The process of structuring European sustainability reporting has recently taken a decisive step forward: on June 3, the public consultation phase on the simplified version of the ESRS reporting standards came to a close after having started in July 2025. Previously, on May 6, a draft of the new simplified standards had been published.
These developments are important and should be interpreted in light of the scope within which the Green Deal and, more specifically, the CSRD – Corporate Sustainability Reporting Directive – require European companies to publish an annual sustainability report subject to third-party assurance. Today, this obligation applies only to companies with more than 1,000 employees and more than €450 million in net turnover. Starting from financial year 2027, these companies will be required to publish a sustainability report using this latest version of the ESRS.
However, according to the current direction of the European Union, companies falling outside this scope will also have the option to voluntarily publish a sustainability report using the ESRS. This is a particularly interesting opportunity, considering the close alignment between the ESRS and the regulatory and strategic contents of the Green Deal. Voluntary adoption therefore enables companies to incorporate the development directions of the ecological transition into both their reporting and business strategy.
One important new feature of the revised ESRS is the reference, across all environmental and social standards, to the European regulatory elements to which they relate. This is one of the aspects of simplification and clarification introduced by the new version: the objective of EFRAG, the European Financial Reporting Advisory Group responsible for publishing the ESRS, was precisely to eliminate the excessive redundancy and complexity of the first version of the standards. This objective has been achieved: the new version is more concise, clearer, and easier to navigate.
In addition to this streamlining work, following the public consultation, the ESRS also introduces several interesting updates. For reasons of brevity, this article focuses on the standards relating to climate change, ESRS E1, and circular economy, ESRS E5.
New standards for climate resilience
Concerning climate, a new disclosure requirement on climate resilience has been introduced. This addition is, in fact, the result of a simplification: the previous version of ESRS E1 already included explicit references to climate resilience, but grouping them into a single requirement gives full recognition to this important topic. Following the guidance provided by the standard, companies will disclose in their reports how they have considered the resilience of their business in relation to the risks associated with rising temperatures.
It should be noted that climate resilience is also an important topic in the new version of ISO 14001. Companies renewing this certification will therefore already have a good level of alignment with this reporting requirement. This clearly confirms that the drivers of sustainability are increasingly converging.
Following the public consultation, the requirement to disclose carbon intensity data and energy intensity data has been removed. Carbon intensity refers to the ratio between CO₂ emissions and a reference term representative of the company’s activity. In the first version of the standard, this reference term was represented by the company’s net turnover, which had always appeared limited and limiting. In the author’s view, it would have been preferable to refer to the possibility of reporting an intensity KPI based on the company’s most significant variable, such as hours worked or tonnes of products manufactured, rather than eliminating the requirement entirely. Although this choice is consistent with the essential need to focus decarbonisation pathways on the reduction of gross greenhouse gas emissions, intensity indicators can still represent useful references when properly used, enabling companies to reflect on their annual sustainability performance.
Defining metrics for the circular economy
Regarding the circular economy, instead, the main updates concern the definition of metrics. First, the concept of “key material” has been introduced, i.e., the identification of the material central to the production process and for which specific information is required pertaining to its characteristics and relevance to the business model. Metric requirements now focus exclusively on key materials, whereas previously they applied to all incoming materials, including packaging.
In addition, for each key material, companies are required to specify whether it contains critical raw materials. This confirms the very high level of attention that the European Union places on materials that are decisive for the ecological and digital transition, as also demonstrated by the existence of a dedicated regulation, the Critical Raw Materials Act.
In contrast, the requirement to specify whether incoming materials come from a certified bio-based supply chain has been removed. On the one hand, this data point suffered from several difficulties: ensuring consistency across different bio-based material certification schemes, correctly identifying the scope within which the certification was valid, and accounting for the fact that some materials result from the combination of different materials with different characteristics. On the other, the complete removal of this reference, replaced by the simpler requirement to specify, where relevant, whether the key material is of bio-based origin, appears excessive.
A further new element is the softening of requirements concerning the durability and repairability characteristics of output products: these characteristics may now be expressed exclusively in qualitative terms. This change addresses one of the most critical aspects of the circular economy standard. The previous version called for companies to quantify the durability and repairability of the goods they produced, a requirement that was effectively impossible to meet due to the absence of recognised European standards for assessing these characteristics. In this regard, the delegated acts under the Ecodesign Regulation are still awaited.
We are therefore witnessing a significant shift in European reporting, whether mandatory or voluntary. The new ESRS provides companies with a more accessible version of a major review and synthesis of international publications and regulatory instruments. Through them, the fundamental concepts of sustainable development are translated into practice in a form that can effectively guide the sustainability journey of European companies.
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