ESRS 2 General Disclosures: basis of preparation, governance, strategy, business model, stakeholders, material IROs, content index and GDR

2026 REVISED ESRS · PILLAR / DEEP GUIDE

How basis of preparation, governance, strategy, stakeholder views and materiality connect to the sustainability statement

ANSWER · EXPLAIN · APPLY · EVIDENCE · CONNECT · PUBLISH

© 2026 London Reporting Academy. Educational technical guidance.

REQUIREMENT Revised ESRS 2 is the cross-cutting standard for the sustainability statement. It explains the basis on which the statement is prepared, how the administrative, management and supervisory bodies oversee sustainability matters, how strategy and the business model interact with material impacts, risks and opportunities, and how the undertaking identifies those IROs and locates the resulting disclosures. Its requirements apply across sustainability topics and provide the connective structure for topical ESRS and entity-specific information.

Source anchor: Revised ESRS 2, paragraphs 1-2.

REQUIREMENT ESRS 2 does not replace the topical standards. Once a topic or sub-topic is related to one or more material IROs, the undertaking applies ESRS 2, the GDR requirements for policies, actions, metrics and targets, the relevant topical DRs and ARs, and entity-specific information where needed for fair presentation.

Source anchor: Revised ESRS 1, paragraphs 25-31.

Figure 1. The cross-cutting ESRS 2 architecture. The graphic is an educational representation; the official requirements remain those in the adopted text.

The four reporting questions

BP is not a short boilerplate paragraph. It is the reader’s control panel for the sustainability statement: version, reporting boundary, value-chain reach, reliefs, options, phase-ins and other specific provisions that affect completeness or comparability.

BP-1: basis, boundary and applied provisions

REQUIREMENT BP-1 requires the undertaking to state whether the sustainability statement is prepared on a consolidated or individual basis. If the boundary of own operations differs from the financial consolidation boundary, the difference and its reasons are disclosed. The undertaking also gives an overview of the extent to which upstream and downstream value-chain information is covered.

Source anchor: Revised ESRS 2, paragraph 4.

REQUIREMENT The undertaking states that the sustainability statement has been prepared in accordance with the ESRS applicable at the end of the reporting period. It also discloses each relief, option or other specific ESRS 1 provision it has used, together with the related information required by that provision.

Source anchor: Revised ESRS 2, paragraphs 5-6 and AR 2.

REQUIREMENT The revised standard’s AR 2 points to a broad set of possible items: acquisition and disposal relief, different time horizons, changes in preparation or presentation, adjustments to comparatives, material judgements and significant uncertainty, permitted omissions, metric-boundary reliefs, undue-cost-or-effort limitations, events after the reporting period and prior-period errors. The disclosure should be placed either in the general information section or alongside the affected disclosure, but it must remain easy to find.

Source anchor: Revised ESRS 2, AR 2.

BP-2: phase-in information

REQUIREMENT Where a phase-in permits the undertaking to omit the information required by an entire listed topical standard, BP-2 still requires the undertaking to say whether the related IROs were assessed as material. If the topic or sub-topic is material, the undertaking gives concise information on the interaction with strategy and business model, targets and progress, policies, actions and results, and relevant metrics.

Source anchor: Revised ESRS 2, paragraphs 8-9.

REQUIREMENT For other phase-in omissions, the undertaking discloses the fact that the information has been omitted. The fact may be shown in the general section, alongside the topical disclosure or, where permitted, in the content index.

Source anchor: Revised ESRS 2, paragraph 10 and AR 3-4.

The GOV disclosures should allow a reader to see the actual governance system rather than a list of committees. The strongest drafting starts from decision rights, information flows, challenge and evidence: who receives what information, who decides, how often, with which expertise, and what record proves that the oversight occurred.

INTERPRETATION GOV-3 is a statement on where due-diligence steps are reflected; it is not, by itself, evidence that the undertaking has satisfied every substantive due-diligence duty under another law. Drafting should avoid turning a disclosure cross-reference into an unsupported legal-compliance claim.

Source anchor: Revised ESRS 2, GOV-3; the distinction between disclosure and substantive due diligence is an implementation safeguard.

REQUIREMENT For GOV-4, the revised ARs direct attention to completeness and integrity of the reporting process and the accuracy of information, including estimates. A workable control framework therefore covers narrative claims as well as metrics: source approval, version control, estimation governance, review, evidence retention and issue escalation.

Source anchor: Revised ESRS 2, GOV-4 and related ARs.

A practical governance test

Identify the board, committee or equivalent body with accountability for the sustainability statement and the individuals with delegated responsibility.

Map the information that reaches each body: materiality conclusions, target performance, major actions, financial effects, data limitations and control findings.

Document how sustainability IROs are considered in strategy, major transactions and risk management, including any trade-offs.

Separate preparation, review and approval for material judgements, estimates and public claims.

Retain evidence of challenge and resolution, not only evidence that a meeting took place.

SBM-1: strategy, business model and value chain

REQUIREMENT SBM-1 gives the context needed to understand why particular IROs are material. It covers the undertaking’s business model and value chain, its market position, significant products and services, significant markets and customer groups, significant sectors of activity and the prescribed sector-related information where applicable.

Source anchor: Revised ESRS 2, SBM-1.

The disclosure is most useful when the business model description is aligned with the perimeter and terminology used in the materiality assessment. A generic corporate profile copied from the front of the annual report will not explain the value-chain nodes, assets, customer uses or relationships through which material impacts and dependencies arise.

SBM-2: interests and views of stakeholders

REQUIREMENT SBM-2 requires a summarised description of stakeholder engagement, the key categories of stakeholders engaged with, the undertaking’s understanding of the interests and views of key affected stakeholders in relation to strategy and business model, and how the administrative, management and supervisory bodies are informed of those views.

Source anchor: Revised ESRS 2, paragraphs 21-22.

This disclosure should show influence, not merely activity. Useful evidence includes the stakeholder issue, the source of the insight, the decision or judgement affected, the owner, the date and any limitation. The detailed engagement processes for social topics are then reported under the relevant social standards when those topics are material.

SBM-3: interaction with IROs and financial effects

REQUIREMENT SBM-3 describes how material IROs interact with strategy and the business model and reports current and anticipated financial effects. The objective is connected information: users should be able to understand the pathway from a sustainability matter to the affected activity, asset, relationship, revenue stream, cost, cash flow, access to finance or cost of capital.

Source anchor: Revised ESRS 2, SBM-3.

REQUIREMENT The revised standard includes circumstances in which quantitative information on financial effects may be omitted, for example where effects are not separately identifiable, measurement uncertainty is extreme, or the undertaking lacks the skills, capabilities or resources to provide quantitative anticipated financial effects. Where quantitative information is not provided, the undertaking explains why and provides qualitative information, including links to affected financial-statement line items where relevant.

Source anchor: Revised ESRS 2, SBM-3 and related ARs.

IRO-1: describe the process and judgement

REQUIREMENT IRO-1 requires a description of the process used to identify and assess material impacts, risks and opportunities. The disclosure covers the undertaking’s own operations and upstream and downstream value chain, the methodologies, inputs, assumptions and thresholds used, the prioritisation of impacts by severity and likelihood, implemented prevention and mitigation, heightened-risk areas, use of due diligence and stakeholder or expert consultation, changes in the process and the date of the most recent update.

Source anchor: Revised ESRS 2, IRO-1.

The disclosure should be proportionate but reproducible. It does not need to publish every scoring cell, but it should explain enough for a knowledgeable reader to understand the decision logic, the main evidence sources, how thresholds were used and where judgement changed the result.

IRO-2: disclose the outcomes and map the requirements

REQUIREMENT IRO-2 requires a concise description of the material actual and potential positive and negative impacts, the material risks and opportunities, the related topics and where in the business model, own operations or value chain they arise. It also requires the basis for a conclusion that climate change is not material, if that conclusion is reached, and information about changes in the material IROs from the previous period.

Source anchor: Revised ESRS 2, IRO-2.

REQUIREMENT The undertaking also provides a list of the Disclosure Requirements with which it has complied and the locations of the disclosures. Information incorporated by reference is identified, and supplementary information is clearly distinguished from information reported to meet ESRS requirements.

Source anchor: Revised ESRS 2, IRO-2 paragraph 37 and AR 29.

The public content index is the final navigation output. Internally, teams usually need a much richer disclosure matrix connecting IROs, topics, DRs, ARs and datapoints to owners, evidence, controls, assurance and final report locations. That internal matrix is implementation practice, not a substitute for the public IRO-2 index.

REQUIREMENT Once a topic or sub-topic is material, the undertaking uses GDR-P, GDR-A, GDR-M and GDR-T to explain how it manages the related IROs through policies, actions and resources, metrics and targets. These general requirements apply both to topical-standard disclosures and to entity-specific information.

Source anchor: Revised ESRS 2, paragraphs 38-52.

REQUIREMENT Where the same policy, action, metric or target applies to several IROs or topics, the undertaking may describe it once and cross-refer, provided that the scope is clear. Where there is no policy, action or target for a material topic, the absence is disclosed. Boilerplate and excessive detail should be avoided because they can obscure material information.

Source anchor: Revised ESRS 2, paragraphs 38-40 and AR 30-33.

Figure 2. Evidence map for the ESRS 2 disclosure families. The owners shown are illustrative and should be adapted to the undertaking’s governance model.

Lock the reporting version and legal status. Record whether the undertaking is applying the legally current 2023 ESRS or, once legally available, electing early application of the 2026 Revised ESRS.

Build one reporting-perimeter and value-chain map. Use it consistently in BP, SBM, the materiality assessment, topical metrics and financial-effects analysis.

Create a governance and control map. Link responsibilities, meetings, decisions, incentives, due-diligence steps and sustainability-reporting controls to retained evidence.

Run and document the double materiality assessment. Preserve the methodology, evidence inputs, thresholds, stakeholder consultation, judgements, changes and approval.

Prepare the IRO register and map each material topic or sub-topic to GDR, topical DRs and entity-specific needs.

Draft the connected narrative. Reconcile terms, boundaries, time horizons and financial-effect pathways across BP, GOV, SBM, IRO and topical sections.

Generate the content index from the controlled disclosure matrix and perform a page-location, cross-reference, evidence and version freeze before publication.

ESRS Policies, Actions, Metrics and Targets

ESRS Disclosure Matrix and Content Index

How to Identify Impacts, Risks and Opportunities Under ESRS

Stakeholder Engagement in ESRS