Response to the European Sustainability Reporting Standards (ESRS) consultation

Companies drive the real-world change needed for Europe’s net zero transition. As major emitters and key enablers of decarbonisation across value chains, they must set out credible transition plans to ensure meaningful progress. However, the current draft of ESRS E1 lacks clarity on what constitutes a credible transition plan for non-financial companies, risking weaker transparency and comparability across sectors. WBA believes these plans must be credible, comparable, and aligned with harmonised international standards. 

• Credibility depends on transparency around dependencies. Companies should disclose the external conditions that their transition plans rely on, including policies, technologies and supply chain inputs, to enable policymakers and stakeholders to address these dependencies effectively.  
• Quantitative information on locked-in emissions is essential. Qualitative descriptions alone cannot capture the scale of emissions embedded in existing assets, particularly in high-emitting sectors. Quantitative disclosures enable investors to assess stranded asset risks and the pace of transition.  
• Harmonisation with international standards supports comparability. ESRS E1 should prioritise recognised international standards such as ISO 14064-1:2018 for GHG accounting, which has been adopted by the European Committee for Standardization, over private alternatives to ensure global consistency.
• Core transition plan elements must align with best practice. Credible plans should include complete GHG inventories, clear and time-bound targets, concrete decarbonisation levers and actions, governance integration, and consistency between lobbying activities and transition objectives. The essential data points for assessing transition plan credibility, as mapped against ATP-Col recommendations, are available in the appendix. Credible plans should include complete GHG inventories, clear and time-bound targets, concrete decarbonisation levers and actions, governance integration, and consistency between lobbying activities and transition objectives.

We recommend that EFRAG strengthen ESRS E1 by clarifying disclosure expectations for non-financial companies’ transition plans to ensure alignment across sectors, requiring quantitative information on locked-in emissions for high-emitting industries, and prioritising harmonised international standards such as ISO 14064-1:2018 to ensure consistent and comparable disclosures.

Financial institutions (FIs), including banks, asset managers, asset owners, and insurers are central to Europe’s economic future. Through their capital allocation activities, these actors also have the potential to catalyse – or diminish – Europe’s transition to a more sustainable and net zero economy. As such, WBA strongly supports retaining ESRS E1-1 and maintaining mandatory transition plan disclosures for financial institutions:

• FI transition plans drive systemic change. Without FI transition plans, and the commitments to transition finance contained within them, European companies will not be able to finance their own transitions. Since their introduction, the current requirements have helped put the foundations in place for this to happen – our Financial System Benchmark shows that while only a small share of global FIs currently disclose viable transition plans, signally the impact the ESRS requirements have already had. However, removing or weakening the requirements would undermine this progress and threaten the wider economy’s transition.
• The sector is prepared and supportive. Many European FIs now not only comply with ESRS E1-1 but, having invested in the skills needed to produce transition plans, are now using the model to identify and realise financing opportunities. FIs are also increasingly aligning with voluntary frameworks, including SBTi methodologies, demonstrating that the sector can both meet mandatory requirements and go beyond these. The sector is now in the process of upskilling to the point where it can not only meet the requirements, but utilise them for economic gain – removing the requirement
• FIs are now using transition plans to take the next step. FIs within scope of CSRD are now extending their transition planning expertise to integrate social and broader sustainability considerations, creating the foundation for holistic and integrated transition plans  to manage risks and seize opportunities on multiple fronts. For example, many FIs are developing transition plans focused on nature, using ESRS E1-1 as a model. Weakening ESRS E1-1 would risk dismantling this additional momentum.

For these reasons, we strongly welcome EFRAG’s position of retaining ESRS E1-1 for financial institutions and ensuring that simplification continues to support the transition to a strong and sustainable European economy.

Aggregated data cannot adequately capture the real impacts companies have on ecosystems and communities. While almost 50% of companies assessed under WBA’s Nature Benchmark disclosed information on the locations on where they conduct activities, only 10% discloses locations in or adjacent to areas important for biodiversity, and less than 3% has a management plan for such sites. Site-specific disclosures must therefore remain a core element of the ESRS.

• Current drafts replace site-specific requirements with aggregated figures. This significantly reduces visibility for investors and stakeholders into where the most critical impacts occur.
• Actual environmental impacts are inherently location dependent. For pollution (E2), water (E3) and biodiversity (E4), site-level information is essential to assess risks and dependencies at the ecosystem level.
• Stronger alignment with TNFD, the Nature Positive Initiative and GRI would streamline requirements and ensure global consistency.

We recommend reversing changes that remove site-specific reporting (for example in ESRS E2 Paragraph 10) and re-establishing location-specific disclosures as cross-cutting datapoints under ESRS 2.

Weakening requirements for value-chain reporting in ESRS E2–E5 would significantly reduce the decision-usefulness of disclosures. Many companies’ most severe environmental impacts occur in their value chains, not their direct operations, so the current draft risks obscuring the majority of these companies’ ecological footprint.

• Company disclosures regarding their value chain are lagging behind those for their own operations. For instance, while 43% of assessed companies demonstrate evidence of reducing plastic use and waste in their own operations, only 7% and 17% demonstrate actions for upstream and downstream activities, respectively.
• Omitting value-chain metrics risks reducing the usefulness of disclosures to report-users, and placing an unfair burden on those sectors with high direct impacts, rather than encouraging necessary information-sharing and collaboration along value-chains.
• This would diverge from best practice established by TNFD, which requires disclosure of asset and activity locations across operations and value chains.
• Flexibility on phased timelines may be required, but it must not prevent companies from beginning on their disclosure journeys. Transparency on value-chain impacts is essential to track progress on collapsing planetary boundaries.

We recommend reinstating robust value-chain disclosure requirements across ESRS E2, E3 and E4, with practical guidance to support implementation.

Living wages are a cornerstone of decent work and social sustainability. They ensure workers and their families can meet their basic needs, live with dignity, and contribute to resilient societies. The revised draft weakens the standard by setting a lower bar for non-EU workers. While EU companies must compare actual wages with adequate wages as defined in Directive 2022/2041, companies outside the EU are only required to compare against statutory minimum wages, as long as these are set in line with ILO wage-setting principles. This creates risks of inequality and inconsistency that undermine the usefulness of the disclosure.

• Corporate action remains limited. According to WBA’s , only 4% of the 2,000 most influential companies globally pay or have a target to pay their workers a living wage, underscoring the urgency of maintaining strong and consistent disclosure requirements.
• The revised ESRS methodology entrenches global disparities. While EU companies must compare wages against adequate wages defined under Directive 2022/2041, companies outside the EU may rely on statutory minimum wages, even though these often fall well below living wage levels. Evidence from shows that as of October 2025, only 23 out of 182 countries globally (most of them in the EU) have minimum wages equal to or higher than living wage estimates.
• This dual standard also reduces the usefulness of company disclosures for investors and stakeholders who need reliable, globally consistent data.

We recommend that the methodology should require companies to compare actual wages with living/adequate wages for all employees globally. In practice, this means no longer   on the ILO wage-setting principles that reflects a living wage, in line with ILO principles for estimating living wages. In other cases, companies should instead use credible living wage benchmarks and estimates that are consistent with those principles.

Tax transparency is a critical missing element in the current ESRS draft. The revision draft includes tax under G1 – Business Conduct, but it does not require companies to disclose corporate income tax paid in each jurisdiction where they are resident. Without this, stakeholders lack essential information to assess whether companies are contributing fairly to public finances and managing associated risks.

• Evidence from WBA’s 2024 Social Benchmark highlights the scale of the gap. Only 9% of the 2,000 most influential companies globally disclose corporate income tax paid for each jurisdiction of residence. Among EU-headquartered companies, this rises only slightly to 17%.
• In the absence of clear standards, tax reporting remains inconsistent, limiting comparability across companies and undermining accountability. Also, this prevents stakeholders from effectively assessing tax-related risks properly or verifying whether companies are contributing fairly to places where they generate revenue.
• The absence of a disclosure requirement may lead to reputational risk and reduced trust in sustainable reporting. It also limits the ability of regulators, investors, and civil society to hold companies accountable on tax practices, which in turn affects fiscal equity and public revenue,

We recommend that the ESRS include a disclosure requirement for corporate income tax paid for each tax jurisdiction where a company is resident for tax purposes, at a minimum. Ideally, this should include both the statutory tax rate vs. effective tax rate to ensure clarity, comparability, and integrity in reporting.