Responding to ESRS E3
Minimising impact on water and marine resources
Insights
Contents
- What is ESRS E3?
- Connection with Other Standards
- Non-Compliance
- Who Does ESRS E3 Apply to?
- How Will it Drive Action
- How to Respond to ESRS E3
- Contact us
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Anthesis Nature & Water Stewardship team share insights into ESRS E3, detailing what it encompasses, its connection to the broader sustainability reporting landscape, and how organisations can prepare.
What is ESRS E3?
ESRS E3 Water and Marine Resources at a Glance
ESRS E3 is one of the ten topical standards developed by the European Financial Reporting Advisory Group (EFRAG) to provide a structured framework for implementing the Corporate Sustainability Reporting Directive (CSRD). This standard focuses on reporting requirements related to water and marine resources.
Two cross-cutting ESRSs and ten topic-specific ESRSs 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 |
Companies complying with CSRD must first undertake a Double Materiality Assessment, which supports stakeholders in understanding the organisation’s impacts on people and the environment, as well as the material financial impacts of sustainability matters on the organisation. If water and marine resources arise as a material issue for the company in the Double Materiality Assessment, they must respond to ESRS E3.
Reporting Requirements of ESRS E3
Companies must report information on:
- Water-related impacts, risks and opportunity management—and aligned risk assessment, policies and actions
- Metrics and targets related to water consumption, wastewater discharges, pollution, and the broader effects of their activities on surrounding ecosystems
Companies with activities within maritime areas must similarly report their dependencies, impacts, and marine resources-related metrics and targets. Additionally, the standard also emphasises reporting on related strategies, measures, and financial impacts based on identified impacts and dependencies.
Within the environmental pillar, ESRS E3 has the fewest data points, with 51 data points spanning five disclosure requirements. From our experience, it is also one of the least commonly found as material during the double materiality assessment with some sectors more affected than others.
How Does ESRS E3 Connect with Other Standards?
ESRS E3 aligns with broader sustainability goals and policies at the European and global levels.
Alignment with European and Global Goals
- European Green Deal: ESRS E3 supports the European Green Deal’s goal of restoring biodiversity. By focusing on key issues like water quality, pollution, and resource efficiency, it directly supports the Green Deal’s goal to preserve a healthy ecosystem and biodiversity
- Other EU policies: Additionally, ESRS E3 aligns with the EU Water Framework Directive and Marine Strategy Framework Directive
- UN SDGs: The standard contributes to achieving SDG 6 (clean water and sanitation) and SDG 14 (life below water)
- Global standards: The ESRS framework is consistent with global sustainability standards like the GRI, ISSB and TNFD
Integration with Other ESRS Standards
As with all of the topical standards, ESRS E3 links to the overarching ESRS 1 and ESRS 2 as well we being interconnected with other topical standards including:
- ESRS E1 (Climate Change): addressing the water-related impacts of climate risks
- ESRS E2 (Pollution): Tackling pollutants in water systems
- ESRS E4 (Biodiversity): Ties closely to E3 by considering water and marine ecosystems as critical habitats
- ESRS E5 (Resource Use and Circular Economy): managing water as a finite resource
This cohesive approach encourages companies to address sustainability holistically, recognising water’s integration across climate and nature.
Non-Compliance
Non-compliance may result in financial penalties or exclusion from investor portfolios, underscoring the importance of this standard in both regulatory and investor contexts. By fostering transparency, ESRS E3 also supports water solution providers and innovation in water management, which could drive market growth for sustainable practices in the long term.
Anthesis can support clients to navigate through the changing landscape of regulatory requirements and develop suitable solutions as an integral part of their sustainability strategies.
Who Does ESRS E3 Apply To?
All companies within the scope of the CSRD must report on ESRS E3 if their double materiality assessment identifies water resources or marine ecosystems as material to their business.
ESRS E3 will be especially relevant for businesses that:
- Depend heavily on water resources
- Operate in water-stressed regions
- Have a notable impact on marine environments
- Have high water consumption or substantial wastewater discharge
Example industries most likely to have to report under ESRS E3 include:
- Manufacturing: Sectors like textiles, chemicals, food and beverage, and pulp and paper often require large amounts of water in their production processes. For example, textile manufacturing is highly water-intensive and often associated with water pollution due to dyeing and treatment processes
- Agriculture and Food Processing: These industries rely heavily on water for crop irrigation, livestock maintenance, and food processing. Companies operating in water-scarce regions face greater risks, making ESRS E3’s water usage and conservation guidelines material to their operations
- Mining and Extractive Industries: Mining operations impact water quality through the discharge of contaminants and disrupt marine ecosystems, especially in offshore extraction. The ESRS E3 standards on water management and pollutant control are therefore particularly relevant to these industries
- Energy Sector: Power generation, especially in sectors such as hydropower, nuclear, and fossil fuels, is water-intensive, relying on water for cooling processes. Energy companies are also significant stakeholders in marine resources when they are involved in offshore drilling and renewable marine energy
- Tourism and Coastal Developments: Businesses involved in tourism, real estate, and recreational activities near coastal areas are likely to have a material interest in water and marine resources due to their direct impact on local water sources and marine biodiversity
- Tech Sector: Data centres and technology manufacturing facilities can have water-intensive operations and are often located in basins facing high water risk. With the rise in AI models and their heavy computing power, water consumption has increased significantly for the cooling of data centres. With growing public and regulatory pressure, ESRS E3 disclosures on metrics and targets will encourage companies who operate or depend on data centres to develop strategies and set clear targets to minimise their negative impact on local water and marine resources
How Will it Drive Action?
ESRS E3 is intended to drive a positive change in corporate behaviour by embedding management of water and marine resources into their core business strategies. By mandating detailed disclosures on policies, targets, risks and impacts, the standard compels companies to evaluate their dependencies on and impacts to these critical resources. This is likely to prompt organisations to adopt innovative solutions—both within their direct operations and across their supply chains—such as incentivising water footprint reduction, implementing water recycling, fostering water stewardship, pursuing water-positive strategies, and developing sustainable marine practices initiatives. For industries heavily reliant on water or significantly impacting marine ecosystems, this framework encourages proactive risk management and regulatory compliance, helping them stay ahead of escalating environmental expectations.
Beyond regulatory compliance, adhering to ESRS E3 can provide companies with a competitive advantage. Companies can enhance their reputation, strengthen ESG credentials and meet evolving stakeholder demands and investor expectations. Overall, holistically embracing ESRS E3 can act as a catalyst for positive change, driving industries toward a more sustainable future.
How to Respond to ESRS E3
Anthesis can support businesses to prepare for ESRS E3 compliance throughout their journey.
- Double materiality assessment: To begin, an assessment conducted on a business’s operations and supply value chain helps to identify impacts to and dependencies on water and marine resources. This includes mapping risks like water scarcity, flood risk, water pollution, and regulatory changes, alongside evaluating site-specific impacts on ecosystems and consultation with local affected communities.
- Water Inventories: Next, a company must collect and report the relevant water data by tracking metrics such as water withdrawal and consumption, discharge quantity and quality, and recycling rates. Integrating these processes into existing systems ensures alignment with ESRS E3 KPIs.
- Water Risk Assessment: Conducting a Water Risk Assessment can then help identify where water impacts occur in regions experiencing high water stress.
- Water Policies: Anthesis experts can work with you to develop or hone policies relating to water impacts to align with ESRS E3, incorporate supply chain engagement best practices, and meet customer and investor expectations.
- Context-based or science-based targets: As a company seeks to create and demonstrate progress on water and marine resources, it is important to implement mitigation strategies and improve over time. Anthesis can support in setting achievable targets.
- Water stewardship strategies: Developing roadmaps and strategies for water quantity, water quality, and access to clean water and sanitation. Based on basin-level and operational site-level risk assessments, companies can adopt targeted water efficiency measures or improved water treatment and continue to monitor and report on progress over time.
Anthesis Nature Water Stewardship service helps businesses to align with ESRS E3 compliance and prepare responses. We help businesses develop holistic water management strategies that integrate accountability and address shared water challenges to drive continuous improvement towards Water Stewardship.
We are the world’s leading purpose driven, digitally enabled, science-based activator. And always welcome inquiries and partnerships to drive positive change together.
