ESRS and #ESG

The **European Sustainability Reporting Standards (ESRSs)**, issued by the **European Financial Reporting Advisory Group (EFRAG)**, play a crucial role in enhancing sustainability reporting. Let's delve into the details:

1. **What are European Sustainability Reporting Standards?**

- The **ESRSs** are a set of reporting standards designed to support the **EU Green Deal** and outline detailed disclosure requirements under the **Cor

porate Sustainability Reporting Directive (CSRD)**.

- These standards significantly impact the scope, volume, and granularity of sustainability-related information that companies need to collect and disclose.

- The first set of **12 ESRSs** covers the following areas:

- **General principles for sustainability reporting (ESRS 1)**

- **Overarching disclosure requirements (ESRS 2)**

- **Specific disclosure requirements** focused on **10 environmental (ESRS E1–E5), social (ESRS S1–S4), and governance (ESRS G1) topics**¹.

2. **Applicability and Timing:**

- The **CSRD** applies to **large and most listed companies** in the EU, including non-EU companies with listed securities on an EU regulated market.

- **Large companies** (with over 500 employees) that are either **European public interest entities** or non-EU companies with listed securities will be required to report in accordance with **ESRSs** for financial years beginning on or after **1 January 2024**.

- Other large companies will follow for periods commencing on or after **1 January 2025**, and listed **SMEs** after **1 January 2026**.

- Companies outside the EU with significant operations (net turnover exceeding EUR 150 million) will report from the start of the reporting period beginning **1 January 2028**¹.

3. **Interoperability with ISO Standards:**

- **EFRAG** continues to work jointly with the **International Sustainability Standards Board (ISSB)** to optimize the interoperability of overlapping **ESRS** and **ISSB** standards.

- This collaboration is relevant for companies required to use **ESRSs** and wish to comply with **ISSB** standards as well².

In summary, the **ESRSs** provide a comprehensive framework for sustainability reporting, enabling investors to understand the impact of companies' sustainability practices. As we move toward a sustainable EU economy, these standards play a pivotal role in promoting transparency and accountability³⁴.