The European Sustainability Reporting Standards, or ESRS, define the information companies report under the Corporate Sustainability Reporting Directive. CSRD establishes the reporting obligation. ESRS provides the detailed disclosure architecture.
The structure of ESRS
The framework contains cross-cutting standards on general requirements and disclosures, plus topical standards covering environmental, social and governance matters. Companies assess topics through double materiality, considering both their impacts on people and the environment and the financial effects of sustainability issues on the company.
Climate change is addressed in ESRS E1. It covers transition plans, targets, energy use, gross greenhouse gas emissions, removals, mitigation actions, carbon pricing and anticipated financial effects.
Why ESRS E1 matters for carbon markets
Gross Scope 1, 2 and 3 emissions are reported separately from carbon credits and removals. This is important because external credits cannot simply be netted against the corporate inventory.
Where a company uses carbon credits, the disclosure should explain volumes, project types, quality characteristics, standards, host countries and the relationship between the purchase and the company's climate targets. Claims need an audit trail that connects procurement records, registry retirement and public wording.
Double materiality and value-chain data
A company may need extensive supplier and customer information to report material Scope 3 emissions and transition risks. This makes data quality, estimation methods and control procedures central to compliance.
The reporting process is not only a communications exercise. It requires governance, documented methodologies, defined ownership of data and evidence suitable for external assurance.
Practical priorities for companies
Organisations preparing for ESRS reporting should establish a stable GHG inventory, map data owners, document calculation methods and separate internal reductions from external climate contributions. Carbon procurement should be integrated into the same control environment rather than handled as a stand-alone marketing activity.
Sentinel Earth's emissions strategy advisory supports inventory construction, target setting, reporting architecture and carbon market participation designed around defensible evidence.
