European Commission adopts ESRS sustainability reporting standards under CSRD

The European Commission adopted the European Sustainability Reporting Standards (ESRS) on July 31, 2023, for companies subject to the Corporate Sustainability Reporting Directive, with phased application starting in financial year 2024. Indian companies with EU operations or in EU supply chains will face ESRS-driven disclosure expectations, making the standards directly relevant to Indian corporate reporting.

The European Commission adopted the European Sustainability Reporting Standards (ESRS) on July 31, 2023, for companies subject to the Corporate Sustainability Reporting Directive (CSRD), which entered into force on January 5, 2023. CSRD expands reporting obligations to a broader group of large companies and listed SMEs on their sustainability performance. The ESRS, developed by EFRAG and adopted as a delegated regulation, will undergo scrutiny by the European Parliament and Council. Phased application begins with the 2024 financial year, with the first reports published in 2025. The Commission opened a four-week public feedback period on June 6, 2023.

The standards directly affect large EU companies and listed SMEs subject to CSRD, and indirectly affect non-EU companies in their value chains. For Indian companies with EU subsidiaries, listings, or significant EU customers, ESRS-driven disclosure expectations are likely to flow through supply-chain and reporting requirements. Indian exporters and multinationals operating in Europe may need to gather and report standardised sustainability data, while the harmonised standards could eventually reduce fragmented reporting demands across jurisdictions over the medium term.

Phased application commences with the 2024 financial year, with the first compliant reports published in 2025; the ESRS delegated act still faces European Parliament and Council scrutiny. CSRD also mandates assurance on reported sustainability information and a digital taxonomy of sustainability data. Indian companies connected to EU markets should assess their exposure, build data-collection capabilities aligned with ESRS, and monitor the delegated act's progress and the phased timelines to prepare for disclosure and assurance obligations.

Key figure — Phased application: begins financial year 2024, first reports published 2025