ESRS E1 Explained: What Every CSO Needs to Know

ESRS E1 is the climate change standard within the European Sustainability Reporting Standards framework. As Head of Climate Science at Carbonkindle, I spend a significant portion of my time helping enterprise sustainability teams parse what ESRS E1 actually requires, separate from the noise generated by regulatory commentary and vendor marketing. The short version: it is more demanding than TCFD, it has teeth in the form of mandatory limited assurance, and CSOs who treat it as a reporting exercise rather than a data management discipline will face restatements.

Here is a practical breakdown of what ESRS E1 requires, how the disclosure requirements are structured, and where the assurance process will apply the most pressure.

The Architecture of ESRS E1

ESRS E1 sits within the broader ESRS framework alongside cross-cutting standards (ESRS 1 and ESRS 2, which set the general principles) and other topical environment standards (E2 through E5 covering pollution, water, biodiversity, and circular economy). E1 is the most developed and, for most enterprise CSOs, the first required filing under CSRD.

The standard is organized around four themes:

• Governance and strategy: how the company integrates climate into board oversight and business model
• Impacts, risks, and opportunities (IRO): the double materiality assessment, identifying material climate IROs
• Metrics and targets: quantitative GHG emissions, energy consumption, and reduction targets
• Policies and transition plans: the company's documented approach to decarbonization

Each theme has mandatory disclosure requirements (indicated as "shall disclose" in the standard text) and application guidance. First-phase CSRD filers — large public-interest entities with more than 500 employees — should note that some requirements have phased-in transitional provisions. But the core GHG metrics under E1-6 are mandatory from the first filing year.

E1-6: The Emissions Disclosure Requirements in Detail

E1-6 is the disclosure requirement covering gross GHG emissions. It is where most assurance attention concentrates, and it is where we see the highest error rate among enterprise teams preparing their first CSRD disclosures.

ESRS E1-6 requires disclosure of:

• Gross Scope 1 GHG emissions in metric tonnes CO2-equivalent (tCO2e), disaggregated by GHG gas if material
• Gross Scope 2 GHG emissions, reported under both location-based and market-based methods
• Gross Scope 3 GHG emissions by GHG Protocol category, with clear identification of included and excluded categories and the basis for exclusion
• Total GHG emissions (Scope 1 + 2 + 3 combined)
• The organisational boundary approach used (operational control, financial control, or equity share)

A point that trips up many teams: the standard requires both location-based and market-based Scope 2 figures. You cannot report only the market-based number — which incorporates RECs, GOs (Guarantees of Origin), and green energy contracts — even if it is substantially lower than the location-based figure. Both numbers must appear in the disclosure, with the methodology clearly stated.

"We reviewed 23 draft CSRD disclosures in 2025. The majority reported market-based Scope 2 correctly but failed to include the location-based figure alongside it. ESRS E1-6 requires both. That is a gap that triggers an auditor finding." — Felix Gruber, Head of Climate Science, Carbonkindle

The Transition Plan and Target Requirements

E1-1 requires disclosure of the company's transition plan for climate change mitigation. This is not a strategic aspiration statement — the standard specifies that the transition plan must cover decarbonisation levers, investment requirements, and the pathway to stated targets. Companies with validated Science Based Targets (SBTi) have a significant head start here, because the SBTi validation process generates much of the target-level evidence E1-1 requires.

E1-4 requires disclosure of any GHG reduction targets, including whether they have been validated by a third party, the base year, the target year, and the proportion of total GHG emissions the target covers. A 2030 target that covers only Scope 1 and 2 but excludes Scope 3 will need explicit justification — ESRS E1 expects targets to be coverage-complete or the gaps to be explained.

Targets that rely on carbon removals or offsets rather than absolute reductions must be separately flagged. The standard does not prohibit offset-dependent targets, but it requires full transparency on what is an operational reduction versus what is a purchased offset. In our view, this transparency requirement is constructive — it gives CSOs a defensible framework for explaining offset use without overstating absolute progress.

Double Materiality: What It Means in Practice

ESRS E1 operates under a double materiality framework. This means companies must assess both:

• Impact materiality: does the company's activity have a material impact on the climate (e.g., significant Scope 3 emissions from the value chain)?
• Financial materiality: are climate risks or opportunities material to the company's financial condition (e.g., physical risks from flooding, transition risks from carbon pricing)?

A climate impact or risk is material under ESRS E1 if it passes either test — not both. This is different from single materiality under IFRS S1/S2 or TCFD, which focuses primarily on financial materiality.

In practice, the double materiality assessment generates a list of material climate-related IROs that must each be addressed in the E1 disclosure. If a company has identified physical risk from extreme heat as financially material, there must be corresponding disclosure under E1's climate risk section — not just a general mention in the strategic risk narrative. The assessment process must itself be documented and subject to board oversight.

What Auditors Check First

Limited assurance under CSRD is performed by accredited sustainability assurance providers — typically the same Big-4 or mid-tier audit firms conducting financial audits. The assurance scope covers the entire CSRD sustainability statement, but E1 emissions data is usually the first area reviewed because it is the most quantifiable.

Based on what assurance teams have communicated publicly and through working groups, the four areas that receive the most scrutiny are:

1. Data lineage: Can the reported tCO2e figure be traced back to source activity data and the emission factor applied? Missing the emission factor version or source database is a common gap.
2. Scope 3 category justification: Are excluded categories accompanied by documented materiality assessments? Bare assertions of immateriality are rejected.
3. Location-based vs. market-based Scope 2: Both figures must be present and methodologically consistent.
4. Base-year recalculations: If the base year changes or an acquisition changes the boundary, is the recalculation methodology documented and applied consistently?

None of these are unreasonable to prepare for. But they all require structured data management, not spreadsheet-based assembly. The disclosure that looks credible in a PDF is the one built on a traceable calculation engine — one where every number can be regenerated from source, not reconstructed from memory.

What to Do Before Your First CSRD Filing

CSRD E1 is a technical and operational challenge as much as a regulatory one. A CSO who understands the requirements but does not have the data infrastructure to support them will face a difficult assurance conversation. Here is where to focus in the 12 months before filing:

• Complete your double materiality assessment and document the methodology
• Establish your organisational boundary and document the rationale
• Stand up a Scope 1 and Scope 2 inventory with documented emission factors — both location-based and market-based for Scope 2
• Run a preliminary Scope 3 screen across all 15 categories; document exclusions
• Identify which targets you are claiming and verify they meet E1-4 requirements
• Begin the transition plan narrative — this requires board input, so start early

ESRS E1 is demanding but learnable. The enterprises that file with confidence are the ones that invested in data infrastructure before filing season, not during it.