ESRS E5 Resource Use and Circular Economy: Material Flows, Waste and Circularity Metrics

ESRS E5 material-flow architecture: identify physical flows, then connect policies, actions, targets, metrics and evidence.

Resource-use reporting often fails because procurement, operations, product design, logistics, waste contractors and finance hold different parts of the evidence. A recycled-content figure can cover one product family, a waste total can omit leased sites, and a circular-design claim can lack product-level support. ESRS E5 is designed to make these fragments understandable as one controlled system.

The reporting team should therefore start with the physical flow: what key materials enter the undertaking, how they are transformed, what products and services leave, what becomes waste, and where value-chain data or estimates are needed. Policies, actions, targets and financial effects are then attached to this model rather than drafted separately.

A useful flow model is sufficiently detailed to connect material impacts and dependencies to physical quantities, but it is not an unfiltered purchasing or waste ledger. Selection should follow the material IROs, quantities, strategic dependency, environmental pressure, critical-material content and decision-usefulness.

ESRS E5 material-flow architecture: identify physical flows, then connect policies, actions, targets, metrics and evidence.

For each key material, maintain a concise description of its operational role and relevance. Where the distinction between technical and biological materials matters, preserve it. If a key material contains a critical or strategic raw material under the applicable EU classification, identify that content rather than treating only the finished component as the material.

Depending on materiality and the product population, E5 product information addresses durability, repairability and the rate of products and packaging designed for recyclability. A defensible methodology defines the product population, weighting basis, period and technical test. Revenue-weighted, mass-weighted and unit-weighted results can differ materially, so the selected basis should be explained and consistently applied.

Waste reporting should preserve the original-state weight and a controlled stream taxonomy. Contractor labels such as “recovered”, “recycled”, “treated” or “zero waste to landfill” are not automatically reporting categories. Map treatment codes to preparation for reuse, recycling, other recovery, disposal, unknown destination or radioactive waste where relevant, and retain treatment evidence.

E5-1 to E5-3 use the ESRS 2 general disclosure requirements. Policies should show scope, governance and value-chain coverage. Actions should identify interventions—material substitution, design change, efficiency, reuse, repair, take-back or waste prevention—and allocated resources. Targets should define outcome, boundary, baseline, target year, metric, method, milestones and progress. If no target exists, explain how effectiveness is tracked rather than inventing an aspiration for the report.

The waste hierarchy is a useful operating logic: prevention, preparation for reuse, recycling, other recovery and disposal. It helps organise actions and targets but should not be converted into an invented ESRS score or used to hide technical, safety or financial trade-offs.

The reporting undertaking is the same as for the related financial statements, but material sustainability information can extend upstream and downstream. Procurement inflows, product metrics and waste data can therefore use different metric-specific boundaries. Each boundary should be stated and reconciled rather than implied by one generic group statement.

Where direct value-chain data cannot be obtained after reasonable efforts, reasonable and supportable estimates or proxies can be used under ESRS 1. Document the data gap, alternatives considered, proxy, assumptions, uncertainty, coverage and improvement plan. An estimate is not a failure if it is transparent; unexplained precision is.

Metric controls for ESRS E5: every figure needs a defined population, unit, boundary, method, owner and review trail.

Material E5 dependencies and changes can affect commodity costs, critical-material access, product-design compliance, extended-producer-responsibility costs, waste liabilities, useful lives, capex, revenue from repair/refurbishment and access to markets. Finance should trace the narrative to budgets, capex plans, procurement forecasts, provisions, product-development gates and ESRS 2 financial-effects analysis. The physical metrics support but do not replace that disclosure.

Confirm material E5 sub-topics and record the IROs.

Map entities, sites, products, materials, suppliers and waste streams.

Create the key-material register and controlled units/conversions.

Define product populations and durability, repairability and recyclability methods.

Create the waste-stream and destination mapping.

Link policies, actions and targets to the physical-flow model.

Reconcile metrics to sources and document estimates, limitations and comparatives.

Connect material dependencies and actions to strategy, financial planning and governance approval.

The undertaking reports controlled key-material weights and secondary-resource shares, limits designed-recyclability and repairability results to product populations with validated methods, and presents take-back outcomes separately. Unverified contractor destinations remain “unknown” until evidence is obtained. Modular-design capex and critical-material exposure are linked to product-development and financial-planning records. The approach is stronger than extrapolating unsupported percentages to the whole group.