Explainer
The ESRS are the standards companies report against under CSRD. There are twelve of them, they run to hundreds of datapoints and they are being simplified as you read this. Here is what they are, how materiality decides which ones apply to you and what the simplification means in practice.
By Christopher Fagan, Managing Partner, PEF Consulting Partners
The European Sustainability Reporting Standards are the detailed rules that sit under the Corporate Sustainability Reporting Directive. CSRD says who must report; the ESRS say what and how. They were adopted by the European Commission in 2023 and apply to every company in CSRD scope, which since the Omnibus means companies and groups with more than 1,000 employees and more than €450 million of turnover, including UK groups caught through a large EU subsidiary or through the €450 million EU turnover test. Unlike the voluntary frameworks that came before them, they are law in the member states, they require assurance and they are built around double materiality: what the company does to people and planet, and what sustainability matters do to the company’s finances.
Two cross cutting standards apply to everyone. ESRS 1 sets the general requirements, including how to run the materiality assessment and structure the report. ESRS 2 sets the general disclosures on governance, strategy, impact and risk management and metrics that every reporter must make. Ten topical standards then cover the environment (E1 climate change, E2 pollution, E3 water and marine resources, E4 biodiversity and ecosystems, E5 resource use and circular economy), social matters (S1 own workforce, S2 workers in the value chain, S3 affected communities, S4 consumers and end users) and governance (G1 business conduct). A topical standard only applies where the materiality assessment finds the topic material, with climate the one most companies cannot reasonably leave out.
The double materiality assessment is the gate to the whole exercise. For each topic you assess the impact materiality, meaning the actual or potential effects of the business on people and the environment across the value chain, and the financial materiality, meaning the risks and opportunities the topic creates for the business. A topic that is material on either test is reported. The assessment has to be documented, evidenced with stakeholder input and defensible to the assurance provider, because it determines which hundreds of datapoints you are and are not producing. Done badly it is the single biggest source of rework in a first CSRD report.
The Omnibus package announced in early 2025 asked EFRAG, the body that drafts the standards, to cut the ESRS substantially. EFRAG delivered its advice in December 2025, removing around 61 per cent of the mandatory datapoints, or 71 per cent counting the voluntary ones, separating more clearly what must be disclosed from what may be, and aligning more closely with the ISSB standards. The Commission adopted the revised standards in July 2026. Once the Parliament and Council scrutiny period has run, they apply to financial years beginning on or after 1 January 2027, and companies may use them voluntarily for 2026.
The Omnibus directive itself, in force since March 2026, also scrapped the plan for sector specific standards. The direction is now settled: fewer, more quantitative disclosures, a stricter rule that information which is not material is left out, and the materiality assessment doing more of the work. Anyone preparing now should build their data model around the revised set rather than the original 2023 standards.
Three things. First, if you are in CSRD scope through an EU subsidiary, the ESRS are your reporting standard and the UK SRS is not, although the two are converging. Second, the ESRS data model is a sensible backbone for ESG reporting generally, because SECR, climate disclosures and the UK SRS all draw on the same underlying energy, emissions, workforce and governance data. Third, if you are not in scope but sell to companies that are, expect their ESRS value chain disclosures to arrive on your desk as questionnaires, which is where the VSME standard for smaller companies comes in.
Related reading: what is CSRD, the CSRD Omnibus and the new timeline, double materiality assessment, ESG reporting explained, the VSME standard explained, the CSRD checker.
Twelve: two cross cutting standards (ESRS 1 and ESRS 2) and ten topical standards covering five environmental topics, four social topics and business conduct. Sector specific standards were planned but have now been dropped.
No. ESRS 1 and ESRS 2 apply to everyone in scope. The topical standards apply only where the double materiality assessment finds the topic material, although a company that concludes climate is not material has to explain why in some detail.
The ISSB standards, IFRS S1 and S2, focus on financial materiality for investors. The ESRS use double materiality, adding the company’s impacts on people and the environment. The ESRS climate standard was written to be interoperable with IFRS S2, so a company reporting under both can reuse most of the climate work.
They have just changed. The revised ESRS adopted by the Commission in July 2026 cut the mandatory datapoints by around 61 per cent and apply to financial years from 2027, with voluntary use allowed for 2026. The twelve standard structure and double materiality remain, so preparation built on them is not wasted.
If you need to know which ESRS apply to your group and how to build one data model that serves CSRD, SECR and the UK SRS together, a short confidential conversation is the place to start.