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Definition
What do the ESRS regulate?
The ESRS (European Sustainability Reporting Standards) establish the mandatory framework under which companies in the EU must report on their impacts, risks, and opportunities regarding Environment, Social, and Governance (ESG). Developed on the basis of the EU Corporate Sustainability Reporting Directive (CSRD, 2022/2464), they define what information must be disclosed and how.
Goals and significance
Warum sind die ESRS so wichtig?
Creating comparability: Uniform standards make sustainability information from different companies systematically comparable for investors, business partners, and regulators.
Transparency on impacts: Companies must disclose how their activities affect people and the environment, not only within their own operations, but across the entire value chain.
Double materiality: The core principle of the ESRS requires a two-directional assessment: on one hand, how the company impacts people and the environment; on the other, how sustainability risks affect the company itself.
Capital market relevance: The disclosed information feeds directly into investment decisions, lending, and ESG ratings, thereby influencing access to capital.
Development and versions
How have the ESRS evolved?
NFRD (pre-2022): The Non-Financial Reporting Directive required only large capital market-oriented companies, as well as banks and insurance companies, to provide rudimentary non-financial reporting, without uniform standards or mandatory audit requirements.
CSRD & First ESRS Set (2023): The Corporate Sustainability Reporting Directive massively expanded the scope of application. The first twelve sector-agnostic ESRS (ESRS 1, ESRS 2, and E1–E5, S1–S4, G1) entered into force.
EU Omnibus Package (2025/2026): The European Commission passed far-reaching simplifications. A political agreement was reached between Parliament and the Council. The Omnibus Package officially entered into force on March 18, 2026.
Affected Parties
Who are the ESRS directed at?
The ESRS apply to companies subject to EU sustainability reporting obligations under the CSRD. The specific scope is determined by size criteria such as headcount and annual revenue and is being phased in gradually. Companies that are not directly subject to reporting requirements may also be indirectly affected. Suppliers to large companies will increasingly be required to provide sustainability data. Since the scope of application continues to evolve with changing EU legislation. Read our current CSRD article for applicable thresholds and deadlines.
Core Requirements
What obligations apply under the ESRS?
Analysis: Identification of all relevant ESG topics from both an impact and financial perspective – the starting point for any reporting.
Governance disclosures: Disclosure of how sustainability topics are embedded in corporate governance, board-level oversight, and executive compensation structures.
Strategy & business model: Description of how material sustainability aspects influence corporate strategy and the value chain.
Measures, metrics & targets: Concrete disclosures on actions taken and planned, along with measurable targets and progress tracking.
Due Diligence: Documentation of processes for identifying and addressing adverse impacts on people and the environment.
Audit requirement: The sustainability statement must be integrated into the management report and externally verified by an auditor.
Outlook
What challenges exist under the ESRS?
The effort required to collect data across complex global supply chains is substantial, particularly when suppliers are not themselves subject to reporting obligations and do not provide structured sustainability data. At the same time, the double materiality assessment demands solid methodological expertise and well-defined internal processes.
Many companies face the challenge of connecting existing financial and sustainability data systems, as the ESRS require close integration of both. The ongoing development of the standards through sector-specific additions and regulatory adjustments such as the EU Omnibus Package, makes continuous monitoring and adaptation of internal compliance processes essential.
Further information:
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