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On 31 July 2023, the European Commission adopted the European Sustainability Standards (ESRS) delegated act, together with a detailed Q&A.

The ESRS delegated act adopted by the European Commission will be formally transmitted in the second half of August to the European Parliament and to the European Council for scrutiny. The scrutiny period runs for two months, extendable by a further two months. The European Parliament or the European Council may reject the delegated act, but they may not amend it.

The ESRS are included in Annex I of the Commission Delegated Regulation supplementing Directive 2013/34/EU as regards sustainability reporting standards. Annex II contains acronyms and a glossary of terms. There is also a page with a Timeline of the initiative, stakeholder's feedback and other language versions.

On 22 June 2023 we published an blog on the consultation version of the ESRS. In this update we provide an overview of the main changes to the ESRS compared to the consultation version of June 2023. Attached in the margin on the right you will find redline comparison between the final ESRS and the draft version.

Main changes to the July 2023 final ESRS compared to the consultation version of June 2023

ESRS 1 - 3.2 Material matters and materiality of information
In the consultation version, irrespective of the outcome of its materiality assessment, the undertaking shall always disclose the information required by ESRS 2 General Disclosures (i.e. all the disclosure requirements and data points specified in ESRS 2). 

  • This text has been amended so that in addition thereto, the undertaking shall also disclose the information required by the disclosure requirements and datapoints in topical ESRS related to the disclosure requirement IRO-1 (Description of the process to identify and assess material impacts, risks and opportunities) as listed in ESRS 2 Appendix C (Disclosure/Application Requirements in topical ESRS that are applicable jointly with ESRS 2 General Disclosures). 

In the consultation version, if an undertaking concludes that a topic is not material and therefore it omits all the disclosure requirements in a topical ESRS it may briefly explain the conclusions of the materiality assessment for that topic.

  • This text has been amended so that if this conclusion on non-materiality regards climate change and therefore all disclosure requirements in ESRS E1 are omitted, it shall disclose a detailed explanation of the conclusions of its materiality assessment regarding climate change, including a forward-looking analysis of the conditions that could lead the undertaking to conclude that climate change is material in the future.
  • See also ESRS 2, IRO-2, data point 57-58.

In the consultation version, when reporting on metrics and when disclosing the datapoints that derive from other EU legislation (as listed in Appendix B of ESRS 2), if the undertaking omits information prescribed by either a disclosure requirement or a datapoint of a disclosure requirement in the Metrics and Targets section of a topical ESRS, such information is considered to be implicitly reported as “not material for the undertaking”.

  • This text has been amended so that if an undertaking omits the information prescribed by a datapoint that derives from other EU legislation (as listed in appendix B of ESRS 2) it shall explicitly state that the information in question is not material. 
  • See also ESRS 2, IRO-2, data point 56: a table shall be included by the undertaking for this disclosure.  

ESRS 1 - 3.5 Financial materiality
In the consultation version, the financial materiality assessment should include the identification of information that is considered material for primary users of general-purpose financial reports in making decisions relating to providing resources to the entity.

  • This text has been amended so that it should not include the identification of information, but it should correspond thereto.

ESRS 1 - 7.2 Sources of estimation and outcome uncertainty
In the final version, it has been newly added that an undertaking shall disclose information to enable users to understand the most significant uncertainties affecting the quantitative metrics and monetary amounts reported in its sustainability statement.

ESRS 1 - 7.4 Changes in preparation of presentation of sustainability information
In the consultation version, an undertaking shall provide restated comparative figures (unless it is impracticable to do so) if a metric or target is redefined or replaced.

  • This text has been amended so that these restated comparative figures shall also be provided when the undertaking has identified new information in relation to the estimated figures disclosed in the preceding period and the new information provides evidence of circumstances that existed in that period. 

ESRS 1 - 10.3 Transitional provision related to section 7.1 Presenting comparative information
Before, to ease the first-time application of ESRS 1, the undertaking is not required to disclose the comparative information required by section 7.1 Presenting comparative information in the first year of preparation of the sustainability statement under the ESRS. 

  • This text has been amended so that also for disclosure requirement listed in Appendix C (List of phased-in Disclosure Requirements), this transitional provision applies with reference to the first year of mandatory application of the phased-in disclosure requirement. 

ESRS 1 - Appendix C: List of phased-in Disclosure Requirements
Two new phased-in Disclosure requirements have been added to Appendix C (List of phased-in Disclosure Requirements):

  • ESRS 2, disclosure requirement SBM-3 (Material impacts, risks and opportunities and their interaction with strategy and business model): The undertaking may omit the information prescribed by ESRS 2 SBM-3 paragraph 48(e) (anticipated financial effects) for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS 2 SBM-3 paragraph 48(e) by reporting only qualitative disclosures for the first 3 years of preparation of its sustainability statement if it is impracticable to prepare quantitative disclosures.
  • ESRS S1, S1-13 (Training and skills development): The undertaking may omit the information prescribed by ESRS S1-13 for the first year of preparation of its sustainability statement. 

ESRS 2 - disclosure requirement BP-2 (Disclosures in relation to specific circumstances)

  • The text about disclosures in relation to specific circumstances has been amended so that the undertaking shall (a) identify the quantitative metrics and monetary amounts it has disclosed that are subject to a high level of measurement uncertainty and (b) in relation to each quantitative metric and monetary amount identified:
  1. disclose information about the sources of measurement uncertainty (for example, the dependence of the amount on the outcome of a future event, on a measurement technique or on the availability and quality of data from the entity’s upstream and/or downstream value chain); and
  2. disclose the assumptions, approximations and judgements the entity has made in measuring it.
  • It has been newly added as AR 2 (Application Requirement) in Appendix A that the under-taking may disclose whether it relies on any European standards approved by the European Standardisation System (ISO/IEC or CEN/CENELEC standards), as well as the extent to which data and processes that are used for sustainability reporting purposes have been verified by an external assurance provider and found to conform to the corresponding ISO/IEC or CEN/CENELEC standard.

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In case you have any questions regarding the ESRS, the CSRD or other related legislation, please reach out. We would be happy to discuss!

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