ESRS guide (updated 2025): carbon reporting for EU companies

 

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If your company is preparing a carbon report in Belgium, France, the Netherlands, Luxembourg or the UK, you’ve likely come across the ESRS—the European Sustainability Reporting Standards. These standards, developed to support the Corporate Sustainability Reporting Directive (CSRD), define what sustainability information companies must disclose and how.

Starting in 2024 for wave-one companies, ESRS sets a common framework across Europe. It requires reporting on environmental, social, and governance (ESG) impacts and risks, using a double materiality lens. This means organisations must consider how sustainability affects their business and how their business affects society and the planet.

This article comprehensively analyses ESRS and the latest changes introduced in July 2025. You’ll learn:

  • who must report and when
  • what needs to be included in carbon and sustainability reports
  • what’s new in the “quick fix” and simplification Exposure Drafts
  • how to prepare a compliant and strategic carbon report using the ESRS

 

 

What is ESRS, and why does it matter

 

The European Sustainability Reporting Standards (ESRS) are the mandatory reporting framework adopted by the European Commission in July 2023. They apply under the CSRD and are designed to ensure companies disclose information on:

  • greenhouse gas emissions (Scope 1, 2 and 3)
  • climate change risks
  • biodiversity
  • resource use
  • workforce and value chain conditions
  • governance structures

Unlike voluntary standards such as GRI or CDP, ESRS reporting is legally required and subject to external assurance.

 

ESRS vs CSRD: how they fit together

The CSRD defines who must report and when, while the ESRS defines what and how companies must report. Think of the CSRD as the legal obligation and the ESRS as the detailed rulebook.

 

The concept of double materiality explained

Double materiality combines:

  • financial materiality (how ESG risks affect your company)
  • impact materiality (how your company affects the environment and society)

For example, climate change might disrupt your supply chain (financial), while your emissions may harm ecosystems (impact). Both must be assessed and reported if material.

 

 

Who must comply: scope and reporting waves

 

The CSRD implementation is phased in four waves:

  1. Wave one: large public-interest entities with 500+ employees → report for FY 2024
  2. Wave two: all large companies (250+ employees, €40m+ turnover or €20m+ assets) → report for FY 2025 (delayed)
  3. Wave three: listed SMEs → report for FY 2026 (opt-out available until 2028)
  4. Wave four: non-EU companies with EU revenue >€150 million → report for FY 2028

 

 

The structure of ESRS: topics and general disclosures

 

The full ESRS framework includes 12 sector-agnostic standards:

  • ESRS 1: principles and architecture
  • ESRS 2: general disclosures (strategy, governance, risk, targets)
  • E1–E5: environmental standards (climate change, pollution, water, biodiversity, resource use)
  • S1–S4: social standards (own workforce, value chain workers, communities, consumers)
  • G1: governance

Each standard has required disclosures—datapoints—companies must include if they are deemed material.

 

 

Recent updates: quick fix delegated act (July 2025)

 

The European Commission adopted a “quick fix” on 11 July 2025 to reduce the burden on wave-one companies. This allows early reporters to omit certain disclosures through FY 2026.

 

Reliefs for wave-one companies through FY 2026

Wave-one companies may:

  • omit anticipated financial effects of sustainability risks until FY 2026
  • omit Scope 3 emissions and total GHG emissions if they have <750 employees
  • omit all disclosures under ESRS E4, S2, S3 and S4, and most of S1—even if material

Companies with >750 employees now get the same exemptions as smaller firms, ensuring a level playing field.

 

Summarised materiality disclosures are still required

Even when exempt, if a company deems a topic material (e.g. biodiversity), it must include a summary disclosure under ESRS 2. This ensures accountability while easing the data burden.

 

 

Simplification Exposure Drafts (July 2025) by EFRAG

 

EFRAG, the body that developed ESRS, published simplified Exposure Drafts on 31 July 2025. These reflect the European Commission’s Omnibus initiative to reduce reporting burdens.

 

Reduction in datapoints (–57% mandatory, –68% total)

EFRAG reviewed the entire ESRS framework and:

  • reduced mandatory datapoints by 57%
  • cut total disclosures (incl. voluntary) by 68%
  • shortened the standards by over 55%

This makes ESRS more usable—especially for smaller teams.

 

Simplification levers

EFRAG applied six main strategies:

  1. Streamlining the double materiality assessment (top-down first, fewer scoring burdens)
  2. Improved readability with aggregated disclosures
  3. Eliminating duplication between ESRS 2 and topical standards
  4. Simplifying language and layout
  5. Adding relief mechanisms (exemptions for high-cost disclosures)
  6. Enhancing interoperability with global frameworks (GRI, ISSB)

 

Consultation process and what’s next

The public consultation runs until 29 September 2025. Final drafts will be submitted to the European Commission by 30 November 2025. The revised standards are expected to apply from the financial year 2027.

 

 

Preparing your carbon report under ESRS

 

Whether you’re in scope already or preparing for future waves, here’s how to align your carbon footprint report with ESRS:

 

Integrating Scope 1–3 emissions disclosures

Under ESRS E1, companies must report:

  • Scope 1: direct emissions
  • Scope 2: indirect emissions from purchased energy
  • Scope 3: all other indirect emissions (upstream/downstream)

Use a recognised methodology like the GHG Protocol to collect data at entity and group levels.

 

Navigating phase-ins and exemptions

Check if you qualify for temporary exemptions (see “quick fix” rules). Use ESRS 2 to declare if a topic is material, and prepare summaries where complete disclosures are delayed.

 

 

Quick takeaways

 

  • ESRS defines the sustainability reporting content required by CSRD
  • Companies must comply if operating in the EU
  • The July 2025 “quick fix” defers disclosures for wave-one companies through FY 2026
  • The new Exposure Drafts simplify reporting by cutting datapoints and clarifying structure
  • Reporting on Scope 1–3 emissions is required, but exemptions may apply
  • Final revised ESRS are expected by FY 2027

 

 

Conclusion & next steps

 

The European Sustainability Reporting Standards are becoming the foundation for carbon and ESG transparency across Europe. For companies already in scope—or preparing to be—understanding your obligations and leveraging simplifications is essential.

Thanks to the quick fix delegated act, Wave-one companies have an extended runway. Meanwhile, the simplified ESRS Exposure Drafts promise a more manageable, interoperable, and impact-focused future for sustainability reporting.

If your company operates in Belgium, France, the Netherlands, Luxembourg or the UK and wants to:

  • understand your reporting obligations,
  • build your carbon footprint with confidence,
  • or simplify your disclosure process,

now is the time to act.

📢 Tapio can provide you with carbon accounting, data collection, and reporting tools that align with ESRS. Contact us today to get started.

 

 

 

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