Learn the fundamentals of mastering the structure of the ESRS sustainability statement

Double materiality assessment as the key first step 

The double materiality assessment is the starting point to determine what to disclose in your reporting. It will help you identify the impacts, risks and opportunities that are material for your company, and the requirements that you must report on. After finalising the process, it’s time to gather the data, prepare the material disclosures and consolidate the information into a sustainability statement.

The structure of the sustainability statement

The sustainability statement should be included in a dedicated section of your organisation’s management report. It should be clear to the reader that it’s a separate part in the management report that contains your sustainability information. It needs to be structured in the following way: 

1. General information (ESRS 2) 
2. Environmental information
3. Social information
4. Governance information 

Establish a connection to the bigger picture

It’s essential to provide the readers of your sustainability statement with strategic context for your disclosure requirements. Cover the data points that are material to you and make sure to take it a step further to offer knowledge of how they link to other aspects of your organisation. This will make it easier for different stakeholders to understand how you operate. Include a narrative link to your strategy, a narrative description of the disclosure requirement, along with the data that is required.

“It’s essential to provide the readers of your sustainability statement with strategic context for your disclosure requirements.”

Simon Taylor – Position Green

Incorporation by reference and cross-referencing

The ESRS allows you to include relevant information by referring to:

• Another section of the management report
• The financial statements
• The corporate governance report
• The remuneration report required by the Shareholders Right Directive
• The universal registration document, as referred to in Article 9 of Regulation 2017/1128
• Public disclosures under Capital Requirements Regulation, pillar 3 disclosures

If you wish to refer to one of these reporting elements, keep in mind that you must clearly identify that the information addresses the disclosure requirement. It must also be published before, or at the same time, as the management report. Furthermore, it must be in the same language, be subject to the same level of assurance and bear the same qualitative characteristics as the sustainability statement.

Finally, make sure that incorporation by reference doesn’t impact cohesiveness and readability – it’s important that readers can follow and understand it.  

The inclusion of indexes

Disclosure requirement IRO-2 of the ESRS requires companies to include two indexes in their sustainability statement:

1. A list of the disclosure requirements complied with in preparing the sustainability statement, including the page numbers or paragraphs of where they appear in the report. This can be presented as a content index anywhere in the sustainability statement. 
2. A table covering all of the data points derived from other EU legislation and where they can be found in the sustainability statement. For those that have been assessed as not material, this should be clearly stated. This extensive table covers the Principal Adverse Impacts (PAIs) and will be of keen interest to financial and investment stakeholders who require it for their own reporting. 

Apart from this, you will need to include additional tables from ESRS 2 and for covering the data material for you in the topical standards. For example, in ESRS 2, GOV-4  you need to disclose a mapping of where in the sustainable report the reader can find the information relating to your due diligence process. For the topical standard E-1 Climate change, you need to disclose your total GHG emissions disaggregated by Scope 1, 2 and 3. 

Integrating GRI and national regulatory requirements

The  ESRS allows you to incorporate disclosures from the GRI and other established frameworks, as well as other requirements such as national legislation. When doing so, you must clearly identify this information with a reference to the framework or legislation, and it must meet the ESRS’ requirements for qualitative characteristics of the information.  

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