Adoption of the European Sustainability Reporting Standards


On 31 July 2023, the European Commission (the EC) adopted the new European Sustainability Reporting Standards (ESRS). The ESRS will become mandatory for use by large companies, listed small and medium-sized companies (SMEs) and parent companies of large groups that are subject to the Accounting Directive including the Non-Financial Reporting Directive (NFRD)1, as amended by the Corporate Sustainability Reporting Directive (CSRD)2 , which outlines the obligation for companies to use standards to fulfil their legal sustainability reporting obligations and aims at ensuring that companies across the European Union (EU) report comparable and reliable information on how sustainability matters affect the company’s development, performance and position.

The ESRS are based on technical advice from EFRAG (previously known as the European Financial Reporting Advisory Group) submitted to the EC in November 2022, which in turn consulted Member States and various EU bodies such as ESMA or EBA on that topic.

The ESRS follow a “double materiality” approach, whereby companies are obliged to report both on their impacts on people and the environment, and on how social and environmental issues create financial risks and opportunities for their business. 

They cover all areas of environment, social and governance, and are divided as follows: 

  • General principles to be followed when disclosing information under the ESRS;
  • General disclosures that are mandatory for all companies subject to CSRD; and
  • Other specific disclosures which must be disclosed if the required information is considered as “material” as a result of a robust materiality assessment ensuring that all sustainability information necessary to meet the objectives and requirements of the CSRD are being disclosed. To the extent that a topic is not considered as material, the company will need to provide a detailed explanation of the negative outcome of the materiality assessment.

Companies will need to start reporting under ESRS according to the following phases: 

  • Financial year 2024, with first sustainability statement published in 2025, for companies previously subject to the NFRD (i.e. large listed companies, large banks and large insurance undertakings having more than 500 employees), as well as large non-EU listed companies with more than 500 employees;  
  • Financial year 2025, with first sustainability statement published in 2026, for other large companies, including other large non-EU listed companies; 
  • Financial year 2026, with first sustainability statement published in 2027, for listed SMEs, including non-EU listed SMEs, with a possible opt out of the reporting requirements for a further two years (i.e. financial year 2028 as the last possible date to start reporting); and
  • Financial year 2028, with first sustainability statement published in 2029, for non-EU companies that generate over EUR 150 million per year in the EU and that have in the EU either a branch with a turnover exceeding EUR 40 million or a subsidiary that is a large company or a listed SME, for which additional separate standards will be developed. 

By June 2024, the Commission is expected to adopt additional delegated acts for additional sets of sector-specific standards, proportionate standards for listed SMEs, and standards for non-EU companies.

For more detailed information, follow these links to consult the EC delegated act, its Annex I and Annex II, and the relevant EC Q&A

If you have any questions, please do not hesitate to reach out to our sustainability experts Aurélien Hollard, Julie Pelcé, Nicolas Lorgé or Julien Robert

1 Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertaking.

2 Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting.