How to Structure an ESRS Sustainability Statement: Sections, Cross-References and Connected Information

A practical guide to organising the dedicated sustainability statement so that users can navigate material IROs, management response, metrics and financial effects without duplication.

Teams often say that ESRS has “four sections” without clarifying what they mean. This creates avoidable structure problems. The revised ESRS uses two related but distinct organising ideas.

First, the sustainability statement is normally divided into four presentation parts: general, environmental, social and governance information. These parts help users navigate the statement and understand where topical disclosures sit. Secondly, the substance of ESRS disclosures covers four reporting areas: governance; strategy including financial effects; management of IROs, including policies and actions; and metrics and targets. The reporting areas recur across the general and topical parts.

A useful design therefore avoids creating four isolated chapters called Governance, Strategy, IRO Management and Metrics. That approach would fragment each material topic and force readers to jump repeatedly through the report. Instead, the four parts provide the main navigation, while the four reporting areas shape the internal anatomy of each material topic.

The revised ESRS requires the undertaking to present all ESRS disclosures in a dedicated section of the management report identified as the sustainability statement. The section should be clearly distinguished from other management-report information and presented in a form that is both human-readable and machine-readable. The prescribed standard order is general information, environmental information, social information and governance information.

An undertaking may use an alternative structure if it gives a reasoned explanation and complies with the other presentation requirements. The statement may contain appendices or separate sub-parts. EU Taxonomy Article 8 disclosures must be included in the sustainability statement and may be placed in a separate appendix within the management report. An executive summary may be useful, but it should not obscure or replace material information.

Figure 1. A practical sustainability-statement architecture: four parts for navigation, with the four reporting areas applied across material topics.

Part 1. General information

Part 1 should orient the reader before topical detail. It normally includes the basis of preparation, the role and oversight of the administrative, management and supervisory bodies, strategy and business model, stakeholder views, the DMA process and outcome, the reporting index and the general disclosures on policies, actions, metrics and targets that apply across material topics.

The strongest general part does not become a repository for all sustainability narrative. It gives the common context once and points precisely to topic-specific information. For example, the governance system for sustainability reporting can be explained under ESRS 2, while the climate transition plan, climate targets and climate metrics remain in the environmental part. The cross-references should allow users to understand the relationship without duplicating paragraphs.

Part 2. Environmental information

Part 2 should cover the material environmental topics under ESRS E1 to E5. A useful sequence is to place ESRS E1 first where climate change is material, followed by pollution, water, biodiversity and resource use as applicable. Each topic can use a consistent internal pattern: material IROs and interaction with strategy; policies; actions and resources; targets; metrics; and current or anticipated financial effects where required.

The EU Taxonomy disclosures may appear as a separate appendix within the sustainability statement. Where the Taxonomy tables rely on the same CapEx, turnover or asset populations as climate or financial-effect disclosures, direct cross-references and reconciliations should make the relationship visible without implying that Taxonomy alignment and ESRS transition-plan credibility are the same assessment.

Part 3. Social information

Part 3 should cover material information on own workforce, workers in the value chain, affected communities and consumers or end-users. The structure should make affected groups, locations, value-chain relationships, material impacts and management response easy to follow. Sensitive grievance or personal information should remain protected while the published statement provides material, balanced information at an appropriate level of aggregation.

Where a policy or action covers several social topics, disclose it once in the most logical location and use exact internal cross-references. Avoid repeating a group-wide human-rights policy under every social standard unless the topic-specific implications are genuinely different.

Part 4. Governance information

Part 4 covers material business-conduct disclosures under ESRS G1. It should not duplicate the general governance disclosures in Part 1. A clear division is to use Part 1 for the overall governance of sustainability matters and sustainability reporting, while Part 4 explains material business-conduct IROs, policies, actions, metrics and targets. Cross-reference the relevant committees, control framework or remuneration links where necessary.

An internal cross-reference points from one location in the sustainability statement to another. Under the revised ESRS, these internal references are not incorporation by reference. They are a drafting tool that helps avoid repetition and show connections.

A useful internal reference identifies the topic, DR or subsection and the precise location. “See climate section” is weak. “See Part 2, section 2.1.4, E1-5 Climate actions and resources, page 46” is stronger. Digital publications should also use a stable link or anchor. The referenced information must remain part of the same sustainability statement and the link should still work in the filed or tagged version.

Incorporation by reference means that material ESRS information is located in another eligible corporate document but is treated as part of the sustainability statement through a precise reference. The revised ESRS permits incorporation from specified locations, including another section of the management report, the financial statements, the corporate-governance statement, the remuneration report, a universal registration document, certain Pillar 3 disclosures and an EMAS report.

The mechanism is conditional. The referenced information must be separately identified, published at the same time as or before the sustainability statement, in the same language, subject to at least the same level of assurance and available with the same digitalisation capability. The use of incorporation should preserve readability and cohesion. If the conditions are not met, the material information should be included in the sustainability statement rather than delegated to a later or less accessible document.

Figure 2. Decide whether to use an internal cross-reference, incorporation by reference or a full disclosure in the sustainability statement.

Connected information enables users to understand relationships between material IROs, strategy, policies, actions, targets, metrics and financial effects. The drafting team should avoid describing each disclosure as an isolated answer. For example, a climate transition risk should connect to the affected business model, transition plan, decarbonisation actions, CapEx, GHG target, reported emissions and anticipated financial effects.

Use stable IRO identifiers and a connection matrix behind the report. The public statement does not need to show every internal ID, but it should preserve the logic. A policy without a material IRO, an action without a policy or objective, a target without a baseline, or a financial effect without the underlying risk creates an incomplete chain.

The revised ESRS asks for information that enables users to understand connections with other corporate reporting, including the financial statements. Direct connectivity arises where a monetary or quantitative amount also appears in the financial statements. In that case, the sustainability statement should use a precise cross-reference and, where aggregation differs, provide a reconciliation or explanation.

Indirect connectivity arises when the relationship is conceptual rather than a one-to-one amount. For example, a climate scenario may inform impairment or useful-life judgements without producing a separately disclosed financial-statement amount. The sustainability statement should explain the relationship, affected assumptions and reasons for any significant difference in scope, timing or measurement objective.

Data and assumptions should be consistent with the financial statements where possible. Different assumptions are not automatically wrong: sustainability metrics and financial accounting may have different measurement objectives. The risk arises when differences are significant, unexplained and capable of giving users contradictory pictures of the same exposure.

Lock the reporting basis: applicable edition, entity, period, material IROs, statement parts and incorporation choices.

Build a disclosure matrix linking each material IRO to ESRS 2, topical DRs, entity-specific information, owners, evidence and proposed location.

Design a reader journey and sample contents before drafting, including the placement of the EU Taxonomy appendix and dense methodologies.

Draft common context once in Part 1 and topic-specific content in Parts 2-4, using exact internal references rather than repetition.

Create a cross-reference register with source location, destination, wording, link, eligibility and assurance status.

Perform a connected-information review across IROs, strategy, P/A/T, metrics, financial effects and financial statements.

Run a completeness review against IRO-2, the disclosure matrix and materiality decisions, including entity-specific information.

Test the statement in PDF, tagged digital format and machine-readable filing, checking link integrity, readability, table accessibility and evidence traceability.

Obtain technical, legal, financial, governance and assurance review before final release.

A strong ESRS sustainability statement is both a legal reporting section and a navigable explanation of the undertaking’s material sustainability story. The four presentation parts create order, while the four reporting areas create substance. Precise cross-references reduce duplication, valid incorporation by reference prevents unnecessary repetition across corporate reports, and connected information makes the relationship to strategy and financial statements visible. The architecture should be designed early, controlled through the disclosure matrix and tested in the final digital publication - not improvised after the disclosures have been drafted independently.