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The „E“ of ESG in the ESRS (Updated)

The “E” for “Environment” stands for environmental protection measures with regard to climate protection and climate change that reduce environmental pollution, prevent greenhouse gas emissions or improve energy efficiency. The ESRS (European Sustainability Reporting Standards) Exposure Drafts define on a very detailed level the future reporting requirements of the CSRD. Below you find an overview of the topics included in the Standards for environmental topics. In November 2022 the Exposure Drafts have been updated in a version that has been sent to the EU-Commission. In this updated version the datapoints to report have been reduced and topics have been summarized.  

Table of contents

The respective standards can be found here. This Article has been Updated in February 2023

DRAFTS TO EU-COMMISSION

E1: Climate Change

Section 1: General requirements, governance, strategy, and materiality assessment

  • Disclosure requirement related to GOV-3 On integration of climate change strategies and performance in incentive schemes
  • Disclosure Requirement E1-1 – Transition plan for climate change mitigation
  • Disclosure Requirement related to SBM 3 On resilience of strategy and business model
  • Disclosure requirement related to IRO-1 On description of processes to identify and assess material climate-related impacts, risks and opportunities

Section 2: Implementation-Management of impacts, risks and opportunities

  • Disclosure Requirement E1-2 – Policies related to climate change mitigation and adaptation
  • Disclosure Requirement E1-3 – Action plans and resources in relation to climate change policies and targets

Section 3: Metrics and targets

  • Disclosure Requirement E1-4 –Targets related to climate change mitigation and adaptation 7
  • Disclosure Requirement E1-5 – Energy consumption and mix
  • Disclosure Requirement E1-6 – Gross Scopes 1, 2, 3 and Total GHG emissions
  • Disclosure Requirement E1-7 – GHG removals and GHG mitigation projects financed through carbon credits
  • Disclosure Requirement E1-8 – Internal carbon pricing
  • Disclosure Requirement E1-9 – Potential financial effects from material physical risks, material transition risks and climate-related opportunities

E2: Pollution

ESRS 2 General disclosures

  • Disclosure Requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material pollution-related impacts, risks and opportunities

Impact, risk, or opportunity management

  • Disclosure Requirement E2-1 – Policies related to pollution
  • Disclosure Requirement E2-2 – Pollution actions and resources

Metrics and targets

  • Disclosure Requirement E2-3 – Targets related to pollution
  • Disclosure Requirement E2-4 – Pollution of air, water and soil
  • Disclosure Requirement E2-5 – Substances of concern and substances of very high concern
  • Disclosure Requirement E2-6 – Potential financial effects from pollution-related impacts, risks and opportunities

E3: Water and marine resources

ESRS 2 General disclosures

  • Disclosure Requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material water and marine resources-related impacts, risks and opportunities

Impact, risk and opportunity management

  • Disclosure Requirement E3-1 – Policies related to water and marine resources
  • Disclosure Requirement E3-2 – Actions and resources related to water and marine resources policies and targets

Metrics and targets

  • Disclosure Requirement E3-3 – Targets related to water and marine resources
  • Disclosure Requirement E3-4 – Water consumption
  • Disclosure Requirement E3-5 – Potential financial effects from water and marine resources-related impacts, risks and opportunities

E4: Biodiversity and ecosystems

General requirements, governance, strategy and materiality assessment

  • Disclosure Requirement E4-1 – Transition plan on biodiversity and ecosystems
  • Disclosure Requirement related to SBM 4 on resilience of strategy and business model
  • Disclosure Requirement related to IRO-1 on description of processes to identify and assess material biodiversity and ecosystem-related impacts, risks and opportunities

Implementation – Management of impacts, risks and opportunities

  • Disclosure Requirement E4-2 – Policies related to biodiversity and ecosystems
  • Disclosure Requirement E4-3 – Action plans and resources in relation to biodiversity and ecosystems-related policies

Targets and performance metrics

  • Disclosure Requirement E4-4 – Targets related to biodiversity and ecosystems
  • Disclosure Requirement E4-5 –Impact metrics related to biodiversity and ecosystems change
  • Disclosure Requirement E4-6 – Potential financial effects from biodiversity and ecosystem-related risks and opportunities

E5: Resource use and circular economy

ESRS 2 General disclosures

  • Disclosure Requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material sustainability impacts, risks and opportunities

Impact, risk and opportunity management

  • Disclosure Requirement E5-1 – Policies related to resource use and circular economy
  • Disclosure Requirement E5-2 – Actions and resources in relation to resource use and circular economy

Metrics and targets

  • Disclosure Requirement E5-3 – Targets related to resource use and circular economy
  • Disclosure Requirement E5-4 – Resource inflows
  • Disclosure Requirement E5-5 – Resource outflows

Products and materials: Waste

  • Disclosure Requirement E5-6 – Potential financial effects from resource use and circular economy-related impacts, risks and opportunities

EXPOSURE DRAFTS

E1: Climate Change

General, strategy, governance and materiality assessment

  • Disclosure Requirement E1-1 – Transition plan for climate change mitigation

Policies, targets, action plans and resources

  • Disclosure Requirement E1-2 – Policies implemented to manage climate change mitigation and adaptation
  • Disclosure Requirement E1-3 – Measurable targets for climate change mitigation and adaptation
  • Disclosure Requirement E1-4 – Climate change mitigation and adaptation action plans and resources

Performance measurement

  • Disclosure Requirement E1-5 – Energy consumption and mix
  • Disclosure Requirement E1-6 – Energy intensity per net turnover
  • Disclosure Requirement E1-7 – Scope 1 GHG emissions
  • Disclosure Requirement E1-8 – Scope 2 GHG emissions
  • Disclosure Requirement E1-9 – Scope 3 GHG emissions
  • Disclosure Requirement E1-10 – Total GHG emissions
  • Disclosure Requirement E1-11 – GHG intensity per net turnover
  • Disclosure Requirement E1-12 – GHG removals in own operations and the value chain
  • Disclosure Requirement E1-13 – GHG mitigation projects financed through carbon credits
  • Optional Disclosure Requirement E1-14 – Avoided GHG emissions from products and services
  • Taxonomy Disclosure Requirements – Taxonomy Regulation for climate change mitigation and climate change adaptation
  • Disclosure Requirement E1-15 – Potential financial effects from material physical risks
  • Disclosure Requirement E1-16 – Potential financial effects from material transition risks
  • Disclosure Requirement E1-17 – Potential financial effects from climate-related opportunities

E2: Pollution

Policies, targets, action plans and resources

  • Disclosure Requirement E2-1 – Policies implemented to prevent and control pollution
  • Disclosure Requirement E2-2 – Measurable targets for pollution
  • Disclosure Requirement E2-3 – Pollution action plans and resources

Performance measurement 9

  • Disclosure Requirement E2-4 – Pollution of air, water and soil
  • Disclosure Requirement E2-5 – Substances of concern and most harmful substances
  • Taxonomy Regulation for pollution prevention and control including enabling activities
  • Disclosure Requirement E2-6 – Pollution-related incidents and deposit impacts and risks, and financial exposure to the undertaking
  • Disclosure Requirement E2-7 – Financial effects from pollution-related impacts, risks and opportunities

E3: Water and marine resources

Policies, targets, action plans and resources

  • Disclosure Requirement E3-1 – Policies implemented to manage water and marine resources
  • Disclosure Requirement E3-2 – Measurable targets for water and marine resources
  • Disclosure Requirement E3-3 – Water and marine resources action plans and resources

Performance measurement

  • Disclosure Requirement E3-4 – Water management performance
  • Optional Disclosure Requirement E3-5 – Water intensity performance
  • Disclosure Requirement E3-6 – Marine resources-related performance
  • Taxonomy Regulation for water and marine resources
  • Disclosure Requirement E3-7 – Financial effects from water and marine resources-related impacts, risks and opportunities

E4: Biodiversity and ecosystems

General, Strategy, Governance and Materiality assessment

  • Disclosure Requirement E4-1 – Transition plan in line with the targets of no net loss by 2030, net gain from 2030 and full recovery by 2050

Policies, Targets, Action Plans and Resources

  • Disclosure Requirement E4-2 – Policies implemented to manage biodiversity and ecosystems
  • Disclosure Requirement E4-3 – Measurable targets for biodiversity and ecosystems
  • Disclosure Requirement E4-4 – Biodiversity and ecosystems action plans

Performance Measurement

  • Disclosure Requirement E4-5 – Pressure metrics
  • Disclosure Requirement E4-6 – Impact metrics
  • Disclosure Requirement E4-7 – Response metrics
  • Optional Disclosure Requirement E4-8 – Biodiversity-friendly consumption and production metrics
  • Taxonomy Regulation for biodiversity and ecosystems
  • Optional Disclosure Requirement E4-9 – Biodiversity offsets
  • Disclosure Requirement E4-10 – Financial effects from biodiversity-related impacts, risks and opportunities

E5: Resource use and circular economy

General, Strategy, Governance and Materiality assessment

  • Disclosure Requirement E5-1 – Policies implemented to manage resource use and circular economy
  • Disclosure Requirement E5-2 – Measurable targets for resource use and circular economy
  • Disclosure Requirement E5-3 – Resource use and circular economy action plans

Performance measurement

  • Disclosure Requirement E5-4 – Resource inflows
  • Disclosure Requirement E5-5 – Resource outflows
  • Disclosure Requirement E5-6 – Waste
  • Disclosure Requirement E5-7 – Resource use optimisation
  • Disclosure Requirement E5-8 – Circularity support
  • Taxonomy Regulation for the transition to a circular economy (including enabling activities)
  • Disclosure Requirement E5-9 – Financial effects from resource use and circular economy-related impacts, risks and opportunities

Next Steps:

As shown above the reporting standards (ESRS) are a comprehensive regulation that must be prepared in due time. If you want to start the preparation for the CSRD: Contact us, now.

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Georg Tichy

Georg Tichy

Georg Tichy is a management consultant in Europe, focusing on top-management consultancy, projectmanagement, corporate reporting and fundingsupport. Dr. Georg Tichy is also trainer, lecturer at university and advisor on current economic issues. Contact me or Book a MeetingView Author posts