ESRS: Structure & requirements

The European Sustainability Reporting Standards (ESRS) are a set of guidelines for sustainability reporting by companies in the European Union. They were published by the European Commission in December 2021 and are mandatory for large companies and listed companies with a head office in the EU from 1 January 2024.

The ESRS set out what information companies must disclose in their sustainability reports. They cover general principles and requirements as well as specific requirements for reporting on the following topics:

• Environment: Climate change, resource consumption, waste, air and water quality

• Social: Working conditions, human rights, diversity and inclusion

• Governance: Corporate governance, risk management, corruption prevention

The ESRS are closely linked to the Sustainable Development Goals (SDGs) of the United Nations. The SDGs are an ambitious plan for a more sustainable future. They cover 17 goals that relate to a variety of sustainability topics, including climate change, poverty reduction, education, and health. The ESRS cover a large portion of the SDGs.

Key requirements of the ESRS

The ESRS set a number of key requirements for sustainability reporting by companies. These include:

• Doubly materiality: Companies must report on all sustainability topics that are material to their business and to society.

• Integrity and accountability: Companies must ensure that their sustainability reporting is complete, reliable, and transparent.

• Traceability: Companies must disclose the underlying data and information for their sustainability reporting.

• Scope of reporting: Companies must report on all material sustainability topics, including those that are not specifically addressed by the ESRS.

• Timeframe for reporting: Companies must report on their sustainability performance for the most recent financial year.

• Frequency of reporting: Companies must report on their sustainability performance at least once a year.

Compliance with EU sustainability reporting regulations, which will be massively tightened from 2024, will become increasingly difficult for companies without automated solutions. GLOSUS offers easy-to-use but robust software for managing sustainability information. Our modular, subscription-based cloud solution enables companies to aggregate their ESG data for holistic management and legally compliant sustainability reporting.

The European Sustainability Reporting Standards (ESRS) are mandatory for large companies and listed companies with a head office in the EU from 1 January 2024.

Large companies are companies that meet at least two of the following three criteria:

• Balance sheet total: €20 million

• Turnover: €40 million

• Number of employees: 250

Listed companies are companies that are listed on an EU stock exchange.

The European Sustainability Reporting Standards (ESRS) set a number of requirements for sustainability reporting by companies. These include:

• Scope of reporting: Companies must disclose all material sustainability topics in their sustainability reports.

• Quality of reporting: Companies must ensure that their sustainability reporting is complete, reliable, and transparent.

• Traceability of reporting: Companies must disclose the underlying data and information for their sustainability reporting.

The ESRS are integrated in the GLOSUS Library. With the help of the predefined library, you can select key sustainability indicators for your company and use them accordingly for sustainability reporting.

The implementation of the ESRS is taking place in two phases:

• Phase 1 (1 January 2024 to 31 December 2025): In this phase, companies must implement the ESRS requirements in their sustainability reports.

• Phase 2 (from 1 January 2026): In this phase, the ESRS requirements will be further tightened.

The European Commission has published a number of example reports for the ESRS. These reports can serve as a guide for companies in implementing the ESRS.

The ESRS are a significant step towards a more transparent and comparable sustainability reporting in the European Union. By implementing the ESRS, companies can demonstrate their commitment to sustainability and contribute to a more sustainable future.

The European Financial Reporting Advisory Group (EFRAG) is a private, non-profit organization that was commissioned by the European Commission to develop standards for sustainability reporting. EFRAG was founded in 2001 and is headquartered in Brussels.

EFRAG developed the ESRS in a two-stage process. In the first phase, the ESRS were developed through a consultation process with stakeholders from around the world. In the second phase, the ESRS were reviewed and adopted by the European Commission.

EFRAG is responsible for the ongoing development of the ESRS. EFRAG will report regularly on the compliance of companies with the ESRS.

The European Commission is responsible for the implementation of the ESRS in the European Union. The Commission has taken a number of steps to support companies in the implementation of the ESRS. These include:

• Providing guidance and resources for companies

• Conducting training and workshops for companies

• Establishing a consultation process for companies

Companies that want to comply with the ESRS requirements should consider the following points:

• Early planning: Companies should start planning early and develop a roadmap for implementation.

• Internal resources: Companies should ensure that they have the necessary internal resources to comply with the ESRS requirements. This includes qualified staff, data and information, and IT systems.

• External support: Companies can also seek external support to comply with the ESRS requirements. This includes consulting firms, auditors, and software providers.

• Communication: Companies should communicate with their stakeholders about the implementation of the ESRS. This can be done by publishing information on the company website or on social media.

Companies that want to comply with the ESRS requirements should start planning early and develop a roadmap for implementation.

GLOSUS supports you in complying with the ESRS - we will advise you and develop a plan for implementation together with you. We have a team of experienced consultants who can help you understand the ESRS requirements and develop a plan for implementation that is tailored to your specific needs. Our services include:

• Consulting: We can provide you with advice on all aspects of sustainability reporting, including the ESRS requirements, data collection and analysis, and report writing.

• Software: We offer a range of sustainability reporting software solutions that can help you automate your reporting process.

We understand that the ESRS can be a complex and challenging task. We are committed to helping you succeed in your sustainability reporting efforts. To learn more about how GLOSUS can help you comply with the ESRS, please contact us today!