What are the ESRS?

What are the ESRS?

For enterprise compliance teams navigating the modern regulatory landscape, a common question arises: What are the ESRS?

The European Sustainability Reporting Standards (ESRS) are the mandatory reporting frameworks underpinning the European Union’s Corporate Sustainability Reporting Directive (CSRD). Drafted by the European Financial Reporting Advisory Group (EFRAG), the ESRS dictate exactly what sustainability information companies must disclose and exactly how they must measure and format it.

Designed to eliminate greenwashing and standardize ESG data across the global market, the ESRS require companies to treat non-financial sustainability metrics with the same rigor, transparency, and auditability as their traditional financial statements.

CSRD vs. ESRS: Understanding the Difference

While often used interchangeably, the CSRD and the ESRS represent two different parts of the regulatory equation:

• The CSRD (The Law): The overarching EU directive that determines which companies must report, when they must report, and mandates that the reports be digitally tagged and third-party audited.
• The ESRS (The Rulebook): The highly technical, detailed standards and data points that companies in scope of the CSRD must actually use to construct their sustainability disclosures.

The Structure of the European Sustainability Reporting Standards

The ESRS are not a simple checklist. They form a complex, multi-layered architecture encompassing both qualitative narratives (policies, targets, and action plans) and quantitative metrics. The initial set of sector-agnostic standards is divided into two primary categories:

Cross-Cutting Standards (Mandatory)

These standards apply to all companies, regardless of their industry or the specific sustainability issues they face.

• ESRS 1 (General Requirements): Explains the foundational principles of the reporting, including how to structure the report, the concept of double materiality, and value chain mapping.
• ESRS 2 (General Disclosures): Mandates specific disclosures regarding the company’s governance, overarching strategy, impact/risk management, and metrics related to sustainability broadly.

Topical Standards (Subject to Materiality)

These cover specific Environmental, Social, and Governance (ESG) issues. A company only reports on these if they are deemed material to their business.

• Environmental:
  • E1: Climate change (including Scope 1, 2, and 3 emissions)
  • E2: Pollution
  • E3: Water and marine resources
  • E4: Biodiversity and ecosystems
  • E5: Resource use and circular economy
• Social:
  • S1: Own workforce
  • S2: Workers in the value chain
  • S3: Affected communities
  • S4: Consumers and end-users
• Governance:
  • G1: Business conduct (corporate culture, anti-corruption, and supplier relationships)

Note: EFRAG is actively developing sector-specific ESRS to further refine reporting requirements for high-impact industries in the coming years.

The Role of the Double Materiality Assessment

You cannot determine which ESRS topical standards apply to your enterprise without first conducting a Double Materiality Assessment (DMA).

Under the ESRS, companies are not expected to report on every single topical standard. Instead, they must assess each topic through a "double" lens:

1. Financial Materiality: Does this ESG topic pose a significant financial risk or opportunity to the company's bottom line?
2. Impact Materiality: Does the company have a significant positive or negative impact on people or the environment regarding this topic?

If a topic (e.g., E3: Water) triggers either materiality threshold, the company must disclose the corresponding data points outlined in that specific ESRS standard.

Overcoming ESRS Data Complexity: Why Spreadsheets Fail

Complying with the ESRS requires managing hundreds of individual data points sourced from facilities, suppliers, HR systems, and utility providers worldwide. Furthermore, because CSRD requires mandatory limited assurance, every single metric must be fully auditable.

Legacy processes built on manual spreadsheets, decentralized emails, and disconnected point solutions will fail under ESRS scrutiny. Auditors demand to see the full data lineage: the original source document, the specific calculation methodology applied, the individual who approved the metric, and an immutable change history.

To confidently report under the ESRS, Chief Sustainability Officers and ESG Controllers require an enterprise-grade digital architecture. The Novisto CSRD Difference is that our platform was built from the ground up for enterprise compliance complexity and double materiality.

• FLEXIBLE DATA CAPTURE: Automate and unify the collection of unstructured, messy, disparate ESG data required for ESRS disclosure from across your entire organization and value chain.
• CFO-GRADE, AUDIT-READY: Guarantee absolute compliance. Every data point, qualitative disclosure, and policy can be traced directly back to its source, calculation methodology, owner, approval workflow, and full change history.
• TRUSTED ESG DATA FOUNDATION: Seamlessly bridge the gap between financial and non-financial reporting. Translate double materiality assessment results directly into structured ESRS metrics, frameworks, controls, and narrative disclosures.
• POWERFUL MODELLING: Map and structure your entire ESG data footprint to match the complex, multi-layered requirements of CSRD, easily adapting the framework as regulatory standards and your business evolve.

Ready to master your ESRS reporting? Book a Demo today and discover how Novisto builds the audit-ready data foundation your enterprise needs.