We've recently discussed the CSRD (Corporate Sustainability Reporting Directive) and how this European directive will require companies to produce a sustainability report and disclose comprehensive information on sustainability. But what are the standards according to which this report will be produced? That's where the ESRS come into play: let's have a look at them together.
What are the ESRS?
ESRS stands for European Sustainability Reporting Standards. They were adopted by the European Commission on 31 July 2023, to be used by all companies subject to the Corporate Sustainability Reporting Directive (CSRD).
How many ESRS are there and what are they all about?
There are 12standards. They cover the full range of environmental, social and governance issues, including climate change, biodiversity and human rights.
THE 12 ESRSS
The first two ESRS, "General Requirements" and "General Disclosures," set out the general principles for reporting under the ESRS and specify the essential information to be disclosed regardless of the sustainability issue under consideration. These standards are mandatory for all companies within the scope of the CSRD.
All other standards, individual disclosure requirements, and the data within them are subject to materiality assessment. This means that companies will only report relevant information and may omit information that is not relevant ("material") to their business model and activity. Companies' materiality assessment process is subject to external validation in accordance with the provisions of the Directive.
Environmental ESRS: E1, E2, E3, E4, E5
There are five environmental ESRS:
ESRS E1 aims to understanda company's impact onclimate change, both positive and negative, and to assess its mitigation actions. It requires companies to comprehensively analyze their emissions, including those from Scope 3 upstream and downstream in the production chain, which often represent a significant proportion of total emissions, particularly in agriculture.
ESRS E2 covers air, water, and soil pollution . With a particular focus on agricultural activities, this standard intersects with ESRS E1 and acknowledges pollutants such as carbon dioxide and methane emitted during agricultural processes.
For water, ESRS E3 requires companies to disclose withdrawals, consumption and total discharges within specific geographic regions and business units, and to set water targets for each of these regions. This standard also links to ESRS E5, which emphasises the importance of efficient water management in agriculture
ESRS E4 focuses on the integration of biodiversity and ecosystem conservation plans into business strategies and models. Although the Corporate Sustainability Reporting Directive (CSRD) addresses this issue, the maturity of reporting in terms of metrics and data collection methods remains underdeveloped. However, companies are required to develop transition plans that outline pathways to achieve specific biodiversity targets, including: net gain of biodiversity by 2030; full restoration of biodiversity by 2050.
ESRS E5 focuses on the use of resources and the circular economy, promoting sustainable practices to minimise waste production and environmental impact.
What is the role of xFarm in this context?
xFarm is a valuable tool for improving sustainability reporting in agriculture. Through its platform, xFarm enables farmers and agri-food companies to monitor and track key sustainability indicators in real time. In particular, xFarm provides an integrated solution to effectively address E2, E3 and E5 standards through its modules and artificial intelligence-based decision support systems (DSS). From environmental impacts, such as carbon footprint and water use, to economic aspects, xFarm provides a comprehensive view of agricultural sustainability.
https://eur-lex.europa.eu/legal-content/ IT/TXT/PDF/?uri=CELEX:32013L0034 DIRECTIVE 2013/34/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of June 26, 2013 - Annual financial statements
Food and Agriculture Organization of the United Nations (FAO). " Building resilience for adaptation to climate change in the agriculture sector." https://www.fao.org/3/i3084e/i3084e.pdf
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