ESRS 2 General Disclosures – requirements explained simply

What ESRS 2 covers

ESRS 2 is the mandatory part of every ESRS sustainability statement and, alongside ESRS 1, the second “cross-cutting” standard. It covers the four reporting areas at a general level: governance, strategy including financial effects, management of IROs (impacts, risks and opportunities) including policies and actions, and metrics and targets. The topical standards (E1 to G1) add concrete disclosures. The rules on materiality, reporting boundary and structure sit in ESRS 1.

The disclosure requirements at a glance

ESRS 2 contains 11 disclosure requirements:

• BP-1 Basis for preparation: consolidated or individual, deviations of the reporting boundary from the consolidated financial statements with reasons, extent of the value chain, the statement that the report is prepared in accordance with the ESRS, and every relief used
• BP-2 Disclosures in relation to transitional provisions: what is deferred and what must still be disclosed
• GOV-1 Role of the administrative, management and supervisory bodies
• GOV-2 Sustainability in incentive schemes for members of those bodies
• GOV-3 Statement on due diligence
• GOV-4 Risk management and internal controls over sustainability reporting
• SBM-1 Strategy, business model and value chain
• SBM-2 Interests and views of stakeholders
• SBM-3 Interaction of material impacts, risks and opportunities with strategy and business model, including financial effects
• IRO-1 Process to identify and assess material impacts, risks and opportunities and the material information to be reported
• IRO-2 Material impacts, risks and opportunities and the disclosure requirements included in the report

In addition come 4 general disclosure requirements for policies, actions, metrics and targets (GDR), which apply to every material topic (see section 06).

Governance: GOV-1 to GOV-4

This is where it shows whether sustainability is anchored in management.

• GOV-1: composition of the management and supervisory boards (or advisory board), their expertise and how it is ensured that this expertise is available or built up, responsible persons or committees, oversight of targets, and how the management and supervisory boards (or advisory board) take IROs into account in strategy, major decisions and risk management, including trade-offs
• GOV-2: how the remuneration of the management and supervisory boards (or advisory board) is linked to sustainability topics: features of the incentive schemes, targets or metrics used, and the share of variable pay that depends on them. If there are no such incentive schemes, the disclosure is omitted
• GOV-3: where in the statement the main steps of sustainability due diligence appear. This means the process of identifying, preventing, mitigating and remediating negative impacts on people and the environment, not financial or legal due diligence. A table with cross-references is enough
• GOV-4: scope and features of risk management and internal controls over reporting. Completeness and integrity of data and accuracy of estimates belong here

Strategy: SBM-1 to SBM-3

This is where the business model is linked to the material topics.

• SBM-1: business model, value chain and the company's own position in it, significant product groups, markets and sectors. Significant means more than 10% of revenue or connected with material impacts. In addition, with the related revenue, whether the company is active in four areas: fossil fuels, production of chemicals in NACE group 20.2 (pesticides and other agrochemical products), prohibited weapons, and cultivation and production of tobacco
• SBM-2: the key stakeholders, what they expect, and how the management and supervisory boards (or advisory board) learn about it
• SBM-3: how material impacts arise from strategy and business model, how risks and opportunities have affected the financial position, for which risks and opportunities there is a significant risk of a material adjustment to carrying amounts next year, and what development is expected. In addition, a qualitative description of the resilience of the strategy

Materiality process: IRO-1 and IRO-2

IRO-1 describes how the company arrived at its material topics and information. IRO-2 shows the result.

• IRO-1: process and decision steps, methods, assumptions, criteria or thresholds, how impacts were assessed by severity and likelihood and areas of heightened risk were considered, integration of due diligence and stakeholders, changes since the prior year, and date of the last update. The company's own procedure is required, not generic standard text
• IRO-2: description of the material IROs, changes since the prior year, a list of the disclosure requirements met, for example as a content index, a list of additional information, and a table of datapoints from other EU legislation in which non-material datapoints are marked “not material”
• Climate: if climate change is rated as not material, the reasons must be given; all E1 disclosures may then be omitted
• Forced and child labour: if own operations or the value chain are connected to material negative impacts, the report states the heightened risk by type of operation or by country or region

Policies, actions, metrics and targets

4 general disclosure requirements (GDR) apply to every material topic, including entity-specific ones. The topical standards refer to them.

• GDR-P Policies: content, objective, scope and reference to third-party standards, plus the statement whether an overarching human rights policy exists under the UN Guiding Principles, the ILO Declaration and the OECD Guidelines
• GDR-A Actions and resources: what has been done and what is planned, with time frame and expected outcome. For significant financial resources, the amount in the reporting year and a range for the future
• GDR-M Metrics: unit, calculation method, sources, estimates, assumptions, data quality in the value chain and change from the prior year
• GDR-T Targets: measurable, time-bound and outcome-oriented, with base year, target year, milestones and assumptions, whether the target is required by law and, for environmental targets, whether it rests on conclusive scientific evidence. Without measurable targets, an explanation is required whether and how effectiveness is still tracked

If there are no policies, actions or targets for a material topic, this must be stated openly.

Transitional provisions in ESRS 2: BP-2

Companies that defer whole topical standards under the transitional provisions in ESRS 1 (in the first years E4, S2, S3, and S4, for certain first-wave companies even all of them in 2026) must still state in BP-2 whether these topics are material. For each material deferred topic, a short description is required of how business model and strategy take the impacts into account, plus targets and progress, policies, actions and metrics. For the other transitional provisions, such as anticipated financial effects, stating the omission is enough.

Where the data sits in the company

The ESRS prescribe no behaviour, except for reporting itself; duties under other laws remain. They require a description of the situation today and of the plans adopted. Almost all disclosures therefore come from existing documents and processes:

• Articles of association and rules of procedure of the management and supervisory boards (or advisory board) provide composition and responsibilities
• Internal rules and policies, for example on remuneration, show incentive schemes and existing policies
• Management and the strategy department provide business model, value chain and sectors
• Finance provides revenue and the amounts for financial effects
• Risk management and the internal control system provide risks and opportunities as well as the controls over reporting
• Materiality assessment and stakeholder dialogue are the basis for IRO-1, IRO-2 and SBM-2
• Compliance knows the actions and the due diligence steps

Relationship with the VS standard

The VS standard (Regulation (EU) 2026/1560) is the voluntary standard for companies not subject to the CSRD. It has no materiality assessment. Its Basic Module (B1–B11) starts with “B1 Basis for preparation”, which corresponds to BP-1. The comprehensive module also covers business model and strategy with C1, similar to SBM-1. Disclosures such as IRO-1 or SBM-3 do not exist in the VS standard.

Typical mistakes

These points come up most often in practice:

• Treating ESRS 2 as a mere introduction and filling it late. The disclosures need input from management, finance, risk management and compliance
• Not considering the transitional provisions from the start. Checking only at the end what may be deferred means collecting data that is not yet needed and forgetting the BP-2 disclosures
• Rebuilding governance in parallel to look better. ESRS 2 describes the situation as it is. Changing responsibilities, incentive schemes or policies are governance decisions that take time. They do not belong in the reporting process; missing policies or targets are named openly
• Setting no clear responsibilities and controls for reporting. The result is late corrections and errors in the comparative figures