European Sustainability Reporting Standards (ESRS)
The European Sustainability Reporting Standards (ESRS) are a comprehensive set of mandatory reporting standards designed to ensure the transparency and comparability of sustainability disclosures by companies within the European Union. The ESRS are a central element of the Corporate Sustainability Reporting Directive (CSRD), which came into effect in January 2024 and replaces the previous Non-Financial Reporting Directive (NFRD). Their main goal is to require companies to report comprehensively and consistently on their environmental, social, and governance (ESG) practices, thus providing a reliable data foundation for investors, regulators, and the public.
On July 3, 2026, the EU Commission published revised ESRS, reducing the number of mandatory data points by around 60%. The Council and Parliament are currently reviewing the draft within a two-month period, with final publication expected mid-September 2026. Until then, companies can choose whether to report under the previous or the new ESRS for the 2026 financial year; from the 2027 financial year onward, the revised ESRS will be mandatory.
The ESRS, developed by the European Financial Reporting Advisory Group (EFRAG), comprise a total of 12 standards, divided into two main categories: overarching standards and thematic standards. These cover specific ESG areas such as climate change, environmentally sustainable management, social responsibility, and corporate governance. A key feature of the ESRS is the dual materiality approach, which allows companies to consider both the impacts of their activities on the environment and society as well as the financial risks and opportunities arising from social and ecological issues.To support companies in implementing the standards, EFRAG has published guidelines that assist particularly in conducting materiality assessments and reporting along the value chain. The introduction of the ESRS is expected to improve the quality of non-financial reporting, ultimately contributing to better-informed decisions by stakeholders and supporting European goals for sustainable economic development.
