From 2024, large companies are required to report on sustainability according to new European standards (ESRS). If you are a small or medium-sized company this requirement won’t apply for a few more years yet. But be aware: you will still feel the consequences through your supplier relationship.
In ‘WhatsUpp’ our expert answers a specific customer question or explains exactly what a new law or rule means for your company.
What are the European Sustainability Reporting Standards (ESRS)?
The European Sustainability Reporting Standards (ESRS) make it possible for companies to report in a consistent manner on sustainability. ESRS is divided into different themes: climate change, biodiversity, workers in the value chain, communities, governance, risk management and internal controls, and so on.
ESRS makes concrete the sustainability guidelines of the Corporate Sustainability Reporting Directive (CSRD). This in turn is one of the cornerstones of the EU Green Deal, Europe’s roadmap towards a modern, resource-efficient and competitive economy. Read more about the CSRD.
When am I required to report under ESRS?
- From financial year 2024: public-interest companies (e.g. banks, insurers, listed companies) with 500 employees or more. This applies not only to EU companies, but also to non-EU companies with shares listed on an EU-regulated market.
- From financial year 2025: all large companies that meet at least two of the following three criteria: 250 employees, net annual turnover of 50 million euros and total assets of 25 million euros.
- From financial year 2026: listed SMEs, small credit institutions and intermediaries (captives).
- From financial year 2028: all international companies that record a turnover of more than 150 million euros in the EU and also meet the other reporting conditions.
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I'm a small business, so I don't have to do anything yet, right?
Yes, your reporting obligations only begin in 2026. But there is a good chance that you will receive questions about sustainability from your customers much sooner than this, or that they will tighten their requirements. This is because they themselves may already be required to report as a large company and have to identify their entire value chain. You will therefore come into the picture as a supplier, transport company or other party involved in the supply chain.
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ESRS is a requirement, but do I also stand to benefit from it?
Absolutely! You have to comply, but there are also many competitive advantages for your company.
- Greater trust from your stakeholders: if you take a consistent approach to your reporting, investors and other stakeholders can easily compare your information with other companies. If you want to raise capital, you will also notice that your financial institution takes sustainability criteria into account when making the decision. Sustainability also inspires confidence in job applicants, your employees, end customers and others.
- Active risk management: through sustainability reporting you identify and manage your company’s environmental and social risks. This enables you to tackle them more proactively. Examples of such risks are scarcity of raw materials, reputational damage and violations of regulations. Read more about active risk management.
- Long-term value creation: by consciously integrating sustainability into your strategy and business processes, you increase your innovative capacity, attract the right talent more easily, strengthen your reputation and work towards a better future for people, the environment and society.
How should I go about my ESRS reporting?
Your sustainability report is part of your general management reporting. ESRS works according to the principle of double materiality: for each sustainability theme you identify both your company’s impact and the theme’s impact on your business operations. You also need to map your entire value chain (e.g. transporters, suppliers), not just your own activities.
Note: be sure to check any sector-specific obligations which apply in addition to ESRS.
Do you need advice about sustainability and your ESRS obligations?
