Responding to ESRS E2
Establishing Pollution Reduction Strategies for Businesses
25th October 2024
Insights
Contents
- What is ESRS E2?
- What does the ESRS E2 standard cover?
- Sustainability reporting landscape
- Who does ESRS E2 apply to?
- What will ESRS E2 mean for your business?
- How to get started with ESRS E2
- Contact us
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Paolo Bonamigo, Anthesis Associate Director and chemicals regulatory affairs expert, shares insights into ESRS E2, detailing its scope, connection to the broader sustainability reporting landscape and how organisations can prepare.
Two cross-cutting ESRSs and ten topic-specific ESRSs (5 environmental, 4 social and 1 on governance) will require disclosure on governance, strategy, and impact, risk and opportunity management.
| Number | Subject |
| ESRS 1 | General Requirements |
| ESRS 2 | General Disclosures |
| ESRS E1 | Climate |
| ESRS E2 | Pollution |
| ESRS E3 | Water and marine resources |
| ESRS E4 | Biodiversity and ecosystems |
| ESRS E5 | Resource use and circular economy |
| ESRS S1 | Own workforce |
| ESRS S2 | Workers in the value chain |
| ESRS S3 | Affected communities |
| ESRS S4 | Consumers and end users |
| ESRS G1 | Business conduct |
What is ESRS E2?
ESRS E2 is one of the ten topical European sustainability reporting standards (ESRS) that are included in the Corporate Sustainability Reporting Directive (CSRD), developed by the European Financial Reporting Advisory Group (EFRAG). This standard addresses the impact of organisations on the pollution of air, water, and soil, alongside the associated financial repercussions to the organisation. As with other ESRS standards, E2 is subdivided into various sections.
ESRS E2 is also connected to other standards. For example, the E2-4 section partially overlaps with the reporting requirements of ESRS E1 regarding specific greenhouse gases, as well as ESRS E5, which focuses on resource use and the circular economy.
What does the ESRS E2 standard cover?
ESRS is divided into subsections, each representing unique reporting requirements.
ESRS E2 covers 3 main components:
- Policies, actions and targets (E2-1,2,3): Under the ESRS E2 standard, organisations must collect qualitative data on their policies and targets for reducing amounts of pollution, and any resources they will use to get there.
- Quantities of pollution (E2-4,5): ESRS E2 requires companies to collect quantitative data relating to pollution levels in air, water, and soil, including microplastics, as well as the amounts of substances of concern (SOC) and of very high concern (SVHC) (E2-5) produced during manufacturing processes.
- Financial implications of pollution (E2-6): In addition to keeping a record of pollution levels and actions taken in response, ESRS-compliant companies must disclose actual and potential financial impacts of the production, sale and distribution of harmful substances (SOC and SVHC).s, and implement strategies to mitigate these risks and impacts. This ensures greater transparency, accountability, and proactive management of climate-related challenges.
Connection with the wider sustainability reporting landscape
ESRS E2 Pollution is part of a broader sustainability reporting landscape that includes various standards and frameworks such as the Global Reporting Initiative (GRI), the Task Force on Climate-related Financial Disclosures (TCFD), and the UN Sustainable Development Goals (SDGs). It also builds on existing EU legislation like the European Pollutant Release and Transfer Register (E-PRTR) and other reporting obligations around greenhouse gases.
It builds on these frameworks by offering detailed guidance on pollution. Incorporating ESRS E2 into broader sustainability reporting strengthens the comprehensiveness of an organisation’s disclosures.
Who does ESRS E2 apply to?
Companies in the chemical manufacturing industry will be affected, encompassing both upstream manufacturers and downstream users, such as those producing paints, coatings, adhesives, detergents and similar products.
In addition, organisations outside the chemical sector may be impacted if they have harmful emissions to report (e.g. due to combustion processes) or if their production processes use pollutant substances (SOC and SVHC). For example, textile manufacturers may be required to report under ESRS E2 if their product contains substances of concern present in purchased components, even if those substances are not directly used in their manufacturing processes.
What will ESRS E2 mean for your business?
Our experience shows that the ESRS E2 preparation is a complex activity consisting of various workstreams such as:
- Policies on pollution: Many companies have a vision to reduce pollution which is not formalised in a policy. Documenting this vision, current practices, and goals provides a solid foundation for reporting.
- Overview of ongoing actions: Organisations often implement mitigating measures such as water treatment plants and oxidative treatments for exhaust fumes but lack robust reporting from operations and manufacturing functions.
- Measurements and metrics: Data on emissions or substances is often available yet sometimes inconsistent across sites due to varying regulations. Where existing metrics are inconsistent there may not be a comprehensive overview of all available data. Consolidating and standardising this data is crucial for E2 reporting.
- Granularity on substance presence: Since the chemical industry supplies around 60% of all industrial sectors, the majority of products on the market contain chemicals. Batteries, packaging, automobiles, medical devices, aeroplanes, cables and toys all contain chemicals in their manufacturing supply chain. E2 reporting requires companies to clearly identify what chemicals are present, where and in what amounts.
The final two points require a detailed understanding of a company’s products and processes, which some organisations may not have. Consequentially, E2 reporting can be an iterative process. Initial reports may rely on justified assumptions due to limited data. However, this sparks a cycle of improvement, where ongoing measurements and studies enhance knowledge of the process, leading to more accurate and detailed reports over time.
How to get started with ESRS E2
Anthesis guides companies in developing a comprehensive overview of their products and processes, building on our experts’ extensive knowledge of chemistry and manufacturing. This strong foundation enables organisations to identify relevant pollutants/substances for reporting and determine effective quantification strategies, such as measurements or estimates. We also perform detailed analyses of selected processes and products to deepen understanding and enhance reporting accuracy.
Additionally, Anthesis helps companies leverage this data to go beyond mere compliance. We assess which chemicals may not align with future regulatory trends and broader sustainability goals, offering guidance on transitioning to more sustainable alternatives. This approach transforms reporting efforts into a long-term, data-driven strategy for improving the company’s sustainable performance.
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