ESRS Explained: The 12 Standards and the Revised Draft

The European Sustainability Reporting Standards (ESRS) set out what a company reporting under the CSRD must disclose. There are 12: two cross-cutting standards, five environmental, four social and one on governance. This article explains what each covers and where suppliers feel the effect, then covers the revision adopted in 2026, which changes a lot of detail.

Who Has to Report

Omnibus I (Directive (EU) 2026/470, in force since 18 March 2026) narrowed the CSRD to companies with more than 1,000 employees and more than €450 million in turnover. Many manufacturers and most small suppliers are now outside direct scope. They can still be asked for data by a customer that is inside it.

The Structure: 2 + 5 + 4 + 1

Double Materiality (ESRS 1 and ESRS 2)

ESRS 1 sets the rules, including double materiality. A company assesses impact materiality (its effect on people and the environment) and financial materiality (sustainability risks and opportunities that affect the company). A topic is reportable if it is material on either view. ESRS 2 sets the general disclosures that every reporter provides, and the company must also describe how it did its materiality assessment. The 2026 revision keeps double materiality at the centre. The May draft allowed a top-down approach at topic level and said companies must not report information that is not material; I have not checked that the final text keeps both.

Environmental Standards

E1 (Climate change) is material for most manufacturers. It covers Scope 1, 2 and 3 greenhouse gas emissions using the GHG Protocol, energy, targets and a transition plan. The original text asks for the Scope 3 categories that are significant for the company, not all 15 categories automatically; the company decides which are significant. For a manufacturer, purchased goods and services is usually where supplier data matters most.

E2 (Pollution) covers pollutants to air, water and soil. It follows the pollutants listed in EU legislation, including the E-PRTR Regulation, rather than a fixed short list. E3 (Water) covers water use, withdrawal and discharge, and where operations are in water-stressed areas. For dyeing and finishing, E3 is often material. The standard expects a recognised method for identifying water stress; tools such as the WRI Aqueduct are commonly used, but I could not confirm which tool the standard names, and I could not find the "UN Global Freshwater Stress Index" cited in earlier versions of this article.

E4 (Biodiversity) and E5 (Resource use and circular economy) are also topical. E5 matters for manufacturers with significant material inputs and waste, and for brands facing product-design rules such as the ESPR.

Social Standards

S1 (Own workforce) covers employment conditions, health and safety, training, pay and collective bargaining for the company's own employees, including factory workers. Existing audits such as SA8000 or SMETA may help with data collection, but they do not replace the ESRS disclosures.

S2 (Workers in the value chain) is the standard that reaches suppliers most directly. A reporting brand must describe impacts on workers in its supply chain, which pushes it to ask suppliers for audit results, grievance mechanisms and policies. S3 (Affected communities) is relevant mainly where operations affect local communities, for example through pollution or land use. S4 (Consumers and end-users) covers impacts on people who use the company's products, such as product safety and information.

Governance

G1 (Business conduct) covers anti-corruption and anti-bribery policies, whistleblower protection, the handling of supplier relationships including payment practices, and political influence. It also requires disclosure of confirmed corruption incidents.

What the 2026 Revision Changes

I did not read the adopted text in full, so I cannot say exactly which topical standards or datapoints remain or how each is restructured. Check the Official Journal text for the standard you need. The value chain cap matters most for suppliers: a small or mid-sized supplier has a right to refuse requests that go beyond the cap, and the voluntary standard for smaller companies, based on the VSME and in force since 24 September 2026, can be used to answer them. The cap covers requests made for ESRS reporting; it does not necessarily limit requests under other laws or customer programmes.

What This Means for Suppliers

Practical steps

• Find out whether any of your customers is in CSRD scope, and which standards they are likely to report: usually E1, S2 and E5 for manufacturers.
• Collect energy, fuel and production data by facility, so you can answer an E1 or Scope 3 request quickly.
• Keep records of worker numbers, health and safety incidents, audit results and grievance procedures for S2 requests.
• If you have 1,000 or fewer employees, learn the voluntary standard's basic module and use it as your standard answer to customer requests.
• Keep a supplier policy on anti-corruption and a whistleblowing route; G1 and customer questionnaires both ask for them.
• Treat a request that goes beyond the voluntary standard as a negotiation, not an automatic obligation, once the cap applies (financial years starting on or after 1 January 2027).

Frequently Asked Questions

References

Delegated Regulation (EU) 2023/2772 (ESRS) and Directive (EU) 2022/2464 (CSRD). Directive (EU) 2026/470 (Omnibus I). Morrison Foerster, European Commission Proposes Revised ESRS and New Voluntary Sustainability Reporting Standard (May 2026). Dcycle, ESRS 2.0: final draft and voluntary window for FY2026. EFRAG, 2026 Revised ESRS (knowledge hub) and its news item of 3 July 2026. EY, European Commission adopts revised ESRS. Ebner-Stolz, simplified ESRS (22 September 2026). XBRL International, voluntary standard and value chain cap enter EU law (27 September 2026). The sources are law-firm and adviser summaries; confirm details in the official text.