Table of contents

  1. What is ESRS?
  2. Objectives of Sustainability Reporting Standards
  3. Key Principles of European Sustainability Reporting Standards
  4. Reporting Under ESRS
  5. How Can GCB Support Your ESRS Reporting?

What is ESRS?

ESRS (European Sustainability Reporting Standards) are a set of European sustainability reporting standards introduced by the EU under the Corporate Sustainability Reporting Directive (CSRD). These standards outline specific requirements for reporting on ESG-related information.

ESRS mandates companies to report in detail on their impact on the environment, social issues, and corporate governance. Key areas covered include:

These standards apply to large EU companies based on three factors (number of employees, total assets, and annual revenues), with implementation being phased in from the financial year 2024.

The primary goal of ESRS is to enhance transparency in corporate sustainability actions and facilitate the comparison of company performance in this area.

The Relationship Between ESRS and CSRD

ESRS and CSRD are closely linked. While the Corporate Sustainability Reporting Directive (CSRD) sets out “what” needs to be reported and “who” must report it, ESRS specifies “how” it should be done, providing detailed guidelines, methodologies, and indicators.

ESRS was developed by EFRAG (European Financial Reporting Advisory Group) at the request of the European Commission to help companies meet CSRD requirements.

Objectives of Sustainability Reporting Standards

The objectives of Sustainability Reporting Standards focus on:

  1. Harmonizing Sustainability Reporting: Creating a common reporting language across the EU to eliminate ESG reporting inconsistencies and enable meaningful comparisons of company performance.
  2. Enhancing Corporate Responsibility: Requiring companies to systematically measure their environmental and social impact while monitoring ESG risks and supply chain oversight.
  3. Supporting Market Transformation: Facilitating the redirection of capital toward sustainable investments and accelerating the decarbonization of the European economy.
  4. Protecting Investors: Ensuring access to reliable ESG data for informed investment decisions and reducing the risk of greenwashing.
  5. Building Trust: Introducing external verification of ESG data and improving reporting quality to foster transparency and better stakeholder dialogue.

Key Principles of European Sustainability Reporting Standards

The main principles of European Sustainability Reporting Standards include:

  • Double Materiality: Companies must report both the financial impact of ESG factors on their business and their impact on the environment and society.
  • Comprehensive Reporting: Covers all significant ESG aspects within the environmental, social, and governance domains.
  • Data Comparability: Establishes standardized indicators and methodologies for comparing performance across companies and industries.
  • Verifiability: Requires all reported data to be verifiable by independent entities, necessitating proper documentation and data collection systems.
  • Value Chain Perspective: Considers the impact of the entire value chain, not just direct operations.
  • Forward-Looking Orientation: Companies must present historical data, along with goals, strategies, and plans related to sustainability.
  • Integration with Financial Reporting: Sustainability information should be connected with the company’s financial data and business strategy.

Reporting Under ESRS

Reporting in compliance with ESRS involves presenting a company’s sustainability actions transparently and systematically. ESRS standards require disclosures in three main areas: environmental, social, and governance. Each section must be developed according to specific requirements to meet stakeholder and regulatory expectations.

Structure of a Sustainability Report According to ESRS

A sustainability report under ESRS should include:

  1. Introduction: Objectives, scope, and methodology of the report.
  2. Key ESG Indicators: Quantitative and qualitative data on environmental, social, and governance actions.
  3. Risk, Opportunities, and Impact Analysis: Identification of risks and strategic actions related to sustainability.
  4. Goals and Strategies: Future plans, including actions to reduce negative environmental impacts.
  5. Summary and Conclusions: Key achievements and challenges for the next reporting period.

How Can GCB Support Your ESRS Reporting?

GCB provides comprehensive support in preparing reports compliant with ESRS requirements, offering expert knowledge and tools to meet the most rigorous standards. Our services include:

  • ESG Compliance Audit: Detailed analysis of your company’s actions against ESRS requirements, identifying areas for improvement and creating an action plan.
  • ESG Training and Consulting: Tailored training for teams responsible for ESG reporting and consultation on implementing ESRS standards.
  • Data Collection and Reporting Support: Assistance in creating effective ESG data collection systems essential for transparency and verifiability.

With GCB’s support, your company can ensure that reports not only meet all regulatory requirements but also serve as a powerful tool for building trust and competitiveness in the market. Contact us to learn more about collaboration opportunities!