ESRS E1 — The Definitive Reference
The Corporate Sustainability Reporting Directive (CSRD) is the European Union’s mandatory framework for corporate sustainability disclosure. Adopted as Directive (EU) 2022/2464 on 14 December 2022, it has been substantially amended by the Omnibus I Directive (EU) 2026/470, adopted by the Council on 24 February 2026 and published in the Official Journal on 26 February 2026. Its climate standard — ESRS E1 — is the only topical European Sustainability Reporting Standard that an in-scope undertaking cannot quietly omit on materiality grounds: a finding of non-materiality must be supported by a documented forward-looking analysis.
For organisations with a GHG Protocol-aligned inventory, CSRD does not replace the calculation work — it wraps it in a legally binding disclosure structure. ESRS E1 specifies what must be disclosed (gross Scope 1, 2 and 3 emissions, energy mix, intensity ratios, transition plan, financial effects), how it must be assured (limited assurance, mandatory, by an independent third party), and how it must connect to a double materiality assessment that GHG Protocol does not itself require. This page documents the standard as it stands after Omnibus I, identifies the gaps a typical inventory creates, and maps each disclosure requirement to its underlying calculation discipline.
ESRS E1 is the binding climate disclosure standard under the EU CSRD, set out in Commission Delegated Regulation (EU) 2023/2772 and amended in 2026. After Omnibus I, it applies to large undertakings with more than 1,000 employees and more than €450 million net turnover, and to non-EU groups with consolidated EU turnover above €450 million plus a qualifying EU subsidiary or branch. Reports require limited (not reasonable) third-party assurance, must use AR6 GWP-100 values consistent with the latest IPCC assessment, and must disclose gross Scope 1, 2 and 3 emissions before any offsetting.
CSRD post-Omnibus I — current state of the law
Any analysis of CSRD written before 26 February 2026 must be read with caution. The Omnibus I Directive (EU) 2026/470 — the legislative output of the Commission’s Sustainability Omnibus package proposed on 26 February 2025 — substantially narrowed the directive’s scope, abolished the four-wave rollout structure inherited from the original 2022 text, removed the planned escalation from limited to reasonable assurance, and introduced a value chain cap that restricts what in-scope reporters can demand from smaller suppliers. The provisional political agreement was reached on 9 December 2025, formally adopted by the European Parliament on 16 December 2025, signed off by the Council on 24 February 2026, and entered into force on 19 March 2026.
The pre-Omnibus version of CSRD captured an estimated 50,000 undertakings. After Omnibus I, that number falls to approximately 5,000 — a reduction the European Commission itself estimates at around 80%. If you are operating from guidance, training material, or compliance plans dated before March 2026, the thresholds, timelines, and assurance trajectory referenced are no longer current. The substance of what an in-scope undertaking must report is broadly preserved; the perimeter of who must report has been dramatically narrowed.
The legal architecture now rests on five instruments that practitioners must read together: the original CSRD (Directive (EU) 2022/2464); the binding ESRS Set 1 (Commission Delegated Regulation (EU) 2023/2772); the Stop-the-Clock Directive (EU) 2025/794 of 14 April 2025, which postponed Wave 2 and Wave 3 application by two years; the “quick fix” Delegated Regulation (EU) 2025/1416 of 11 July 2025, which extended Appendix C phase-ins for Wave 1 reporters; and the Omnibus I Directive (EU) 2026/470, which now governs scope, assurance level, and value chain protections. The Amended ESRS technical advice submitted by EFRAG to the Commission on 3 December 2025 is expected to be adopted as a Delegated Act in mid-2026 and to apply for reporting periods beginning on or after 1 January 2027, with an option for early application from FY2026.
CSRD as the disclosure layer over GHG calculation work
The most useful mental model for a GHG practitioner is to treat CSRD as a legal disclosure wrapper sitting on top of the methodology stack already in use. CSRD does not specify how to calculate emissions. It specifies that calculations must be disclosed in a particular structure, assured by an independent third party, and connected to a broader picture of climate strategy and financial risk. The calculation discipline remains the territory of the GHG Protocol; ESRS E1 is the territory of disclosure.
CSRD does not change the calculation engine. It changes the obligation around its outputs: a structured sustainability statement embedded in the management report, the application of a double materiality assessment, the inclusion of an intensity ratio (tCO₂e per €M net revenue), the disclosure of a transition plan, and limited assurance by an independent practitioner. An organisation with a complete, AR6-aligned, ISO 14064-1 structured inventory is well-positioned for E1-6 compliance. The structural gaps are typically the absence of an Inventory Management Plan suitable for assurance, an incomplete Scope 3 screen, and the entire risk-and-strategy track (E1-1, E1-9) that sits outside any GHG inventory.
Scope, thresholds and timeline
Omnibus I abolishes the original four-wave structure. In its place, a single set of size thresholds determines whether an undertaking is in scope, applied uniformly to EU and non-EU companies (with adjustments for the latter). The wave terminology survives only as a historical reference for sequencing the application dates of the existing reports.
Current size thresholds (post-Omnibus I)
| Undertaking type | Threshold (cumulative) | Effective from |
|---|---|---|
| EU undertaking (incl. EU subsidiary of non-EU parent) | More than 1,000 employees on average during the financial year AND net annual turnover above €450 million | FY2027 reports onwards (under amended ESRS) |
| Non-EU group (consolidated) | Net turnover generated in the EU above €450 million for each of the last two consecutive financial years AND either an EU subsidiary that itself meets large-undertaking criteria or an EU branch with turnover above €200 million | FY2028 reports (filed in 2029) |
| Listed SMEs | Removed entirely from CSRD scope by Omnibus I | Not applicable |
| Financial holding companies (qualifying) | Exempt from consolidated reporting where they neither directly nor indirectly manage their subsidiaries | Not applicable |
Transitional treatment of the original waves
Original Wave 1 reporters — large public-interest entities with more than 500 employees that began reporting for FY2024 — remain bound to publish under the existing framework for FY2025 (filed 2026) and FY2026 (filed 2027). Member States may grant exemptions to those Wave 1 entities that no longer meet the new thresholds, but this discretion is permissive not mandatory and the position varies by jurisdiction. Original Wave 2 reporters that meet the new thresholds begin reporting in 2028 covering FY2027 data. Original Wave 3 (listed SMEs) is dissolved. Original Wave 4 — the non-EU group provision — survives in modified form with substantially raised thresholds and applies from FY2028 reports filed in 2029.
Double materiality — the gating concept
Double materiality is the most important concept in CSRD and the one most consistently misunderstood. It is not the financial materiality concept used in financial accounting under IAS 1 or IFRS conceptual framework. It is a simultaneous two-directional assessment that determines the scope of every CSRD disclosure. The Double Materiality Assessment (DMA) is the formal process governed by ESRS 1 that must be conducted before any topical disclosures are prepared. The DMA outputs determine which ESRS standards apply and at what depth. Climate (ESRS E1) holds a unique status: it is presumed material for most undertakings, and a finding of non-materiality must be supported by a documented forward-looking analysis explaining why the topic could not become material.
The terminology in the original 2023 ESRS distinguished impact materiality from financial materiality. The Amended ESRS submitted by EFRAG in December 2025 has aligned the language more closely with IFRS Sustainability Disclosure Standards but preserves the substance of the dual assessment. EFRAG’s 2025 State of Play analysis of 646 Wave 1 reports found that 98% of in-scope undertakings concluded ESRS E1 was material — confirmation that climate is, for practical purposes, a presumed-material topic across the CSRD population.
Most GHG practitioners have deep expertise in impact materiality — quantification, scope classification, factor selection, boundary setting. Financial materiality is traditionally the domain of risk management and finance functions. CSRD requires both to appear in the same sustainability statement and to be internally consistent with one another. For the first time in many organisations, the GHG accountant and the CFO are co-authors of a single regulated disclosure. The GHG inventory provides the impact-materiality foundation; the financial risk assessment under E1-9 (now E1-11 in the amended standard) is new work that demands cross-functional collaboration.
The ESRS family and where E1 sits
ESRS Set 1, adopted by the European Commission via Delegated Regulation (EU) 2023/2772 on 31 July 2023, comprises 12 standards: two cross-cutting (ESRS 1 and ESRS 2) and 10 topical standards covering five environmental, four social, and one governance topic. Understanding where E1 sits in this family prevents a common error: treating ESRS E1 as the entire CSRD disclosure obligation when it covers climate only.
| Standard | Topic | Relevance to GHG practitioners |
|---|---|---|
| ESRS 1 | General requirements | Governs the double materiality process, time horizons, value chain treatment, transitional reliefs (Appendix C). Required reading before any topical work. |
| ESRS 2 | General disclosures | Governance, strategy, IRO management, and metrics-and-targets disclosures. Where the DMA outputs are reported and where climate connects to corporate strategy. |
| ESRS E1 ← this page | Climate change | Transition plan, policies, actions, targets, energy, gross GHG emissions, removals and credits, internal carbon pricing, financial effects. Primary standard for GHG accountants. |
| ESRS E2 | Pollution | Air, water, soil pollutants. Some overlap with Scope 1 process emissions but largely separate. |
| ESRS E3 | Water and marine resources | Water consumption and withdrawal. Connects to Scope 3 water-related factors. |
| ESRS E4 | Biodiversity and ecosystems | Land use and biodiversity. Relevant for AFOLU sectors and land-intensive operations. |
| ESRS E5 | Resource use and circular economy | Waste and material flows. Connects to Scope 3 Categories 5 and 12. |
| ESRS S1–S4 | Workforce, value chain workers, communities, consumers | Outside GHG scope. |
| ESRS G1 | Business conduct | Outside GHG scope. |
For a GHG practitioner, ESRS 1, ESRS 2, and ESRS E1 are the three documents that demand sustained attention. ESRS 1 governs the DMA process and the qualitative characteristics framework. ESRS 2 is where governance, strategy, and the DMA outputs around climate are disclosed. ESRS E1 is where the inventory, energy data, targets, transition plan, and financial effects appear.
ESRS E1 — disclosure requirement structure
The ESRS E1 standard as adopted in 2023 contains nine disclosure requirements (E1-1 through E1-9). The Amended ESRS technical advice submitted by EFRAG to the European Commission on 3 December 2025 restructures the standard into eleven disclosure requirements (E1-1 through E1-11), primarily by separating climate risk identification, scenario analysis, and resilience into standalone DRs and consolidating policies into a single requirement. Both structures are presented below because Wave 1 reporters continue to apply the 2023 standard for FY2025 and FY2026, while later reporters will apply the amended standard from FY2027 onwards.
| 2023 standard (in force for Wave 1 FY2024–FY2026) | Amended standard (FY2027 onwards, subject to Delegated Act adoption) | What it covers |
|---|---|---|
| E1-1 Transition plan for climate change mitigation | E1-1 Transition plan for climate change mitigation | Decarbonisation pathway with milestones, Paris 1.5°C alignment basis, CapEx/OpEx allocated to climate, locked-in emissions disclosure. |
| (Within E1-2 / SBM-3) | E1-2 Identification of climate-related risks and scenario analysis | Now standalone in amended structure: physical and transition risk identification with scenario basis. |
| (Within E1-2 / SBM-3) | E1-3 Resilience in relation to climate change | Now standalone in amended structure: resilience analysis and strategic implications. |
| E1-2 Policies related to climate change mitigation and adaptation | E1-4 Policies (consolidated) | Energy efficiency, renewable procurement, supplier requirements, climate-related procurement criteria. |
| E1-3 Actions and resources in relation to climate change policies | E1-5 Actions and resources | Specific action plan with capital and operating expenditure allocated to climate initiatives. |
| E1-4 Targets related to climate change mitigation and adaptation | E1-6 Targets | Absolute and/or intensity targets, base year, science-based designation if applicable, gross targets only (no offsets in the target denominator). |
| E1-5 Energy consumption and mix | E1-7 Energy consumption and mix | Total consumption by source, renewable vs non-renewable split, energy intensity ratio for high-impact sectors. |
| E1-6 Gross Scope 1, 2, 3 and total GHG emissions | E1-8 Gross Scope 1, 2, 3 GHG emissions | Gross Scope 1, both location-based and market-based Scope 2, Scope 3 by category, intensity ratio per €M net revenue. |
| E1-7 GHG removals and GHG mitigation projects financed through carbon credits | E1-9 GHG removals and credits | Removals from own operations and value chain, separately disclosed credits, gross/net distinction strictly maintained. |
| E1-8 Internal carbon pricing | E1-10 Internal carbon pricing | Type of scheme (shadow price, fee, fund), scope of application, prices applied, emissions covered. |
| E1-9 Anticipated financial effects from material physical and transition risks and potential climate-related opportunities | E1-11 Anticipated financial effects | Quantified financial effects of climate risks and opportunities over short, medium and long horizons. The TCFD/IFRS S2 equivalent. |
Wave 1 reporters preparing FY2025 and FY2026 sustainability statements continue to apply the original 2023 standard with the Appendix C transitional reliefs extended by the “quick fix” Delegated Regulation (EU) 2025/1416. The Amended ESRS does not become applicable until adopted by Delegated Act (expected mid-2026) and is targeted to apply for periods beginning on or after 1 January 2027, with optional early application for FY2026 once the Delegated Act is in force. ESMA has explicitly cautioned that the EFRAG technical advice itself is not yet binding and should not be relied upon for FY2025 reporting.
E1-6 deep dive — the GHG accountant’s primary reference
E1-6 (numbered E1-8 in the amended standard) is the disclosure requirement that GHG practitioners are responsible for. It defines what GHG data must appear in the CSRD sustainability statement. Each component has specific requirements that go beyond what a typical GHG Protocol inventory covers.
Gross Scope 1 must be reported separately from any removals or credits. If the undertaking has land-based carbon removal activities or has purchased offsets, those are reported in E1-7 (E1-9 in the amended standard) and must not be netted against E1-6 Scope 1. Apply the GHG Protocol Corporate Standard calculation methodology and use either the equity-share or operational-control consolidation approach consistently. The amended standard moves toward financial-control consolidation as the default, aligning with IFRS S2.
ESRS E1 requires both location-based and market-based Scope 2 to be disclosed. Location-based uses the average grid intensity for the geography concerned (for example, the DEFRA 2025 UK grid factor of 0.20493 kg CO₂e/kWh consumption-based, or country-specific IEA factors elsewhere). Market-based uses supplier-specific or instrument-specific factors where renewable energy certificates, power purchase agreements, or Guarantees of Origin are held and meet the GHG Protocol Scope 2 quality criteria. Where no instruments are held, the two figures will be identical, but both must still be disclosed.
CSRD requires every category of GHG Protocol Scope 3 to be assessed under the double materiality process. Material categories must be quantified. Immaterial categories must be documented with an exclusion rationale and a magnitude estimate. An inventory that reports only Categories 5, 6, and 7 without a documented screen of all 15 is non-compliant with E1-6 — even where those three categories are calculated correctly. The original ESRS allows a year-one phase-in for undertakings with 750 or fewer employees to omit Scope 3 and total GHG datapoints; the “quick fix” extends selected reliefs for Wave 1 FY2025 and FY2026 reports.
Biogenic CO₂ from biomass combustion, biogas, and biofuels must be reported as a supplementary figure outside the main inventory total — consistent with GHG Protocol treatment. CSRD makes this disclosure explicit rather than optional. For organisations with significant biomass energy use, biogas combustion, or biofuel consumption, this supplementary disclosure is required even though the CO₂e contribution to the main total remains zero (biogenic CO₂ is excluded from the main inventory under the carbon-neutrality assumption for sustainably sourced biomass; the supplementary figure provides transparency on the underlying emissions).
ESRS E1 requires at minimum one intensity metric expressed as total GHG emissions per net revenue (tCO₂e per €M). Additional metrics — per employee, per unit of production, per square metre of floor area — are encouraged but the revenue-based metric is mandatory. Most GHG Protocol inventories do not calculate this. The mechanic is straightforward — total tCO₂e from the inventory divided by net revenue from the audited financial statements — but it requires reconciliation between the sustainability statement boundary and the financial statement boundary, which are not always identical.
ESRS E1 requires the GWP basis used to calculate CO₂e to be disclosed. The reference is to the latest IPCC assessment, which is AR6 (2021). The operative values from AR6 GWP-100 without climate-carbon cycle feedbacks are: CO₂ = 1, CH₄ (fossil) = 29.8, CH₄ (biogenic) = 27.9, N₂O = 273, SF₆ = 25,200, NF₃ = 17,400, source IPCC AR6 WGI Table 7.SM.7. The GHG Protocol Corporate Standard’s text still references AR5 (CH₄ fossil = 28, N₂O = 265). Use AR6 for any CSRD-compliant inventory and disclose the basis explicitly: “GWP values from IPCC AR6 (2021), WGI Table 7.SM.7, 100-year time horizon without climate-carbon cycle feedbacks.”
E1-6 requires gross GHG emissions — actual emissions from operations and value chain before any offsetting. Carbon credits, certified removals, and nature-based-solution purchases are disclosed separately in E1-7 (renumbered E1-9 in the amended standard) and must never be netted against the E1-6 gross total. Reduction targets are likewise gross targets — E1-4 (renumbered E1-6) explicitly states that GHG removals, carbon credits, and avoided emissions cannot count toward target achievement. A company that has purchased offsets to claim “carbon neutrality” must still report its full gross Scope 1+2+3 in E1-6 and its target progress on a gross basis. The separation is intentional and structural — CSRD makes greenwashing through credit purchases visible rather than hidden.
Mapping an existing inventory to ESRS E1
An organisation with a GHG Protocol-aligned inventory typically covers around 60% of ESRS E1 on the GHG side. The table below maps the existing components of a typical inventory to each ESRS E1 disclosure requirement and identifies the structural gaps that remain.
| Existing inventory component | ESRS E1 disclosure satisfied | Remaining gap |
|---|---|---|
| GHG Protocol Scope 1/2 calculation | E1-6 Scope 1; most of E1-6 Scope 2 | Market-based Scope 2 if not already calculated; biogenic CO₂ supplementary disclosure |
| GHG Protocol Scope 3 (any categories) | E1-6 Scope 3 partial | All 15 categories screened, with material categories quantified and immaterial categories documented with rationale |
| AR6 GWP values applied | E1-6 GWP basis requirement | Explicit disclosure of GWP basis, table reference, and time horizon in the sustainability statement |
| ISO 14064-1 Inventory Management Plan | Underpins assurance readiness across E1-6 | If absent: assurance process cannot proceed at acceptable cost |
| Energy consumption data for Scope 1/2 | E1-5 (E1-7 amended) energy data largely covered | Renewable vs non-renewable split; energy intensity ratio for high-impact sectors |
| — (typically absent) | E1-6 GHG intensity ratio | New work: tCO₂e ÷ €M net revenue. Requires finance team reconciliation of sustainability and financial statement boundaries. |
| — (typically absent) | E1-1 Transition plan | New work: Strategic development with quantified milestones, CapEx alignment, board approval. |
| — (typically absent) | E1-9 / E1-11 Anticipated financial effects | New work: Physical and transition risk quantification with financial impact estimates. Finance and risk function engagement required. |
| — (typically absent) | DMA (ESRS 1 process) | New work: Formal Double Materiality Assessment, documented inputs and outputs, annual review. |
CSRD versus TCFD and IFRS S2 (ISSB)
Many organisations have invested in TCFD reporting or are now moving to IFRS S2 under the ISSB framework. Practitioners frequently ask whether that work counts toward CSRD compliance. The answer differs by component. The TCFD framework was formally disbanded in October 2023 with its monitoring transferred to the IFRS Foundation, but its four-pillar structure (governance, strategy, risk management, metrics and targets) survives in IFRS S2 and is referenced in ESRS E1 architecture. The Amended ESRS submitted by EFRAG in December 2025 deliberately tightens interoperability with IFRS S1/S2 — for example, by allowing only the financial-control consolidation approach for GHG emissions, aligning with IFRS S2.
| Dimension | TCFD (legacy) | IFRS S2 (ISSB) | CSRD / ESRS E1 |
|---|---|---|---|
| Legal status | Voluntary; mandatory in some jurisdictions via national rules | Voluntary at IFRS level; mandatory where adopted nationally (UK, Australia, Singapore, Canada, others) | Mandatory EU law; sanctions for non-compliance set by Member State |
| Approach | Principles-based | Principles-based with prescriptive disclosures | Prescriptive — specific datapoints required by topical standard |
| GHG inventory required | Recommended only | Mandatory: Scope 1, 2, 3 with specified methodology | Mandatory: Scope 1, 2, 3 with intensity ratio and biogenic CO₂ supplementary |
| Materiality direction | Single (financial) | Single (financial — investor-focused) | Double (impact AND financial) |
| Transition plan | Recommended | Required if used as part of strategy | Required disclosure (E1-1); explicit statement required if absent |
| Assurance | Not required | Not specified at IFRS level | Mandatory limited assurance; reasonable assurance escalation removed by Omnibus I |
| Climate scenario analysis | Recommended | Required | Required (E1-2 / amended E1-3) |
An existing TCFD or IFRS S2 disclosure provides a strong starting point for the financial-materiality dimension of CSRD: the scenario analysis, climate risk register, and financial effects narrative transfer directly to E1-9 (E1-11 in the amended standard). What neither TCFD nor IFRS S2 supplies is the impact-materiality dimension — particularly the disclosure of policies, transition plan implementation, and the requirement that immaterial categories of Scope 3 be documented with a rationale rather than silently omitted. The Amended ESRS narrows the methodological gap with IFRS S2 considerably but EFRAG explicitly retained certain divergences — including refusing to import the IFRS S2 relief allowing Scope 3 omission where impracticable.
E1-1 — the transition plan requirement
The transition plan disclosure (E1-1) is the requirement that most organisations with established GHG inventories have not yet built. It is not a climate policy statement or a net-zero aspiration — it is a structured disclosure of how the undertaking will decarbonise its operations and value chain over time, with quantified milestones, financial commitments, and consistency requirements.
Assurance — limited only, indefinitely
The assurance requirement is the most operationally consequential element of CSRD for GHG practitioners because it determines what the inventory must look like — not just what numbers it contains. Omnibus I has substantially clarified the assurance trajectory.
Negative-form assurance opinion. Procedures consist primarily of inquiry and analytical procedures with limited testing of underlying data — substantially less work than a financial statement audit. Performed by the statutory auditor or, where Member States permit, by an independent assurance services provider. Pending adoption of EU-level limited assurance standards (deadline now 1 July 2027 under the Omnibus I extension), Member States may apply national standards or the non-binding CEAOB guidelines published by the Commission in September 2024.
Omnibus I has removed this obligation entirely. CSRD reports will remain at limited assurance indefinitely. This removes a substantial future cost burden — reasonable assurance demands extensive substantive testing, controls evaluation, and site visits comparable to a financial audit — but it also removes the regulatory pressure that was driving Wave 1 reporters to invest in audit-grade inventory infrastructure.
Removing the reasonable assurance escalation simplifies the immediate compliance burden but creates a different problem. Capital markets, sustainability-linked lenders, and rating agencies have not lowered their evidentiary expectations in line with the regulatory rollback. An undertaking that builds its CSRD inventory to the minimum required for limited assurance will satisfy the law but may not satisfy investor due diligence, supply chain procurement requirements, or SBTi validation. The Inventory Management Plan, factor citations, scope-classification documentation, and material-source data quality tiering remain functionally necessary regardless of assurance level — and remain the foundation on which any voluntary upgrade to reasonable assurance would later rest.
The value chain cap and the supply chain cascade
One of the most consequential changes introduced by Omnibus I is the value chain cap. This provision limits what an in-scope reporting undertaking can demand from smaller suppliers in its value chain that are not themselves subject to CSRD.
How the value chain cap works
Where a value chain undertaking has fewer than 1,000 employees on average during the financial year, the in-scope reporter cannot require it to provide sustainability information beyond what is set out in a forthcoming voluntary reporting standard for SMEs (the VSME standard, which the Commission will adopt by Delegated Act, currently expected by 19 July 2026). The protected value chain undertaking has a legal right to refuse requests that exceed this voluntary baseline. Where a reporter genuinely needs more information than the voluntary standard provides, it must inform the protected undertaking both of the additional request and of the right to decline. Reporters that comply with this cap are deemed to fulfil their CSRD reporting obligations even if they cannot obtain the additional data.
The value chain cap protects suppliers from being legally compelled to respond to CSRD-driven data requests. It does not stop those requests from being made through commercial channels. EU customers in scope for CSRD continue to send supplier questionnaires asking for emissions data, and most suppliers will continue to respond because the commercial relationship matters more than the legal right to refuse. The practical demand for ISO-grade supplier GHG data is arriving through procurement channels regardless of whether the supplier is in CSRD scope. The cap means the data exchange becomes a commercial negotiation rather than a regulatory compulsion — but the demand itself persists.
Singapore and Asia-Pacific — extraterritorial reach
Omnibus I significantly raises the threshold for non-EU undertakings, narrowing the population of Asia-Pacific multinationals captured directly. The pre-Omnibus threshold of €150 million EU consolidated turnover with a €40 million EU branch threshold has been raised to €450 million EU consolidated turnover with a €200 million EU branch threshold. The practical demand timeline, however, is unchanged because it operates through procurement rather than through the directive’s direct scope.
Non-EU groups with consolidated EU net turnover above €450 million for two consecutive financial years come into formal scope if they also have either an EU subsidiary that itself meets the large-undertaking criteria or an EU branch with turnover above €200 million. Reports are filed in 2029 covering FY2028 data. This provision captures the largest Singaporean, Japanese, Chinese, Korean, Indian and Australian groups with substantial EU operations.
Wave 1 reporters captured for FY2024 must already disclose Scope 3 Category 1 (purchased goods and services), which includes emissions from their Asian suppliers. Your Scope 1 and Scope 2 are your EU customer’s Scope 3. Large EU companies are already issuing supplier questionnaires asking for verified GHG data with CSRD-grade emission factor citations. The value chain cap means suppliers can refuse — but commercial relationships often make refusal impractical.
Singapore Exchange (SGX) mandatory climate reporting references the ISSB IFRS S2 framework, which is broadly compatible with CSRD but less prescriptive on GHG datapoints. The Monetary Authority of Singapore (MAS) ESG disclosure guidance for financial institutions increasingly references ESRS methodology where relevant. Singapore-listed issuers preparing for SGX compliance and serving EU markets will encounter both frameworks; building a single CSRD-grade inventory infrastructure typically satisfies both demands with marginal additional effort.
CSRD readiness checklist
This checklist covers the most common gaps between a standard GHG Protocol inventory and ESRS E1 compliance. It is organised in two tracks — impact materiality (GHG inventory) and financial materiality (risk and strategy) — because the gaps and the responsible functions differ for each.
Common reporting errors
Frequently asked questions
The Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464, adopted 14 December 2022) is the EU mandatory framework for sustainability disclosure, materially amended by the Omnibus I Directive (EU) 2026/470 of 24 February 2026 published in the Official Journal on 26 February 2026. ESRS E1 (Climate Change), set out in Commission Delegated Regulation (EU) 2023/2772 and revised by EFRAG technical advice in December 2025, is the climate-specific European Sustainability Reporting Standard. It defines what in-scope undertakings must disclose on transition plans, climate risk and resilience, policies, actions, targets, energy, gross GHG emissions, removals and credits, internal carbon pricing, and the anticipated financial effects of climate.
The Omnibus I Directive narrows CSRD scope substantially. EU undertakings must have more than 1,000 employees on average during the financial year AND net annual turnover above €450 million to be in scope. Listed SMEs are removed entirely. Non-EU groups come into scope where they have consolidated EU net turnover above €450 million for two consecutive years AND either an EU subsidiary meeting large-undertaking criteria or an EU branch with turnover above €200 million. Wave 1 entities already reporting (FY2024) continue under the existing framework for FY2025 and FY2026; Wave 2 entities meeting the new thresholds begin reporting in 2028 covering FY2027 data; non-EU groups begin reporting in 2029 covering FY2028 data. The European Commission estimates approximately 5,000 undertakings will be in scope, down from approximately 50,000 under the original directive.
Double materiality is the requirement to assess sustainability topics from two simultaneous directions. Impact materiality (inside-out) considers how the undertaking affects sustainability topics — for climate, this is its GHG emissions, energy use, and value chain footprint. Financial materiality (outside-in) considers how sustainability topics affect the undertaking — for climate, this is physical risks (acute and chronic), transition risks (policy, technology, market, reputation), and climate-related opportunities. CSRD requires both assessments through a formal Double Materiality Assessment governed by ESRS 1 before any topical disclosures are prepared. This contrasts with IFRS S2 (ISSB) and the legacy TCFD framework, which require only the financial-materiality direction. Most existing GHG inventories cover impact materiality; financial materiality is typically the new dimension that CSRD adds for sustainability functions.
ESRS E1 requires the GWP basis to be disclosed and references the latest IPCC assessment. The latest assessment is AR6 (2021). The operative values are AR6 GWP-100 without climate-carbon cycle feedbacks: CO₂ = 1, CH₄ (fossil) = 29.8, CH₄ (biogenic) = 27.9, N₂O = 273, SF₆ = 25,200, sourced from IPCC AR6 WGI Table 7.SM.7. The GHG Protocol Corporate Standard text still references AR5 because it has not been updated to AR6, but CSRD’s reference to the latest IPCC assessment effectively requires AR6 for compliance. Use AR6, and disclose explicitly: “GWP values from IPCC AR6 (2021), WGI Table 7.SM.7, 100-year time horizon without climate-carbon cycle feedbacks.” If the base year was calculated under AR5, state this and consider whether the change is material enough under GHG Protocol’s significance threshold (commonly 5%) to require base year restatement.
A GHG Protocol-aligned inventory typically covers approximately 60% of ESRS E1 on the GHG side. The Scope 1, 2, and 3 calculation work satisfies the core of E1-6 (E1-8 in the amended standard). What is typically missing: the GHG intensity ratio (tCO₂e per €M net revenue), market-based Scope 2 if not already calculated, biogenic CO₂ as a supplementary disclosure, complete screening of all 15 Scope 3 categories with rationale for any exclusions, and the ISO 14064-1 Inventory Management Plan that makes assurance feasible. What GHG Protocol does not address at all: the transition plan (E1-1), financial risk quantification (E1-9 / E1-11), internal carbon pricing disclosure (E1-8 / E1-10), and the Double Materiality Assessment (ESRS 1 process). Those require new work outside any GHG inventory.
No. The Omnibus I Directive has removed the obligation on the European Commission to assess feasibility and adopt reasonable assurance standards by 1 October 2028. CSRD reports remain at limited assurance indefinitely. The deadline for the Commission to adopt EU-level limited assurance standards has been extended from 1 October 2026 to 1 July 2027. In the interim, Member States may apply national standards or the non-binding CEAOB guidelines published by the European Commission in September 2024. Voluntary reasonable assurance remains available and is increasingly demanded by capital markets, sustainability-linked lenders, and SBTi validation regardless of the regulatory minimum.
Yes, but the threshold has been substantially raised. Under the post-Omnibus framework, non-EU groups come into scope only where they have consolidated EU net turnover above €450 million (raised from €150 million) for two consecutive years AND either an EU subsidiary that itself meets the large-undertaking thresholds or an EU branch with turnover above €200 million (raised from €40 million). Reports are filed in 2029 covering FY2028 data. The pre-Omnibus version captured many mid-sized Asian, US, and other non-EU multinationals; the post-Omnibus version captures only the largest. Procurement-driven demand for supplier emissions data, however, continues to flow through commercial channels regardless of formal scope — Asia-Pacific suppliers to EU customers will still face data requests through procurement, now subject to the value chain cap protections for those with fewer than 1,000 employees.
The value chain cap is a protection introduced by Omnibus I that limits what an in-scope CSRD reporter can demand from smaller undertakings in its value chain. Where a value chain undertaking has fewer than 1,000 employees, the in-scope reporter cannot require it to provide sustainability information beyond what is set out in a forthcoming voluntary reporting standard for SMEs (the VSME standard, which the European Commission will adopt by Delegated Act, expected by 19 July 2026). The protected undertaking has a legal right to refuse requests that exceed this baseline. The cap applies only to information requests for the purpose of CSRD reporting; it does not affect voluntary information sharing, contractual obligations within the permitted scope, or due diligence and risk management processes unrelated to reporting.
The original ESRS E1, in force since 2023 under Commission Delegated Regulation (EU) 2023/2772, has nine disclosure requirements (E1-1 through E1-9). The Amended ESRS technical advice submitted by EFRAG to the European Commission on 3 December 2025 restructures the standard into eleven disclosure requirements (E1-1 through E1-11), primarily by separating climate risk identification, scenario analysis, and resilience into standalone disclosure requirements. EFRAG reports a 61% reduction in mandatory datapoints across the full ESRS Set 1 and removes all voluntary datapoints. The amended standards are expected to be adopted by Commission Delegated Act in mid-2026 and to apply for reporting periods beginning on or after 1 January 2027, with optional early application for FY2026 once adopted. ESMA has cautioned that the EFRAG technical advice is not yet binding and FY2025 reports must continue to apply the existing 2023 standard.
No. ESRS E1-4 (renumbered E1-6 in the amended standard) explicitly states that GHG emission reduction targets must be gross targets — the undertaking shall not include GHG removals, carbon credits, or avoided emissions as a means of achieving the targets. Credits and removals are disclosed separately under E1-7 (renumbered E1-9). The same separation applies to E1-6 (renumbered E1-8) gross emissions disclosure: gross emissions are reported before any offsetting, with credits and removals appearing as a parallel disclosure rather than a deduction. This structural separation is a deliberate anti-greenwashing mechanism in the standard.
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