ESRS E3 Water – requirements explained simply

01

What ESRS E3 is about

ESRS E3 is guided by the Water Framework Directive and the EU Water Resilience Strategy and takes account of existing law such as the Industrial Emissions Directive, the Drinking Water Directive and EMAS. The disclosures should show users of the sustainability statement how much water the company withdraws, consumes and discharges, where this happens and how it manages water, especially in areas with water stress. The standard covers not only freshwater but all water, including brackish water, seawater and third-party water.

02

The 4 disclosure requirements at a glance

The disclosure requirements show how the company manages water (E3-1 to E3-3) and how much it uses (E3-4). Areas with water stress run through all four.

• E3-1 Policies: the policies on water use. If sites in areas with water stress are not covered by any policy, this must be disclosed
• E3-2 Actions and resources: the key actions, implemented and planned, and the resources allocated to them, separately for areas with water stress
• E3-3 Targets: the targets the company has set on water use, where relevant tied to specific areas, such as areas with water stress
• E3-4 Water metrics: Six metrics for own operations, from withdrawal to water stored (see next section)

03

The six water metrics

The metrics apply to own operations and are reported in cubic metres.

• Withdrawal: all water the company draws from all sources, whether from the public network, from its own wells or from waterbodies
• Discharge: all water the company releases again, into surface water, into groundwater or to third parties such as the sewer system
• Consumption: water that is withdrawn and not released again, for example because it evaporates or goes into products. It can be measured, estimated or calculated as withdrawal minus discharge. Consumption in areas with water stress must be disclosed in addition
• Water recycled and reused: water used more than once before discharge, in the same process or elsewhere in the company, which lowers demand
• Water stored: water in storage facilities or reservoirs

If the material water consumption lies in the value chain, for example in growing agricultural raw materials, these metrics do not cover it. The value chain and the policies, actions and targets for it then belong in the disclosures, to the extent needed for an understanding. Where the metrics are not sufficient, entity-specific metrics must be added.

04

Areas with water stress

Water stress describes the pressure on a river basin: how much water is available, in what quality and who has access to it.

• Assessment: the standard names global indicators with thresholds, such as baseline water stress at “high” or above (40–80 %), water depletion and the Water Exploitation Index plus (WEI+) at 40 % or above. They capture only quantity; a full assessment also considers quality and access
• Level: the assessment is normally made at least per river basin. Tailored methods that use local knowledge are allowed
• Boundary: water stress is only one part of physical water-related risks; floods and drought, for example, come on top. A full picture also includes regulatory and reputational risks. Physical risks caused or exacerbated by climate change, including water stress, are covered by E1

05

Phase-in periods

Unlike E4 or the social standards S2 to S4, E3 cannot be deferred as a whole, and it has no phase-in periods of its own. Only the general reliefs apply, for example for anticipated financial effects from water-related risks. A special rule applies to financial year 2026: wave-one companies that, at the balance sheet date, do not exceed at least one of the two thresholds (EUR 450 million net turnover or an average of 1,000 employees) may omit all topical standards if they already apply the new set. They must, however, state whether water is material. If it is, they must briefly describe how their business model and strategy take account of the impacts, their targets and progress, policies and actions, and disclose relevant metrics.

06

Typical data sources in the company

Most of the data already exists, just in different places:

• Utility invoices and water meters per site provide the withdrawal from the public network
• Production and engineering know the cooling, process and cleaning water, recirculation and storage
• Environmental management systems such as ISO 14001 or EMAS can provide water data, targets and actions
• Freely available tools such as the World Resources Institute’s Aqueduct Water Risk Atlas show whether sites lie in areas with water stress

07

Link to the VS standard

The VS standard requires total water withdrawal in its Basic Module, including withdrawal from the public network. Companies with processes that use a lot of water, such as drying, energy production or irrigation, also report water consumption, separately for sites in areas with water stress.

08

Typical mistakes

These points often come up in practice:

• Recording water only at company level. E3 needs the link to site, river basin and water stress
• Overlooking water consumption in the value chain, because the metrics cover only own operations
• Underestimating the effort of data collection. With many sites, building water data per site and the water-stress assessment often takes several months