementioned conceptional divergence is not somehow alleviated by the fact that a topic, which is material for the reporting entity from an inside-out perspective (impact materiality), would be likely to produce effects that would also be significant from a financial point of view (financial materiality).

    As a part of the ESRS elaboration process, EFRAG has endeavoured to promote a close cooperation with the Global Reporting Initiative (GRI)4 aiming at a high degree of interoperability under both frameworks as well. Unlike the ISSB Standards, GRI Standards also include a double materiality approach, thus abating almost entirely conceptual differences in this domain, even though ESRS seem to encompass more financially material topics than GRI Standards. The former envisages a topic as material if material either from impact or financial perspective, whereas the latter analyse financial materiality through the prism of impact materiality, i.e. under GRI Standards a topic is construed as financially material as a consequence of being impact-material in the first place.

    Given the high level of interoperability achieved and based on the [draft] GRI-ESRS Interoperability Index which has been made publicly available, entities reporting under ESRS can be considered as reporting “with reference” to GRI Standards. Nonetheless, reporting entities subject to ESRS which wish to report “in accordance” with the GRI Standards, could fulfil additional applicable GRI requirements not covered by the ESRS in their sustainability statement5.

    Finally, it is noteworthy that ESRS application is mandatory for reporting entities falling under the CSRD scope whereas ISSB and GRI Standards are applicable on a voluntary basis.

    4 The GRI is an international independent standard-setting organisation focusing on sustainability reporting standards. GRI standards, despite being applicable on a voluntary basis, have become increasingly widespread among companies with international operations.

    5 Refer to ESRS 1 paragraph 114.

    Work of EFRAG

    EFRAG prepares different documents and tools with the aim to assist and support the implementation of the ESRS.


    Link Description
    Draft ESRS Set 1 XBRL Taxonomy Draft ESRS Set 1 XBRL Taxonomy package, explanatory note, and basis for conclusions, with illustrative examples.
    ED ESRS for SMEs EFRAG has launched a public consultation on the Exposure Draft ESRS for listed SMEs (ESRS LSME ED) and the Exposure Draft for the voluntary reporting standard for non-listed SMEs (VSME ED).
    ESRS Implementation Guidance EFRAG IG 1 deals with the requirements on the materiality assessment in ESRS and EFRAG IG 2 with the value chain aspects in ESRS. EFRAG IG 3 contains the detailed ESRS datapoints as a Microsoft Excel workbook with an accompanying explanatory note.
    EFRAG ESRS Q&A Platform The ESRS Q&A platform aims to collect and answer technical questions that remain unresolved after thorough analysis by stakeholders to support the implementation of ESRS.
    ESRS Q&A compilation Compilation of 68 Explanations released on 30 May 2024 to respond to stakeholders’ technical questions on the ESRS, which includes 12 Explanations already released on 5 February 2024 and 12 Explanations already released on 1 March 2024 (also available on the Q&A Platform).


    Laws, regulations and directives

    Other reference texts