The ESRS (a reporting framework under the CSRD) is an amendment to the existing EU’s Non-Financial Reporting Directive (NFRD) and will go into effect throughout the European Union in 2023. It is estimated that 50,000+ companies, who do business in Europe will need to report to European regulators using the ESRS standards.
A big objective of the ESRS is to reduce corporate greenwashing by standardizing and codifying material sustainability reporting for companies.
According to EFRAG:
“The overall architecture of ESRS is designed to ensure that sustainability information is reported in a carefully articulated manner”
Despite the direct use of ‘Sustainability’ in its name, ESRS isn’t just about sustainability disclosure: it shares different reporting sections for environmental, social and governance reporting. The ESRS aims to serve as the architecture for an annual ESG report that meets the needs of EU regulators, investors, and other stakeholders.