European sustainability reporting standards (ESRS)

This chapter provides a comprehensive examination of the European Sustainability Reporting Standards (ESRS), their historical development, core components and significance within the global sustainability reporting landscape. The chapter begins by tracing the evolution of sustainability reporting in the European Union, from the Non-Financial Reporting Directive (NFRD) to the Corporate Sustainability Reporting Directive (CSRD), highlighting the important role of EFRAG in developing the ESRS. Key components of the ESRS framework, including environmental (ESRS E1 to 5), social (ESRS S1 to 4) and governance standards (ESRS G1), as well as sector-specific and entity-specific approaches, are explored in detail. The chapter also outlines the interplay between ESRS and global standards such as GRI, ISSB and TCFD, emphasising efforts towards interoperability. Finally, it addresses challenges and critiques of ESRS, including complexity, double materiality and the risk of fragmented global reporting landscapes. By examining these dimensions, the chapter underscores the transformative potential of ESRS in advancing corporate accountability and sustainable development.