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Fundamental changes to the ESRS

On 31 July 2023, the European Commission adopted the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD). This marks another step forward in the transition to a sustainable EU economy.

But there are certain changes resulting from the delegated regulation published by the European Commission in June 2023, compared to the draft published by EFRAG in November. These are briefly touched upon below as well as exemplified. 

Material and mandatory disclosures:

According to the November draft, certain standards were subject to mandatory disclosure regardless of the outcome of the materiality analysis (ESRS E1 Climate Change, parts of ESRS S1 Own Workforce and ESRS 2). The Commission's draft delegated regulation now stipulates that general mandatory disclosures are only required for ESRS 2 (General Disclosure). The other standards are now all subject to a materiality assessment.


Additional phase-ins:

In the first reporting years, certain reliefs (so-called phase-ins) are applied for reporting entities. In addition to EFRAG's existing phase-ins, the following additional phase-ins apply:

  • All companies can opt out for the first year of reporting disclosing information on expected financial impacts related to non-climate environmental aspects.
    • Pollution (ESRS E2-6)
    • Water and Marine Resources (ESRS E3-5)
    • Biodiversity and Ecosystems (ESRS E4-6)
    • and Resource Use and Circular Economy (ESRS E5-6)

Companies can provide qualitative disclosure only on these financial impacts for the first 3 years of preparation of their sustainability statement.

Additionally, certain information on their Own Workforce (ESRS S1- social protection, people with disabilities, work-related illnesses and work-life balance etc.) can be opted out in the first year of application.

  • Companies with less than 750 employees may also omit the following:
    • in the first reporting year, the disclosure of Scope 3 greenhouse gas emissions (ESRS E1-6) and other disclosures on their Own Workforce (ESRS S1); and
    • in the first two reporting years, the disclosures on Biodiversity (ESRS E4), workers in the value chain (ESRS S2), Affected Communities (ESRS S3) and Consumers (ESRS S4).

A list of phased-in disclosure requirements can be found here (p.31)

Voluntary disclosure requirements:

The draft standards submitted by EFRAG already included many voluntary datapoints. The Commission has further converted several mandatory datapoints proposed by EFRAG into voluntary datapoints. This includes: 

  • an explanation of why the company has deemed a particular sustainability topic to be non-material (i.e. the disclosure requirements of a topic-specific standard as a whole)
  • Biodiversity Transition Plans (ESRS E4-1)
  • certain indicators on 'non-employees' in the company's workforce


Further flexibilities in certain disclosures

The Commission has also introduced certain flexibilities for some of the mandatory datapoints. For example, there are additional flexibilities in the disclosure requirements on the financial effects arising from sustainability risks and on engagement with stakeholders, and in the methodology for the materiality assessment process.

Furthermore, the Commission has modified datapoints regarding corruption and bribery and the protection of whistle-blowers that might have infringed on the right not to self-incriminate.


The Commission expects that the proposed phase-in measures will lead to a cost reduction of EUR 1,172 million compared to EFRAG's initial standards. Additionally, adjustments related to materiality and optional disclosures are estimated to save EUR 230 million annually. These measures are also expected to lead to a significant burden reduction for undertakings and help to ensure that the standards are proportionate.

Below is a timeline indicating when various companies are required to report in accordance with the European Sustainability Reporting Standards:

  1. 2 out of 3 criteria fulfilled:
    • > EUR 40mn turnover
    • > 250 employees
    • > EUR 20mn balance sheet
  2. Separate standards will be developed
  3. Non-EU institutions with EU subsidiaries/ branches and EU turnover of >EUR 150mn


For inquiries please contact:

RBI Regulatory Advisory

Raiffeisen Bank International AG | Member of RBI Group | Am Stadtpark 9, 1030 Vienna, Austria  | Tel: +43 1 71707 - 5923