Ecological Footprint Accounting and the European Sustainability Reporting Standards (ESRS)

In 2021, the European Commission adopted the Corporate Sustainability Reporting Directive (CSRD). With its detailed guidance, this legislation marked a major evolution in corporate sustainability reporting and came into force in 2023.

EFRAG or the European Financial Reporting Advisor Group is the organization in charge of developing the reporting framework to which the companies within the scope of CSRD will follow. This reporting framework for the CSRD is known as the European Sustainability Reporting Standards (ESRS).

Fundamentally, the principles by which Global Footprint Network has applied the Ecological Footprint to companies is aligned with the basis of ESRS sustainability disclosures (ESRS1 Objective 3.3 Double Materiality as the basis for sustainability disclosures) – in other words, identifying risks and opportunities from both an impact materiality and a financial materiality perspective.

Understanding the sustainability context we operate in, from the global context to sector and product specific contexts, assessing the risks and opportunities associated with the context of foreseeable climate change and sustainability scenarios has been at the core of how Global Footprint Network has evaluated the overshoot impact of companies. While sustainability reporting is broader, Ecological Footprint accounting addresses very specific, observable questions, which as explained here, are also fundamental.

Detailed information on the ESRS found can be found here: https://www.efrag.org/lab6

In the December 2023 publication identified as Delegated regulation – EU – 2023/2772 – EN – EUR-Lex europa.eu, ESRS is divided into twelve sections:

• ESRS 1: General principles
• ESRS 2: General, strategy, governance, and materiality assessment
• ESRS Environmental E1: Climate change
• ESRS Environmental E2: Pollution
• ESRS Environmental E3: Water and marine resources
• ESRS Environmental E4: Biodiversity and ecosystems
• ESRS Environmental E5: Resource use and circular economy
• ESRS Social S1: Own workforce
• ESRS Social S2: Workers in the value chain
• ESRS Social S3: Affected communities
• ESRS Social S4: Consumers and end-users
• ESRS Governance G1: Business conduct

Narrative alignment – while a significant effort will be required to understand and prepare the data for reporting, the majority of reporting “data points” for the ESRS will be done in narrative format (Download efrag.org), thus, Ecological Footprint, and the context it provides by identifying clear ecological thresholds and resource balances, can serve as a unifying context for such sustainability reporting.

Data and metrics alignment – Ecological Footprint Accounting data requirements overlap with 4 of the 5 Environmental Reporting Categories in the ESRS: Climate Change (E1), Water and Marine Resource(E3), Biodiversity and ecosystems(E4) and Resource use and circular economy(E5), and the indicator or subcomponents can be used in ESRS reporting. Also Ecological Footprint makes a link between E1-E5, something no other metric does as coherently.

Section E4 of the ESRS on Biodiversity and Ecosystems requires policies to be in alignment with the Post-2020 Global Biodiversity Framework (GBF). Within the Post-2020 GBF, the Ecological Footprint is identified as a monitoring indicator under target 16 (https://www.cbd.int/gbf/targets/16).