ESRS: The European standards for sustainability reporting

The European Financial Reporting Advisory Group (EFRAG), mandated by the European Commission, is working on a new European reporting system based on specific sustainability standards. The European Commission has also called on EFRAG to prioritize the identification of tools to support the implementation of the first set of standards precisely to help companies integrate CSRD (Learn more), the new EU sustainability reporting legislation, which was approved at the end of the year and will be implemented as of January 1, 2024.

Find out how it will be structured and what draft standards have been published so far!

In this article we will see:

The path to new reporting standards

The new European Sustainability Reporting Standard is being developed thanks to the intervention of EFRAG which has created a project task force composed of 35 experts in the field of sustainability. The detailed program sets out the milestones, their scope and the structure of future reporting standards.

The structure will be based on that of the TCFD (Task Force on Climate-related Financial Disclosures), with four main pillars: governance, strategy, impact-related risk and opportunity management and metrics and targets.

In particular it will be composed of three:

  • Reporting levels: generic and sector agnostic; sector specific and one entity specific;
  • Reporting areas: strategic, implementation and performance measurement;
  • Factors: environmental, social and good governance.

  • What draft standards have already been published?

    In November 2022, EFRAG published the first drafts of generic or sector agnostics standards, i.e. 12 standards applicable to all companies regardless of the sector they belong to, of which 2 are cross-cutting and 10 fall into the category of topic standards.

    Standard cross-cutting

    They define the general principles (ESRS1) and the requirements (ESRS2) that companies must necessarily comply with when reporting.

    Standard topic specific

    The specific standards are divided into three categories depending on the topic:

    • Environment: climate change, pollution, water and marine resources, biodiversity and ecosystems, resource use and circular economy;
    • Social: workforce, value chain workers, affected communities, consumers and direct users;
    • Governance: risk management, internal controls and business conduct.

    What are the next application steps?

    The first set of standards will be adopted by the European Commission by 30 June 2023 and then to be transposed into national legislation in 2024.

    On the other hand, the publication of the first sectoral standards, originally scheduled for April and May, was temporarily suspendedwhich could cause delays in the publication of the standards scheduled for 2024 and 2025. As regards the entity specific standards, i.e. the standards attributable to specific aspects of the organization, it is not yet possible to establish with certainty the date of publication.

    Find out how IMPACT can help your business

    The new European reporting system is under development and aims to create specific sustainability standards for each sector and organization. Despite some delays in publishing the standards, the project is ongoing and will soon impact businesses (Learn more) and it's important to be prepared.

    If you're looking for a tool to manage all sustainability processes in a quick, collaborative, and integrated way in compliance with European regulations and international standards, our technology solution is ideal for you!

    IMPACT manages ESG processes, environmental and social performance,  ensures compliance with international standards, minimizes risks and improves the creation of corporate value.

    The IMPACT technological platformhas already been chosen by leading Italian and European companies and has been included in the "Smart Innovators: ESG Reporting And Data Management Software” report of Verdantix, an independent international research body, placing IMPACT among the market leading software for ESG Reporting, Disclosure, Data management and Analysis.

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