ESRS Gap Analysis Guide

Run your ESRS Gap Analysis Full CSRD readiness across all 10 ESRS topics. Missing data points and phased roadmap.

What are they?

European Sustainability Reporting Standards

The European Sustainability Reporting Standards (ESRS) are the technical standards that define exactly what companies must disclose when reporting under the Corporate Sustainability Reporting Directive (CSRD). They were developed by the European Financial Reporting Advisory Group (EFRAG) under a mandate from the European Commission, and the first set of cross-sector standards was adopted as a Delegated Regulation in December 2023 (Delegated Regulation (EU) 2023/2772).

While CSRD is the law that requires reporting, ESRS are the technical specification of what that reporting must contain. Without ESRS, companies would have no concrete guidance on which data points to collect, how to measure them, or what format to present them in. ESRS bridge the gap between the high-level legislative obligation and the practical reality of preparing a sustainability report.

The first set of ESRS consists of 12 cross-sector standards: two cross-cutting standards that apply to all companies regardless of their materiality assessment, and ten topical standards covering the full range of environmental, social, and governance sustainability matters. A second wave of sector-specific ESRS standards is being developed by EFRAG, expected to be adopted in 2025–2026, covering sectors from oil and gas to food and beverage and financial services.

A critical feature of ESRS is that — with the exception of ESRS 2, which is mandatory in full — the disclosure requirements are subject to materiality. Companies only need to report on topical standards where they have identified material sustainability matters through their double materiality assessment. This means the scope of your ESRS reporting obligations depends entirely on the quality and rigour of your materiality assessment process.

Standards structure

The 12 cross-sector ESRS standards

Cross-Cutting Standards (mandatory for all)

ESRS 1General Requirements — architecture, concepts, materiality principles
ESRS 2General Disclosures — governance, strategy, materiality process, targets

Environmental Standards (E)

E1Climate Change — GHG emissions, transition plans, physical risk
E2Pollution — air, water, soil, substances of concern
E3Water & Marine Resources — consumption, withdrawal, marine impacts
E4Biodiversity & Ecosystems — nature impact and dependencies
E5Resource Use & Circular Economy — materials, waste, circular economy

Social Standards (S)

S1Own Workforce — pay, conditions, representation, development
S2Workers in the Value Chain — supply chain labour conditions
S3Affected Communities — local community impacts and rights
S4Consumers & End-Users — product safety, responsible marketing

Governance Standard (G)

G1Business Conduct — anti-corruption, supplier relations, payments

Double materiality

The two dimensions of materiality

The double materiality assessment (DMA) is the foundation of CSRD/ESRS reporting. Before you can determine which topical standards apply to your company, you must systematically assess which sustainability matters are material — and ESRS defines materiality from two perspectives simultaneously:

Impact Materiality

A sustainability matter is impact-material if your company has actual or potential significant impacts on people or the environment — whether through your own operations or across your value chain. This reflects the company's effect on the outside world.

Financial Materiality

A sustainability matter is financially material if it poses significant financial risks or opportunities for your company — affecting your cash flows, access to finance, or cost of capital in the short, medium, or long term. This reflects the outside world's effect on the company.

A topic can be material on one or both dimensions. The key insight of double materiality is that ESG issues can be material to a company's financial performance even when the company itself has minimal impact on that issue — and vice versa. Both perspectives must be assessed, documented, and reviewed regularly throughout the reporting lifecycle.

The DMA is not a one-time exercise. ESRS 1 requires companies to update their materiality assessment at least annually, or whenever there is a significant change in their business or operating context that could affect which matters are material.

Key concepts

Six terms every reporter needs

Data Points

The specific quantitative metrics and qualitative narrative disclosures required by each ESRS standard. Data points range from GHG emission totals (quantitative) to descriptions of transition plans (qualitative). The ESRS taxonomy published by EFRAG lists all data points in machine-readable form.

Mandatory vs. Voluntary

ESRS 2 is mandatory in full for all in-scope companies. Within topical standards, certain data points are marked as "mandatory" (must be disclosed if the topic is material) and others as "voluntary" (encouraged but not required). The distinction is critical for scoping reporting effort.

Value Chain

ESRS requires disclosure across the full value chain — upstream (suppliers, raw materials), own operations, and downstream (customers, product use and end-of-life). Value chain data is often the hardest to collect and the most frequently phased in over time.

IROs (Impacts, Risks, Opportunities)

The core analytical framework in ESRS. For each sustainability matter, companies assess their actual and potential impacts, financial risks, and financial opportunities. The DMA process structures and prioritises these IROs to determine materiality.

Scope 1, 2, 3 Emissions

The GHG Protocol framework used in ESRS E1 for climate reporting. Scope 1: direct emissions from owned/controlled sources. Scope 2: indirect emissions from purchased energy. Scope 3: all other indirect emissions across the value chain — typically 70–90% of total footprint for most companies.

Phase-in Provisions

ESRS includes phase-in provisions allowing companies in their first years of reporting to omit certain complex disclosures (notably Scope 3, value chain data points, and certain ESRS E4 biodiversity disclosures) with appropriate explanation. These phase-ins are time-limited and must be disclosed as omissions.

The gap analysis process

How to approach ESRS compliance

Step 1: Understand your sector and business context — identify the sustainability matters most likely to be material for your industry, geographic footprint, and business model before beginning formal assessments.
Step 2: Conduct your double materiality assessment — systematically evaluate each ESRS topic for impact materiality and financial materiality, involving relevant internal stakeholders and external parties, and document the assessment process and outcomes.
Step 3: Identify applicable disclosure requirements — for each material topic, list all mandatory data points from the relevant ESRS standard, plus the full set of ESRS 2 mandatory disclosures.
Step 4: Assess data availability — for each required data point, evaluate whether your organisation currently collects the relevant data, in the right format, at the required granularity. This is the gap analysis itself.
Step 5: Build a data collection roadmap — prioritise gaps, assign data owners, design collection processes, and set timelines. Use ESRS phase-in provisions strategically for the most complex data points where justified.

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Standard-by-standard breakdown, data point requirements, framework interoperability & sector standards

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Each Standard in Detail

Climate Change

The most demanding ESRS standard in practice. Requires Scope 1, 2, and 3 GHG inventories (tCO₂e), a description of the company's transition plan aligned to 1.5°C, physical climate risk assessments across short/medium/long-term time horizons, and metrics covering energy consumption, energy intensity, and carbon removal. Key mandatory data points include: total GHG emissions by scope, absolute Scope 1–3 reduction targets, and whether the company has adopted a climate transition plan. Phase-in provisions allow Scope 3 Category 15 (financed emissions) deferral for financial institutions in Year 1.

Pollution

Covers pollution of air, water, and soil, and the use of substances of concern (including microplastics). Disclosure requirements include: volumes of pollutants released, incidents of non-compliance with pollution regulations, and description of policies to address pollution. Most relevant for manufacturing, chemicals, agriculture, and extractives sectors. For many service-sector companies, E2 may not be material after a rigorous DMA.

Water & Marine Resources

Requires disclosure of total water withdrawal and consumption, breakdown by region and water stress area, and information on dependencies on marine resources. Companies operating in water-scarce regions or in sectors with high water use (food & beverage, textiles, semiconductors) face significant data collection requirements. The standard also covers discharges to water and the impact on marine ecosystems.

Biodiversity & Ecosystems

One of the most complex ESRS standards. Requires companies to identify their sites located in or near biodiversity-sensitive areas, assess their impacts and dependencies on ecosystem services, and disclose metrics on land use and change, species affected, and ecosystem degradation. Significant phase-in provisions are available. Interoperates with the Taskforce on Nature-related Financial Disclosures (TNFD) framework.

Resource Use & Circular Economy

Covers material consumption, waste generation, and circular economy practices. Key metrics include: inflows of materials (total weight, % recycled), outflows of waste by treatment category (reuse, recycling, recovery, disposal), and product durability and reparability policies. Packaging is a significant focus area. Aligns with the EU Circular Economy Action Plan and forthcoming packaging regulation.

Own Workforce

The broadest social standard. Mandatory data points include: number of employees and contractors, gender breakdown, employee turnover rate, percentage covered by collective bargaining agreements, unadjusted gender pay gap, CEO pay ratio, and training hours per employee. Also covers health and safety metrics (injury rates, fatality rates, work-related ill health). Requires qualitative disclosures on HR policies, human rights due diligence processes, and workforce engagement mechanisms.

S2–S4

Value Chain Workers, Communities, Consumers

S2 covers supply chain labour conditions — modern slavery, forced labour, child labour, living wage. Data collection is primarily through supplier surveys and audits. S3 covers impacts on local communities near operations — land rights, indigenous peoples, community consultation processes. S4 covers consumers and end-users — product safety incidents, data privacy breaches (overlapping with GDPR), and responsible marketing practices.

Business Conduct

Mandatory for most companies and typically lower data-intensity than environmental standards. Covers: anti-corruption and anti-bribery policies and training, number of corruption incidents and investigations, political contributions, supplier payment practices (average payment terms vs. contracted terms), and lobbying activities. Requires disclosure of the company's corporate culture and business ethics framework.

Framework Interoperability

GRI Standards

EFRAG has published a mapping between ESRS and GRI (Global Reporting Initiative) standards. Companies already reporting under GRI can leverage their existing disclosures significantly, though the mapping is not one-to-one — ESRS is generally more prescriptive on methodology and data format than GRI.

TCFD

ESRS E1 substantially incorporates the Taskforce on Climate-related Financial Disclosures (TCFD) framework. Companies that have already adopted TCFD — particularly the scenario analysis requirement — will find significant overlap. ESRS adds additional mandatory data points (Scope 3, energy metrics) beyond the TCFD baseline.

GHG Protocol

ESRS E1 uses the GHG Protocol Corporate Standard as the methodology for Scope 1, 2, and 3 emissions accounting. Companies must follow GHG Protocol methodology unless a competent authority or law prescribes a different approach — which ensures comparability across companies and jurisdictions.

Sector-Specific Standards

EFRAG is currently developing sector-specific ESRS (SSRS) for the following sectors: oil & gas, coal mining, road transport, agricultural products, food & beverage, textiles, basic materials (metals, chemicals), financial institutions, mortgage loans, and investments. These will add sector-specific data points on top of the cross-sector ESRS requirements. Publication is expected in phases between 2025 and 2026. Companies in covered sectors should monitor EFRAG's sector-specific work programme and factor anticipated requirements into their data collection planning.

How to Use the Verdaio ESRS Gap Tool

The Verdaio ESRS Gap Analysis guides you through all 10 topical ESRS standards, asking about your current data availability, existing policies, and measurement practices. The tool generates a comprehensive gap report identifying: which standards are likely to be material for your sector, which mandatory data points you are missing, and a phased compliance roadmap prioritising the most critical gaps. Output is delivered as a detailed PDF report suitable for sharing with your board, auditors, or sustainability consultants.

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