EFRAG Reveals XBRL Taxonomy for ESRS Set 1: A Key Step Towards Standardised ESG Reporting

EFRAG has developed a digital taxonomy for ESRS Set 1, which was adopted in July 2023 under the Delegated Act of the European Commission (EC). The primary aim of the taxonomy is to facilitate companies in preparing digital sustainability reports and to support data users, including analysts and information providers.

The taxonomy was created based on the European regulatory framework, including the Accounting Directive (2013/34/EU) and its amendments under the Corporate Sustainability Reporting Directive (CSRD).

The ESRS Set 1 taxonomy is a robust tool designed to standardise ESG reporting, ensuring consistency and comparability of data across industries. Its foundation lies in the structure and principles set by the European Financial Reporting Advisory Group (EFRAG). This taxonomy offers businesses a streamlined way to organise and disclose their sustainability data in a digital format, fostering transparency and accountability.

The XBRL Taxonomy and ESRS Integration

The taxonomy consists of a set of XBRL elements (also called concepts or tags), which can be tagged in a human-readable Inline XBRL report. Tagging allows one to identify, navigate, and extract digital disclosures (facts). In addition to the definitions of quantitative (numerical) and qualitative (narrative) XBRL elements reflecting the ESRS datapoints, the ESRS XBRL Taxonomy includes dimensions (also called axes) for disaggregating disclosures with dimension members.

Structuring of digital reports includes:

  • The taxonomy uses explicit dimensions (e.g., country, gender, GHG category) that are pre-defined lists of elements (members).
  • It also includes typed dimensions (e.g., geographical area, identifier of policy, identifier of target, operating segment) that are entity-specific and must be defined when preparing the digital reports.

Each reportable XBRL element has corresponding attributes such as period type (instant/duration) and data type (e.g., monetary, percentage, volume, GHG emissions, textblock). Furthermore, a reference to the ESRS, DR, and paragraph number, as well as any applicable references to other standards or EU legislation, is included in the reference linkbase for each element.

The XBRL element is identified by its technical name and equipped with a short description (labels). EFRAG provides the ESRS Set 1 XBRL Taxonomy labels in English only, with ESMA developing draft RTS in English to be submitted to the EC for adoption and publication.

Advantages of the XBRL Format

The choice of XBRL as the standard for digital reporting is due to its global recognition, compatibility with ESEF, and flexibility.

The format enables:

  • Data visualisation in web browsers (e.g., Chrome, Firefox).
  • Creation of user-friendly tables based on structured data.
  • Integration of sustainability reports with financial reporting.

Illustrations and Examples

As part of the publication, EFRAG has prepared:

  • Application guidance — outlining best practices for companies implementing the taxonomy.
  • Illustrative XBRL reports — example reports with test data, demonstrating the correct use of tagging.

These materials are non-binding but can be used for training and testing purposes.

Next Steps

Following the release of the taxonomy, ESMA will develop final tagging rules, which will be adopted by the European Commission. Mandatory implementation is set to commence with sustainability reports for the financial year 2024.

Conclusion

The ESRS Set 1 taxonomy marks a significant step towards the digitalisation of sustainability reporting in the EU. Its application will ensure transparency, facilitate data analysis, and align with the evolving sustainability requirements.