Sustainability reporting standards – the devil is in the details

The third article in a series taking a closer look at issues related to the Corporate Sustainability Reporting Directive (the so-called CSRD) is devoted to detailed reporting standards (we will hereafter refer to them as “standards”). The standards in question – as we have already indicated in previous articles – are intended to define and standardize the information reported by obliged undertakings. Their adoption is expected to harmonize sustainability reporting across the European Union. Indeed, the main idea behind the newly introduced reporting rules is to bring about a situation in which interested parties will be able to freely compare ESG (Environment, Social and Governance) information made available by various entities, similar to what is currently done with financial information.

Sustainability reporting standards in the CSRD directive

The provisions of the CSRD set the framework for sustainability reporting. Reporting, on the other hand, will follow certain uniform standards – the ESRS (European Sustainability Reporting Standards). Under Article 29b of Directive 2013/34/EU[1] (as amended by the CSRD), the task of enacting ESG reporting standards has been entrusted to the European Commission. The Commission is to adopt appropriate delegated acts for this purpose, thus supplementing the general regulations of the CSRD. The standards in question will clarify what specific data or information is to be disclosed by entities as part of sustainability reporting. In drafting the said acts, the European Commission is required to take into account the so-called technical advice of the European Financial Reporting Advisory Group (EFRAG). In the following part of this article, we will look at the drafts of the first standards developed by EFRAG.

The standards are primarily intended to guarantee the quality of information reported by obliged entities in sustainability reporting. Their content will force entities to disclose data that is understandable, relevant, verifiable, as well as comparable. At the same time, the EU legislator’s assumption is that the standards will not impose a disproportionate administrative burden on entities in connection with the new ESG requirements.

General and sectoral view of the individual

In light of the CSRD, sustainability reporting standards can be divided into two categories, i.e. the standards:

  • specifying what information an entity is to disclose regardless of the sector (industry) in which it operates, and
  • indicating what information relating to a specific sector (industry) is to be disclosed by entities.

The sector-independent standards will apply to all entities required to report under the CSRD, taking into account the principle of dual materiality, as will be discussed below.

However, the need to develop sectoral (industry) standards is related to the fact that in some areas of the economy the scale of risks and impacts on sustainability issues is higher than in other sectors. At the same time, entities operating in the same area often face similar ESG risks, as well as their impact on these issues. Therefore, the EU Commission’s adoption of sector-specific standards will enable all interested parties to analyze the information disclosed by entities, taking into account the specifics of their operations. This will allow a better understanding of an entity’s actual impact on sustainability issues. In addition, comparisons between entities operating in the same sector will be much easier and more accessible for interested persons. This may prove helpful, for example, when deciding which company in a given sector is worth investing in.

EFRAG standards projects from a bird’s eye view

As we signaled above, the development of ESRS projects was entrusted to EFRAG. On November 15, 2022, EFRAG adopted the final content of the 12 draft sector-independent reporting standards. Subsequently, on November 22, 2022, the aforementioned draft standards were submitted to the European Commission. In the table below, we present the systematics of these drafts:

Draft sector-independent sustainability reporting standards

Cross-cutting standards

ESRS 1 General Requirements

ESRS 2 General Disclosures

Thematic standards


ESRS E1 Climate change

ESRS E2 Pollution

ESRS E3 Water and marine resources

ESRS E4 Biodiversity and ecosystems

ESRS E5 Resource use and circular economy


ESRS S1 Own workforce

ESRS S2 Workers in the value chain

ESRS S3 Affected communities

ESRS S4 Consumers and end-users


ESRS G1 Business conduct


The draft standards prepared by EFRAG include more than 80 disclosure requirements, both quantitative and qualitative, each then indicating the next necessary data to be reported. Entities will disclose, according to the ESRS, all relevant information (material information) on impacts, risks and opportunities in relation to environmental, social and governance issues. The information is intended to enable an understanding of the entity’s impact on the above issues and the effect of these issues on the entity’s development, performance and position.

The first two drafts, i.e. ESRS 1 and ESRS 2, are so-called “cross-cutting standards”. The cross-cutting standards apply to all sustainability issues. The ESRS 1 standard, in fact, is an instruction manual for reporting in accordance with the other standards. ESRS 2 standard, on the other hand, specifies the information that an entity will have to mandatorily report on a general level on all sustainability issues. The remaining 10 drafts concern standards that will contain additional specific requirements of a thematic nature. The thematic standards regulate environmental, social and corporate governance issues.

It should be noted that disclosure requirements are not equal in terms of the detail of information required of reporting entities. Some of the requirements require very concise and simple information. Others, in turn, will require obligated entities to put more effort and professional involvement to collect the necessary data. Below we present few examples of disclosure requirements.


Disclosure Requirement GOV-2

(ESRS 2)

Disclosure Requirement S1-15


Disclosure Requirement E1-5


Undertakings will need to report on how administrative, management and supervisory bodies are informed about sustainability issues and how these issues were addressed during the reporting period, which includes, amongst others, disclosure of a list of significant impacts, risks and opportunities dealt with by administrative, management and supervisory bodies or their respective committees during the reporting period. Undertakings will have to report on the extent to which employees are eligible for and use family-related leave, which includes indicating the percentage of employees eligible for family-related leave and eligible employees who have taken family-related leave, and a breakdown by gender. Undertakings will have to report on their energy consumption and energy mix, which includes indicating the total energy consumption in MWh associated with their own operations: (i) from non-renewable sources for sectors with a high impact on the climate, broken down into, amongst others, consumption of fuels from coal and coal products, from oil and oil products, and (ii) from renewable sources, broken down into consumption of fuels for renewable sources (including biomass, biogas, waste from non-fossil fuels, hydrogen from renewable sources, etc.), consumption of purchased or acquired, e.g., electricity, heat, steam from renewable sources; and consumption of self-generated energy.


Principle of dual materiality

It should also be pointed out that sustainability reporting will, as a general rule, be based on the principle of double materiality. As we indicated above, entities are expected to disclose material information. Therefore, it is necessary to clarify how the ESRS 1 standard defines materiality for ESG reporting purposes.

Under the ESRS 1 standard, materiality has two dimensions. A material sustainability issue meets the criteria of materiality of impact, financial materiality or materiality of impact and financial materiality. This means that it will be crucial for an undertaking to conduct a materiality assessment through which it will identify the impacts, risks and opportunities that it must report under the CSRD.

Regardless of the outcome of the materiality assessment, obligated entities will always have to disclose information in terms of:

  • all so-called general disclosures indicated in ESRS Standard 2,
  • measurement data resulting from other EU regulations – as defined in thematic ESRS standards,
  • all disclosure requirements from ESRS E1 standard (climate change),
  • S1-1 to S1-9 disclosure requirements from ESRS S1 standard (own workforce) – for entities with at least 250 employees.

The clock is ticking

The European Commission has until the end of June 2023 to adopt the final version of acts containing sustainability reporting standards to be applied independent of the sector in which the undertaking operates (described in this article). Then, by June 30, 2024, the EU Commission should adopt industry standards for each economic area. For the delegated acts in question, the vactio legis will be at least four months after their adoption. The standards will be reviewed at least once every three years by the European Commission. The acts will be updated if there are any significant changes affecting their shape and scope, e.g. due to international regulations.

In addition, also by June 30, 2024, the Commission is to adopt delegated acts containing sustainability standards tailored to small and medium-sized units. These are to be commensurate with the capacity and characteristics of these entities and the scale and complexity of their operations. Due to the smaller scope of operations, these undertakings will be able to limit their reporting to the individual disclosure requirements of the CSRD. This is because the need to comply with the same standards that apply to large companies would result in excessive costs and effort on the part of small and medium-sized entities, which generally have fewer human and financial resources.


In our opinion, the subject matter scope of the ESRS standards published so far should not change in principle. Thus, it is already worthwhile to conduct an analysis of these regulations in terms of the compliance of the company’s internal documentation and procedures against the EFRAG standards.

We will monitor the ESRS standards adoption process and if any changes are made to the current versions of the documents, we will inform you immediately.

[1] Directive 2013/34/EU of the European Parliament and of the Council of June 26, 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC (OJ 2013 L. No. 182, p. 19 as amended).