ESRS: what are they and how can they help us?


Azul Stengel Co-founder of Lienzo

Photo by Ian Talmacs

The upcoming Corporate Sustainability Reporting Directive (check out our CSRD article) requires companies within its scope (over 250 employees, 20 Million in profit, and/or 40 million in turnover) to report using a double materiality perspective. To properly accomplish this, the EU Commission tasked the EFRAG with the development of the European Sustainability Reporting Standards (ESRS) that considers the double materiality perspective and developed a set of standards to help companies with their reporting endeavors, creating a standardized and comparable methodology across the board.

While this might seem like a lot of overwhelming information, the reporting requirements will not happen overnight. Luckily for companies, the requirements will be phased in over time, starting in 2024 for the reports published in 2025. From then on, and until 2028, other companies will be added to the scope to include SMEs.

Source: Intire

These reporting standards are here to create uniform and consistent standards that can be analyzed within and across industries. Sectoral standards are being developed as we speak to deal with the different necessities and address the specific impact these industries have on the environment. However, there is a general outline for all standards that correspond to the following structure:


A) General Conditions

B) General Information


A) Environmental

i. Climate Change

ii. Pollution

iii. Water and maritime resources

iv. Biodiversity and ecosystems

v. Resource use and circular economy

B) Social

i. Own workforce

ii. Workers in the value chain

iii. Affected communities

iv. Consumers and end-users

C) Governance

For those who have been following these subjects for a while might have identified a pattern here, and this is not a casual coincidence. These standards follow the EU Taxonomy categories and look into the same categories that the GRI reporting standards address in their methodology. This is because the ESRS, and the CSRD, is here to unify the international reporting standards and align them with the Sustainable Finance Disclosure Regulation.

Why, you might ask? 

We must not forget the context in which all of these regulations are designed. The EU Action Plan aims to redirect capital flows into sustainable, circular, and transparent investments. In order to do so, the financial sector requires information regarding the assets in which they would invest in, to analyze their environmental and social impact, and understand the climate-related risks of the business model. It is then that the ESRS steps up to the challenge by providing a reporting framework to create comparable and uniform standards that can be used by financial institutions to finance companies with sustainable and circular business practices.

We invite the reader to look into the first drafts of ESRS, following this link, where you will find several explanatory videos that address each category and set of standards. We will also keep you posted on the upcoming sectoral standards that will impact the textile and fashion industry.