EFRAG Releases ESRS Set 1 XBRL Taxonomy for Digital Sustainability Reporting

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Today, EFRAG has released its XBRL Taxonomy for ESRS Set 1, which allows for the digital tagging of ESRS statements. Alongside this, EFRAG also unveiled the XBRL Taxonomy for Article 8 disclosures, as requested by the European Commission (EC). These taxonomies enable the digital markup of sustainability reports in a machine-readable XBRL format.

The European Commission tasked EFRAG with developing the digital taxonomy for the ESRS, which the EC adopted on July 31, 2023. In EFRAG's role as the EC’s technical advisor for these standards, they believe the XBRL taxonomy accurately reflects the human-readable version of ESRS Set 1. This taxonomy will serve as the foundation for the European Securities and Market Authority (ESMA) to establish Regulatory Technical Standards for tagging ESRS sustainability statements.

The XBRL taxonomies and related materials are accessible via the following links:

This document provides an overview of the design and application of the ESRS Set 1 XBRL Taxonomy, aligning with the requirements of the Corporate Sustainability Reporting Directive (CSRD) and the European Single Electronic Format (ESEF) Regulation.

Key Objectives:

  1. Digital Taxonomy Development. EFRAG's taxonomy facilitates the tagging of sustainability reports, ensuring alignment with EU legal frameworks, including the CSRD and the Accounting Directive.
  2. Machine-Readable Format. The use of XBRL (eXtensible Business Reporting Language) ensures that reports are both human- and machine-readable, enhancing accessibility and comparison of sustainability data across entities.
  3. Support for Stakeholders. The taxonomy aims to assist preparers and users in structuring and interpreting sustainability data efficiently.

Design and Methodology

The taxonomy aligns closely with the structure of the European Sustainability Reporting Standards (ESRS) Set 1, ensuring consistency between general requirements and sector-specific disclosure obligations. This approach allows for a standardised yet adaptable reporting framework that can cater to various industries while maintaining uniformity across key areas.

In developing the taxonomy, EFRAG has actively incorporated feedback received during public consultations and outreach efforts. This iterative process has allowed for adjustments and refinements to better meet the needs of preparers and stakeholders while enhancing clarity and usability.

The final tagging rules and methodologies will be determined by the European Securities and Markets Authority. ESMA’s role will involve providing clear and detailed guidelines to ensure that preparers can implement the taxonomy effectively and in a way that aligns with regulatory requirements.

Implementation and Phasing

The introduction of the digital reporting framework will follow a phased implementation approach, providing stakeholders with sufficient time to adapt and integrate the new requirements effectively. This gradual rollout aims to minimise disruption while ensuring a smooth transition to the updated reporting system.

To further support this process, a field test using real-life sustainability statements is planned for 2025 and 2026. The objective of this test is to identify any practical challenges that preparers might encounter and refine the taxonomy accordingly. By conducting these real-world trials, stakeholders can offer valuable insights that will help optimise the framework before it becomes fully operational.

Implications for Stakeholders:

  • Preparers. The taxonomy provides a structured framework for preparing sustainability reports, facilitating compliance with regulatory requirements.
  • Users. Enhanced comparability and accessibility of sustainability data support informed decision-making by analysts and data providers.
  • Regulators. The taxonomy serves as a foundational tool for standardised digital reporting under the CSRD.

Technical Features

The taxonomy is designed to be fully compatible with Inline XBRL, ensuring seamless integration with existing reporting systems and facilitating a smooth transition for preparers. This compatibility allows for efficient and standardised digital reporting across various platforms.

In addition, the taxonomy supports both narrative and numerical tagging, enabling it to accommodate a wide range of sustainability disclosures. This flexibility ensures that both qualitative and quantitative information can be accurately reported, enhancing the clarity and completeness of sustainability statements.

Conclusion

The ESRS Set 1 XBRL Taxonomy represents a significant step towards standardised and digital sustainability reporting in the EU. Its phased implementation, coupled with ongoing stakeholder engagement, aims to ensure a smooth transition for all entities involved.