ESRS E5 Circular Economy

The European Sustainability Reporting Standard ESRS E5 "Resource Use and Circular Economy" is one of the topical environmental standards under the Corporate Sustainability Reporting Directive (CSRD). It addresses how a company uses resources, the extent to which it moves away from the linear "take–make–dispose" model toward circular business models, and the impacts, risks and opportunities that arise across its own operations and its upstream and downstream value chain. The aim is to make the transition to a circular economy transparent and to demonstrate the move away from the overuse of natural resources.

ESRS E5 comprises several disclosure requirements: policies (E5-1), actions and resources (E5-2), and targets related to resource use and circular economy (E5-3). These are complemented by quantitative metrics on resource inflows (E5-4), on resource outflows including products and materials (E5-5), and on anticipated financial effects (E5-6). Among other things, companies are expected to report the total weight of materials used, the share of biological and renewable raw materials, the share of secondary or recycled material, the durability, reparability and recyclability of products, as well as waste generation, split by hazardous and non-hazardous waste and by recovery and disposal routes.

Whether and to what extent ESRS E5 is reportable follows from the double materiality assessment: only material topics must be fully disclosed against the relevant data points. For resource-intensive sectors such as manufacturing, construction, packaging, textiles or electronics, circular economy is regularly material. ESRS E5 is also closely linked to the EU Taxonomy (environmental objective "transition to a circular economy"), the EU Circular Economy Action Plan and the Ecodesign Regulation. A reliable data foundation on material flows is therefore decisive not only for CSRD reporting but also for Taxonomy alignment and regulatory product requirements.