CSRD Spotlight: ESRS E1-E5

As part of the Corporate Sustainability Reporting Directive (CSRD), reporting requirements are broken down into 3 main categories: Environmental, Social, and Governance (for an overview of the CSRD and who is affected, see corresponding blog post: CSRD NetSuite Reporting Best Practices). Here we will specifically look at the Environmental Reporting Standards. This section is designed to provide specific information on a company’s climate-related risks and how they are managed. The Environmental Standards are broken down into 5 subcategories, focusing on pollution, resource use, and biodiversity. These categories are defined as ESRS E1-E5. Here we will explore each of the 5 subcategories in detail.

ESRS E1: Climate Change

This section focuses on a company’s impact on climate change and its efforts to manage climate-related risks and opportunities. It aligns with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.

• Governance
  • Description of the governance structure including information on specific employees and organizations tasked with overseeing and implementing climate-related policies 
• Strategy
  • How a company aligns their business model and strategy with the transition to a low-carbon economy
  • Assessment of short-, medium-, and long-term risks related to climate change
  • Scenario analysis to evaluate climate-related risks under different temperature rise scenarios (e.g., 1.5°C, 2°C)
  • Details on the company’s Net-Zero target, including timeline
• Risk Management
  • How a company identifies, assess, and manages climate-related risks 
• Metrics and Targets
  • Disclosure of Scope 1, 2, and 3 emissions
  • Information on carbon intensity, emissions reductions, and progress towards climate-related targets 

ESRS E2: Pollution

This section relates to details on any form of pollution that a company may be contributing to the environment. It requires the specific quantitative data on the pollutants emitted as well as measures taken to reduce pollution.

• Air Pollution
  • Details on emissions of pollutants such as NOx, SOx, and particulate matter
  • Specific measures a company is taking to reduce emissions
• Water Pollution
  • Information on a company’s discharge of pollutants into water systems. This would include wastewater management practices and reports
  • Details on water use and efforts to minimize water contamination
• Waste Management
  • Disclosure of waste generation, treatment, and disposal practices
  • Waste reduction and diversion programs such as recycling programs or circular economy initiatives 
• Chemical Use
  • Details on use of hazardous chemicals and efforts to reduce or manage their environmental impact 

ESRS E3: Water and Marine Resources

This section focuses on a company’s impact on freshwater and marine resources. Some aspects are not relevant to all organizations.

• Water Use
  • Report on water consumption across operations, broken down by water stress regions
  • Measures a company is taking to reduce consumption, for example water recycling or conservation
• Water Management Risks 
  • Risks to water scarcity and quality
  • Water management practices in place to reduce impact
• Marine Pollution and Conservation (If applicable)
  • Information on marine resources and steps taken to protect marine resources 
  • Contribution to efforts to manage marine biodiversity 

ESRS E4: Biodiversity and Ecosystems

This section highlights a company’s impact on biodiversity and ecosystems, including habitat destruction, species protection, preservation.

• Biodiversity Risks
  • The company’s direct or indirect impact on biodiversity, such as deforestation, habitat degradation, or overuse of natural resources
• Mitigation Measures
  • Efforts to reduce negative impacts on ecosystems and species, for example participation in biodiversity protection initiatives like WWF
• Governance and Policy
  • How biodiversity is integrated into a company’s environmental policies and governance structures
  • Reporting on any biodiversity-related targets or certifications the company is working toward (i.e. commitment to no deforestation or preservation of certain habitats)
• Biodiversity Monitoring
  • The use of biodiversity monitoring practices and how the company measures its impact on ecosystems

ESRS E5: Resource and Circular Economy

This section assesses how a company uses resources and what initiatives are in place to minimize consumption and extend product life cycles.

• Resource Efficiency
  • Details on a company’s efficiency of  resource use. This includes the reduction of raw materials, energy, and water across production processes
  • Description of circularity efforts, including disclosure on how materials are reused, recycled, or repurposed to minimize the need for virgin resources
• Waste and Recycling
  • Information on the volume of waste generated, including the percentage that is recycled or repurposed
  • Details on initiatives in place to eliminate single-use products, reduce packaging waste, or shift towards sustainable packaging
• Sustainable Design and Product Life Cycle
  • Disclosure of efforts to design products with longer lifespans, ease of repair, or recyclability.
  • Description of any business models based on product-as-a-service or take-back schemes that encourage reuse or recycling.
• Circular Economy Metrics
  • Disclose key performance indicators (KPIs) related to circular economy efforts, such as percentage of materials sourced sustainably or waste diverted from landfills

For information on Social and Governance Standards, see corresponding blog posts: ESRS S1-S4, and ESRS G1.

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