For in scope companies, disclosures may be required as early as the reporting period for the 2024 financial year.

By Paul A. Davies, Michael D. Green, and James Bee

On 22 December 2023, the Commission Delegated Regulation specifying the first set of European Sustainability Reporting Standards (ESRS) was published in the Official Journal of the European Union (EU).[1] The ESRS apply from 1 January 2024, for financial years beginning on or after that date.

The ESRS set out specific disclosure requirements for companies required to report under the Corporate Sustainability Reporting Directive (CSRD). The first set of sector-agnostic ESRS cover sustainability-related impacts, risks, and opportunities relating to a range of environmental, social, and governance issues, and will be followed by additional sector-specific standards over the coming years.[2]

See this Latham blog post for more background on the ESRS.

Implementation Guidance Documents

In addition, EFRAG (the technical working group tasked with developing the ESRS) has issued a public consultation on three implementation guidance documents aimed at supporting the application of the ESRS.

The documents cover what EFRAG describes as “the most challenging aspects of ESRS implementation”:

  • The double materiality assessment — covering the approach to materiality under CSRD reporting and considerations for entities required to conduct a materiality assessment. The guidance document includes tools and mechanisms for undertakings to comply with the ESRS.
  • The value chain — detailing processes that may be implemented to navigate value chain requirements in the ESRS, including considerations for the materiality assessment process and mapping the coverage of the upstream and downstream value chain requirements.
  • ESRS datapoints — a comprehensive list of the ESRS datapoints (which comprise a total of 1,102 mandatory and voluntary data points) including guidance on the data type required covering the cross-cutting and topical ESRS.

These documents were published in December 2023, and stakeholders have until 2 February 2024 to provide feedback.

Next Steps

As noted above, the CSRD requires the European Commission to adopt further sets of ESRS which will cover sector-specific standards, proportionate standards for listed small and medium-sized enterprises (SMEs), and standards for non-EU companies.

In October 2023 the Commission announced plans to reduce the reporting burden for companies under the CSRD, which included a proposal to postpone the adoption of sector-specific ESRS and ESRS for non-EU companies required to report under the CSRD to 30 June 2026 (initially, such standards were due by 30 June 2024).

EFRAG has noted its focus over the coming months will be on implementing the sector-agnostic ESRS, although it continues to work on the development of the sector-specific ESRS in parallel. All currently published sector-specific ESRS are in the exposure draft stage of development (to be followed by the final draft stage), with standards for oil and gas, coal, and quarries and mining the furthest along the process. Further details of the process and expected timings can be found here.

EFRAG also expects to issue exposure drafts for consultation relating to simplified ESRS for SMEs in early 2024.

Companies in scope should engage early to understand the requirements of the first set of ESRS, and where adaptation in business processes is required to meet these.

Latham & Watkins will continue to monitor the development of ESG reporting standards in the EU and globally.


[1] EU legislation can only become legally binding once it has been published in the Official Journal.

[2] The 12 ESRS that have been published in the Official Journal include two cross-cutting ESRS (ESRS 1 General Requirements and ESRS 2 General Disclosures), and 10 topical ESRS (ESRS E1 Climate Change, ESRS E2 Pollution, ESRS E3 Water and Marine Resources, ESRS E4, Biodiversity and Ecosystems, ESRS E5 Resource Use and Circular Economy, ESRS S1 Own Workforce, ESRS S2 Workers in the Value Chain, ESRS S3 Affected Communities, ESRS S4 Consumer and End-Users, and ESRS G1 Business Conduct).