CSRD ESRS E1 Climate Disclosure: What Finance Teams Must Report on GHG Emissions

CSRD ESRS E1: What It Is and Why It Matters for Finance Teams

The Corporate Sustainability Reporting Directive (CSRD) is the EU law requiring companies to disclose sustainability information under European Sustainability Reporting Standards (ESRS). ESRS E1 — Climate Change — is the standard covering greenhouse gas emissions, climate risk, and transition planning. It is mandatory for companies meeting CSRD thresholds, and the climate standard is almost universally material — meaning virtually every company subject to CSRD will need to produce a full ESRS E1 disclosure.

For finance teams and corporate sustainability officers, ESRS E1 is significant in three ways. First, the GHG reporting requirements are more detailed and more prescriptive than anything previously required (NFRD, voluntary TCFD). Second, the disclosure must be audited (limited assurance initially, moving to reasonable assurance by 2028). Third, the required financial effects disclosure — quantifying how climate risks affect the company's financial position — directly implicates the CFO and finance team in a way that ESG reporting historically has not.

ClaudeFinanceLab's ESG & Sustainable Finance templates include CSRD ESRS E1 Disclosure Drafters for GHG data narratives, risk section language, transition plan documentation, and the materiality assessment process.

ESRS E1 Structure: What You Must Disclose

ESRS E1 contains the following disclosure requirements (DRs), each with specific datapoints (DPs) that must be reported if E1 is material:

• E1-1: Transition plan for climate change mitigation
• E1-2: Policies related to climate change mitigation and adaptation
• E1-3: Actions and resources in relation to climate change policies
• E1-4: Targets related to climate change mitigation and adaptation
• E1-5: Energy consumption and mix
• E1-6: Gross Scope 1, 2, and 3 GHG emissions
• E1-7: GHG removals and carbon credits
• E1-8: Internal carbon pricing
• E1-9: Potential financial effects from material physical and transition risks and climate-related opportunities

• "CSRD ESRS E1 materiality assessment: We are a €1.2B revenue industrial manufacturing company with operations in Germany, Poland, and Czechia. We are subject to CSRD from FY2025. Perform a double materiality assessment for ESRS E1: (1) Impact materiality — our GHG emissions: Scope 1 24,800 tCO2e, Scope 2 (market-based) 8,200 tCO2e, Scope 3 estimated 420,000 tCO2e primarily from Category 1 (steel, chemicals, energy). Do these emissions represent a material impact? (2) Financial materiality — we have 3 major manufacturing plants in flood-prone areas (IPCC RCP4.5 flood risk), carbon-intensive products facing potential CBAM exposure, and a key supplier in a region with extreme heat risk. Assess: are climate risks financially material? (3) Conclusion: which ESRS E1 sub-topics require full disclosure?"
• "ESRS E1-4 climate target disclosure: Our company has set the following climate targets: (1) Scope 1+2 (market-based): 50% absolute reduction by 2030 vs 2022 baseline of 33,000 tCO2e — target of 16,500 tCO2e by 2030. (2) Scope 3 Category 1: 30% reduction in emissions intensity (tCO2e / € purchase spend) by 2030. (3) Net zero by 2050 across all scopes. These targets are validated by SBTi (1.5°C-aligned for Scope 1+2, well-below 2°C for Scope 3). Draft the ESRS E1-4 target disclosure covering: target type (absolute/intensity), scope, base year, target year, 2030 milestone, SBTi validation status, and the methodology for scope 3 intensity target."

ESRS E1-6: GHG Emissions Disclosure Requirements

E1-6 is the core emissions reporting requirement. It requires disclosure of gross GHG emissions (before any carbon removals or offsets) under the GHG Protocol Corporate Standard. Key requirements include: Scope 1 broken down by regulated EU ETS activities and non-ETS; Scope 2 reported as both location-based and market-based; Scope 3 all 15 categories assessed for materiality with material categories disclosed; biogenic CO2 fluxes (from land use) reported separately; and a GHG intensity metric (tCO2e per € net revenue and per applicable sector-specific metric).

• "ESRS E1-6 GHG emissions table: Prepare the E1-6 disclosure table for our company. 2025 data: Scope 1: Total 24,800 tCO2e — EU ETS regulated activities (combustion in installation >20MW) 18,400 tCO2e, non-ETS activities 6,400 tCO2e. Scope 2 location-based: 11,200 tCO2e; market-based: 8,200 tCO2e (3,000 tCO2e reduction from renewable energy GO certificates). Scope 3: Category 1 (purchased goods) 285,000 tCO2e spend-based, Category 3 (fuel and energy) 12,400 tCO2e, Category 4 (upstream transport) 28,400 tCO2e, Category 11 (use of sold products) 96,000 tCO2e, Category 12 (end of life) 8,200 tCO2e — other categories assessed as not material. Total GHG emissions including material Scope 3: 430,000+ tCO2e. Net revenue 2025: €1.18B. Compute: GHG intensity per € revenue, confirm table format per ESRS E1-6 Appendix A datapoints."
• "ESRS E1-6 Scope 3 materiality assessment documentation: We need to document why we include categories 1, 3, 4, 11, and 12 as material and exclude the others. For each of the 15 GHG Protocol Scope 3 categories: classify as material (included in E1-6 disclosure), not material with brief rationale, or not applicable. Our business: industrial manufacturer of packaging machinery, €1.2B revenue, sell into food & beverage sector. Upstream: mostly steel components and electronics purchased globally. Downstream: products used by customers for 15-20 years, product disposal at end of life. No upstream or downstream leased assets. No franchises. No investments material enough for Category 15 threshold."
• "GHG intensity calculation for ESRS E1-6: We are required to disclose GHG intensity under E1-6 AR 43: (1) tCO2e per € net revenue (Scope 1+2 market-based, and total including Scope 3), (2) tCO2e per sector-specific metric — for an industrial company, options include per tonne of production output or per MWh of energy consumed. Our data: Total Scope 1+2 market-based: 33,000 tCO2e. Total Scope 1+2+3 material categories: 430,000 tCO2e. Net revenue: €1,180M. Production output: 24,500 tonnes of finished machinery. Energy consumption: 185,000 MWh. Calculate all four intensity metrics and indicate which is most meaningful for our sector and ESRS comparability purposes."

ESRS E1-5: Energy Disclosure

E1-5 requires disclosure of total energy consumption and the renewable vs. non-renewable mix. This feeds into the GHG calculation and is also used by EU taxonomy assessments (substantial contribution to climate change mitigation criterion often references energy efficiency metrics). The required breakdown includes: total energy consumption from fossil sources, total from renewable sources, and self-generated vs. purchased breakdown where relevant.

• "ESRS E1-5 energy disclosure: Our 2025 energy data across all facilities (Scope 1 + Scope 2 energy): Natural gas (Scope 1 combustion): 142,000 MWh. Diesel for generators (Scope 1): 8,400 MWh. Purchased grid electricity (Scope 2 location): 95,000 MWh. Purchased renewable electricity via GO certificates (market-based, zero-carbon): 32,000 MWh (already included in total purchased electricity). On-site solar PV generation (renewable, self-generated): 4,200 MWh (some used on-site, some exported). Exported electricity: 800 MWh. Prepare the ESRS E1-5 energy table: (1) total energy consumption from fossil fuels (natural gas + diesel), (2) total renewable energy (GO-backed purchases + on-site solar — exports), (3) total energy consumption, (4) percentage renewable."

ESRS E1-9: Physical and Transition Risk Financial Effects

This is the disclosure that most directly implicates the finance team. E1-9 requires quantification of the potential financial effects of material physical climate risks and transition risks. It is forward-looking: companies must disclose the financial effects they expect from climate risks over the short (0-3 years), medium (3-10 years), and long term (10+ years). The TCFD recommendations inform this section, but ESRS E1-9 requires more specific quantification than TCFD typically produces.

• "ESRS E1-9 physical risk financial effects: We have identified 2 material physical risks: (1) Chronic flooding risk at our Munich facility (2,800 employees, €380M revenue contribution). IPCC RCP4.5 scenario: 60% increase in 100-year flood probability by 2040. Asset replacement value: €180M. Insurance covers 80% of asset value with €2M deductible. (2) Extreme heat operational risk at our Czech facility: RCP4.5 projects 15+ days above 35°C by 2035 vs current 3 days — requiring cooling capex and reducing worker productivity by estimated 8-12% in affected summer periods, Czech EBITDA contribution €45M. Quantify the financial effect scenarios for E1-9: (1) Munich flood expected annual loss (using probability × uninsured loss), (2) Czech heat productivity impact (3 scenarios: low/base/high cooling effectiveness), (3) draft the E1-9 disclosure paragraph covering these two risks."
• "ESRS E1-9 transition risk financial effects: We manufacture packaging machinery using significant steel inputs. Key transition risks: (1) EU Carbon Border Adjustment Mechanism (CBAM) — we import steel from non-EU suppliers. Our annual steel purchase: 8,400 tonnes from Turkish and Indian mills (avg embodied carbon intensity ~1.9 tCO2e/tonne). CBAM phase-in: 25% 2026, 50% 2027, 75% 2028, 100% 2029. EU ETS carbon price assumption (base case €75/tonne for 2026, €95 by 2029). (2) Customer carbon compliance — 3 of our top 10 customers (representing €210M revenue) have committed to net-zero supply chains by 2030 and have introduced supplier carbon scorecards that could affect purchasing decisions. Calculate: (1) annual CBAM cost at 100% phase-in under base/high carbon price scenarios, (2) revenue at risk from customer supply chain requirements, (3) draft the transition risk financial effects disclosure for E1-9."

ESRS E1-1: Transition Plan Disclosure

The transition plan is a forward-looking narrative that connects a company's emissions reduction targets to the specific actions, investments, and business model changes required to achieve them. ESRS E1-1 requires more than a high-level commitment — it asks for the locked-in emissions from existing assets (stranded asset risk), the financial investments planned for decarbonization, and how the plan relates to a 1.5°C pathway. Many companies are producing their first formal transition plan in order to comply with ESRS E1-1.

• "ESRS E1-1 transition plan draft: Our targets: 50% Scope 1+2 reduction by 2030 (base year 2022: 33,000 tCO2e), net-zero by 2050. Key decarbonization actions with planned capex: (1) On-site renewable energy (solar PV at 3 plants): €4.2M capex 2025-2027, expected Scope 2 reduction 12,000 tCO2e by 2027. (2) Process heat electrification (replacing gas burners in 2 coating lines): €8.1M capex 2026-2028, expected Scope 1 reduction 6,400 tCO2e by 2028. (3) Fleet electrification (32 company vehicles): €1.8M 2026-2028, Scope 1 reduction 340 tCO2e. (4) Supplier engagement program for Category 1 Scope 3 — targeting 30% intensity reduction by 2030. Locked-in emissions from existing gas infrastructure: gas equipment depreciates over 15-20 years, creating lock-in risk if gas is not phased out by 2040. Draft the ESRS E1-1 transition plan disclosure covering targets, actions, capex, locked-in emissions, and Paris alignment assessment."

Where to Start

The practical starting point for ESRS E1 compliance is the double materiality assessment — this determines which sub-topics require full disclosure and scopes the work. For most industrial companies, ESRS E1 is fully material across all sub-topics (E1-1 through E1-9). Once materiality is confirmed, the GHG inventory under E1-6 is usually the most time-intensive component — particularly the Scope 3 assessment. ClaudeFinanceLab's ESG & Sustainable Finance templates include CSRD Materiality Assessment Assistant, ESRS E1-6 Disclosure Drafter, and Climate Risk Financial Effects Quantifier. See also Scope 1, 2, and 3 Emissions Calculation Guide and GHG Emissions Calculator with Claude AI.

Frequently Asked Questions

Can we use the sector-specific ESRS for energy or transport instead of ESRS E1?

No — the sector-specific ESRS (which EFRAG is still developing as of 2026) supplement the cross-sector standards rather than replacing them. All companies subject to CSRD must apply the cross-sector ESRS including ESRS E1 where climate is material. The sector-specific ESRS will add additional disclosure requirements for specific industries (e.g., additional scope 3 categories for oil and gas, specific intensity metrics for cement) but ESRS E1 applies universally.

Does CSRD ESRS E1 require limited assurance or reasonable assurance?

The initial requirement under CSRD is limited assurance — the auditor confirms there is nothing that causes them to believe the sustainability information is materially misstated (a negative assurance standard), rather than positively confirming accuracy. The European Commission is required to adopt standards for reasonable assurance by October 2026, with a target of full reasonable assurance being required by 2028. For Wave 1 companies (FY2024 reports), limited assurance is required. For finance teams, this distinction matters: limited assurance is less burdensome than reasonable assurance, but still requires that the disclosure process and underlying data are documentable and defensible to an auditor.

How do we handle the ESRS E1 base year if we have acquired or divested companies?

ESRS E1 follows the GHG Protocol approach to base year recalculations. If a structural change (acquisition or divestiture) exceeds your recalculation significance threshold (typically 5% of base year emissions), you must restate the base year to reflect the current boundary. The restated base year ensures that progress against targets reflects actual decarbonization rather than portfolio changes. Smaller acquisitions or divestitures below the threshold do not require restatement. For companies with active M&A programs, maintaining a documented base year restatement policy is recommended — auditors will review this under CSRD.

Is internal carbon pricing required under ESRS E1?

E1-8 requires disclosure of whether the company uses an internal carbon price — if so, the price level, which emissions are covered, and how it is applied in decision-making. E1-8 does not require companies to implement internal carbon pricing — the disclosure is required only if an internal carbon price is used. However, the transition plan disclosure (E1-1) should explain how carbon costs are factored into investment decisions, and increasingly, companies are finding that an explicit internal carbon price (typically €50-150/tCO2e for European industrials) makes that explanation more concrete and credible.