The European Sustainability Reporting Standards (ESRS) are detailed reporting requirements under the Corporate Sustainability Reporting Directive (CSRD). They aim to standardize sustainability disclosures across the EU, enhancing transparency and accountability for environmental, social, and governance (ESG) factors. It aligns corporate activities with the European Green Deal and transitions to a net-zero, socially responsible economy.
The ESRS is key to advancing EU sustainability goals by enabling investors, regulators, and consumers to make informed decisions about ESG performance. Through the standards companies disclose consistent, comparable, and reliable sustainability information, increasing transparency.
The ESRS imposes significant requirements on the health and beauty industry, starting with supply chain accountability, where companies must disclose the sustainability impacts of sourcing practices, including deforestation, water usage, and labor rights while ensuring ethical sourcing of key ingredients such as mica, palm oil, and plastics. It also emphasizes product lifecycle management, mandating sustainable packaging, waste reduction, circular economy principles, and reporting the environmental impacts of product design and disposal. Furthermore, the directive increases pressure on brands to build consumer trust and engagement by transparently disclosing their products' health and safety impacts and offering non-toxic, eco-friendly formulations, turning ESG initiatives into a competitive edge. Additionally, operational changes require tracking and reporting metrics like energy efficiency, emissions, water use, and diversity while encouraging alignment with science-based sustainability targets. Failure to comply with these regulations may lead to financial implications, such as fines or reduced access to capital markets, as ESG-aligned businesses become a priority for investors.
| 2024 | Implementation begins for companies already under NFRD (large public-interest entities). |
|---|---|
| 2027 | Smaller companies meeting the CSRD thresholds must start reporting. |
| 2030 | Full integration with EU Green Deal objectives, ensuring comprehensive ESG reporting across sectors. |
By preparing early and aligning with ESRS standards, the health and beauty industry can ensure compliance and leverage sustainability as a driver of innovation and consumer loyalty.