ESRS E1 Climate Change Disclosures: The Complete Guide to CSRD Climate Reporting in 2026

If you are preparing your first CSRD report, ESRS E1 (Climate Change) will consume more of your project than any other topical standard — and most likely more than all the others combined. It is the most data-intensive, the most scrutinised by auditors and investors, and the one where the gap between a credible disclosure and a marketing-flavoured narrative is most visible.

It is also the one standard that almost every reporter has to address. Under the revised ESRS adopted through the Omnibus Simplification Package, climate is no longer subject to a strict rebuttable presumption of materiality, but the documentation burden for declaring it not material is so heavy that nearly every company concludes E1 is material and reports it.

This guide walks through what ESRS E1 actually requires, disclosure by disclosure, and where companies most often need outside help. If you want a broader frame, start with our overview of the 12 ESRS standards and then come back here.

What ESRS E1 Covers — And What It Doesn't

ESRS E1 is the climate-change topical standard within the European Sustainability Reporting Standards. It deals with three intertwined questions:

1. How is the company affecting the climate? — impact materiality, primarily through greenhouse-gas emissions
2. How is the climate affecting the company? — financial materiality, primarily through physical and transition risks
3. What is the company doing about both? — policies, actions, targets, and the transition plan

E1 is built on top of the GHG Protocol for emissions accounting and on TCFD-aligned thinking for climate risk and transition planning. If your team has done CDP, SBTi, or TCFD reporting before, much of the underlying methodology is familiar. What changes under E1 is the formality, the connection to the financial statements, the assurance scrutiny, and the digital tagging.

E1 does not cover broader environmental topics like pollution (E2), water (E3), biodiversity (E4), or circular economy (E5). It also does not, on its own, cover the social or governance implications of the climate transition — those flow into ESRS S1–S4 and G1.

The Nine Disclosure Requirements at a Glance

ESRS E1 is structured around nine specific disclosure requirements, layered on top of the cross-cutting governance, strategy, and impact/risk/opportunity (IRO) management disclosures from ESRS 2. Here is the full set:

Disclosure	Topic	What it covers
E1-1	Transition plan	Decarbonisation roadmap and Paris-alignment
E1-2	Policies	Climate-related policies and management approach
E1-3	Actions and resources	Specific decarbonisation actions and the capital behind them
E1-4	Targets	Quantified GHG reduction and energy targets
E1-5	Energy consumption and mix	Total energy use by source, including renewables
E1-6	Gross Scope 1, 2, 3 emissions and total	The headline GHG inventory
E1-7	Removals and mitigation projects	Carbon removals, offsets and internal sequestration
E1-8	Internal carbon pricing	If applied, scope, price, and decision use
E1-9	Anticipated financial effects	Quantified climate risks and opportunities

E1-1 through E1-4 are about your strategy and management response. E1-5 through E1-7 are the quantitative climate footprint. E1-8 and E1-9 connect climate to the financial reporting and capital allocation processes. The architecture is deliberately progressive: each disclosure builds on the previous one, and weaknesses early in the chain (a poor inventory) compound into weaknesses later (a transition plan you cannot evidence).

E1-1: The Transition Plan

This is the disclosure most reporters underestimate. A climate transition plan under E1-1 is not a marketing document — it is an auditable account of how your business will operate in a 1.5°C-aligned economy.

E1-1 expects you to disclose:

• Decarbonisation levers — the specific actions, technologies, and operational shifts that will reduce emissions across Scope 1, 2 and 3
• Compatibility with limiting global warming to 1.5°C — referencing scenarios such as IEA Net Zero Emissions or sector-specific pathways
• Locked-in emissions — emissions you cannot avoid in the short term because of existing assets or long-term contracts
• Investment and funding plans — capex and opex aligned with the transition, including the share of EU Taxonomy-aligned activities
• Whether the company is excluded from the EU Paris-aligned benchmarks — relevant for fossil-fuel-related sectors
• Governance arrangements — how the board oversees the plan

We cover the practical mechanics in detail in our guide to credible CSRD transition plans. The key insight: a transition plan is only as credible as the actions and capital behind it. Auditors will trace each lever back to a budget line, a project owner, and a delivery milestone.

If your company has no transition plan, E1-1 still requires you to disclose that fact and indicate whether and when one will be adopted. Silence is not an option.

E1-2 and E1-3: Policies, Actions, and Resources

E1-2 covers the climate policies the company has adopted — typically a climate-change policy, an energy policy, and any sector-specific guardrails (a no-deforestation commitment, a fossil-fuel financing policy for banks, a fleet electrification policy for logistics).

For each policy, you must disclose:

• Its scope and the parts of the value chain it covers
• The most senior level that approved it
• The third-party standards it references (SBTi, TCFD, GHG Protocol, IEA scenarios)
• How stakeholders were involved in shaping it

E1-3 then asks for the actions that operationalise those policies, alongside the resources allocated. Generic statements like "we are investing in renewables" do not satisfy E1-3. You need specific, time-bound actions with quantified outcomes — for example:

"In FY2026, the company commissioned 14 MWp of on-site solar PV across three manufacturing sites, expected to reduce Scope 2 market-based emissions by approximately 9,200 tCO₂e annually. Capital investment: €11.3M, funded from operating cash flow."

That sentence ties E1-3 to E1-6 (the resulting emissions reduction) and to your financial statements (the capex line). This kind of cross-referencing is what assurance providers expect — see our CSRD assurance and audit guide for what auditors will test.

E1-4: Targets That Stand Up to Scrutiny

E1-4 requires disclosure of GHG emission-reduction targets and other energy-related targets. The minimum is one absolute Scope 1 + 2 target. In practice, most reporters disclose:

• An absolute target for Scope 1 + 2
• An absolute target for total Scope 3, or category-specific targets for the most material categories
• Interim milestones, typically at 2030 and 2040
• A 2050 net-zero ambition

For each target, E1-4 expects you to disclose:

• The base year and base year value
• The scope of the target (entity-level, geography, value chain coverage)
• Whether and how the target is science-based (SBTi-validated, IEA 1.5°C-aligned, sector pathway)
• The role of carbon removals and offsets (which must be reported separately, not netted into the target)
• The methodology used to derive the target and any sensitivity assumptions

A common failure pattern: targets are set with confidence at the 10-year horizon but with no underlying decarbonisation pathway. Auditors will ask the obvious follow-up — what specific levers add up to that target? — and link the answer back to your E1-3 actions and E1-1 transition plan.

E1-5: Energy Consumption and Mix

E1-5 is the most rules-based disclosure in E1. You must report total energy consumption disaggregated by:

• Fossil sources (broken down into coal, oil, natural gas, other)
• Nuclear sources
• Renewable sources (own-produced renewable energy, purchased renewable energy, self-generated non-fuel renewable energy)

You must also disclose total energy intensity, calculated as energy consumption per unit of net revenue from "high-climate-impact sectors" — defined in line with the EU Taxonomy and the NACE sector classification.

This disclosure is rarely conceptually hard, but practically tedious. Energy data lives in dozens of utility invoices, sub-meter readings, fuel cards, and supplier reports. The work of E1-5 is data engineering — see our CSRD data collection and gap analysis guide for how to build a controllable, repeatable pipeline.

E1-6: The GHG Inventory

E1-6 is the headline number — your total greenhouse-gas footprint, disaggregated into Scope 1, Scope 2 (location-based and market-based), and Scope 3. Then totalled into a single "gross total" figure with and without removals.

The technical requirements are stricter than what most companies have produced for voluntary reporting:

• Scope 2 must be reported both location-based and market-based, with the dual reporting reconciled
• Scope 3 must cover all 15 GHG Protocol categories, with materiality reasoning provided for any excluded categories
• Biogenic emissions are reported separately, not within the gross total
• GWP factors must come from the most recent IPCC Assessment Report (AR6 as of 2026)
• Restatements require a clear bridge between prior and current figures

Scope 3 deserves special attention. The revised ESRS introduced a value-chain cap that limits when companies must collect primary data from small upstream and downstream partners. The cap eases data-collection pressure but does not eliminate the obligation to disclose, with appropriate estimation methods, the material Scope 3 categories. Our Scope 3 emissions under the CSRD guide breaks this down.

E1-7: Removals and Mitigation Projects

E1-7 is where many reporters get caught between marketing instincts and audit reality. You must disclose:

• GHG removals and storage from your own operations or upstream value chain
• Carbon credits cancelled inside or outside the value chain — separated by removal vs avoidance, with project type, vintage year, and the standards under which they were certified (Verra, Gold Standard, ART TREES, etc.)
• Planned future use of credits — with an explicit statement of the share of any net-zero claim that depends on credits

The principle: credits cannot be used to net down the gross inventory in E1-6. They are a separate disclosure, with a separate narrative, and they must not be presented as equivalent to actual emission reductions. The CSRD's stance here mirrors SBTi's: offsets cover residual hard-to-abate emissions only, after primary reductions are demonstrated.

E1-8: Internal Carbon Pricing

E1-8 is conditional — it only applies if your company uses an internal carbon price. If you do, you must disclose:

• The type of pricing (shadow price, internal fee, implicit price, etc.)
• The price level and the range across geographies or business units
• The volume of emissions covered
• How the price is used in decision-making — capital allocation, M&A screening, R&D, procurement

Many companies introduce an internal carbon price specifically to satisfy E1-8 and to support their E1-3 actions and E1-1 transition plan. The risk is doing it tokenistically — a €5 per tonne shadow price that affects no real decision. Auditors will look for evidence of how the price moved actual choices.

E1-9: Anticipated Financial Effects

E1-9 is the disclosure that finance teams find most uncomfortable. You must quantify, where possible, the anticipated financial effects of material climate-related physical risks, transition risks, and opportunities — for the short, medium, and long term.

That means:

• The monetary value of assets at material physical risk (flood-prone factories, heat-exposed agricultural assets, sea-level-rise-exposed coastal facilities)
• Projected revenue and cost impacts under defined climate scenarios
• Investments planned to address climate-related risks
• The reconciliation between these climate-related financial figures and the amounts in the financial statements

E1-9 is intentionally connected to the IFRS-based financial statements. The auditor reading your sustainability statement and your financial statements should see consistent numbers — or, if they differ, a clear explanation of why.

Companies in the first year of CSRD reporting are allowed phase-in relief on E1-9 quantification, but the qualitative narrative is required from year one. By year three, most companies are expected to be reporting quantified effects.

The "Always-On" Climate Materiality Question

The revised ESRS softened the original "rebuttable presumption" language around climate materiality but did not remove the underlying expectation: if you conclude climate is not material to your company, you must justify that conclusion publicly and rigorously.

In practice, the only companies credibly concluding climate is not material are very small service-based businesses with minimal energy use, minimal physical assets, and no value chain in carbon-intensive sectors. For everyone else — manufacturers, financial institutions, retailers, real estate, technology with material data-centre footprints, transport, agri-food — climate will almost always emerge as material from a properly run double materiality assessment.

If your assessment surprises you by concluding E1 is not material, treat that as a red flag in the methodology, not as a relief.

Common Pitfalls in ESRS E1 Reporting

Across first-time reports we have seen audited, the same six failure modes recur:

1. Targets without actions — a 2030 reduction target with no pathway and no E1-3 actions to deliver it. Auditors flag this as a "credibility gap."
2. Scope 3 categories excluded without justification — silently dropping Category 11 (use of sold products) or Category 1 (purchased goods) without showing the materiality reasoning.
3. Market-based Scope 2 dominated by unbundled certificates — buying RECs/GOs from unrelated geographies to bring market-based Scope 2 to zero. Auditors increasingly challenge this.
4. Offsets presented inside the gross inventory — netting credits against gross emissions to produce a flattering headline. E1 prohibits this.
5. Transition plan written by sustainability, not signed off by finance — when capex assumptions in the transition plan diverge from the latest financial plan, the disclosure fails E1-9 consistency tests.
6. Energy data based on accounting estimates rather than meter readings — fine in year one with proper disclosure, problematic by year two if no remediation plan is in place.

The pattern: E1 disclosures break when they are produced as separate workstreams rather than as one connected story tied to the financial statements.

Where a CSRD Consultant Adds Real Value on E1

E1 is the part of CSRD where outside help most often pays for itself. The work splits into four buckets where a specialist CSRD consultant genuinely earns their fee:

• GHG inventory build-out — designing the boundary, populating Scope 3 categories, recommending emission factors, and standing up the data pipeline
• Transition-plan development — turning ambition into a defensible decarbonisation roadmap with quantified levers and a capital plan
• Scenario analysis and E1-9 quantification — applying climate scenarios to your asset base and translating physical and transition exposures into financial language
• Assurance preparation — building the evidence pack and methodology documents that auditors will request, anticipating the questions before they are asked

You can budget realistic ranges for these work packages using our CSRD consultant costs guide, and structure a tender using the CSRD consultant RFP template. For first-time reporters, E1 typically consumes 30–45% of total CSRD consulting spend.

Where to Start If You Are Behind on E1

If you are reading this and realising your E1 plan is thin, the order of operations matters. Do not start by drafting target language. Start by:

1. Confirming the reporting boundary — which entities, which geographies, which value-chain perimeter
2. Closing the Scope 1 + 2 inventory — these have the fewest data sources and should be locked first
3. Running a Scope 3 screening — identify the material categories before investing in primary data
4. Designing the transition plan in parallel with the inventory — they must be consistent
5. Engaging finance early on E1-9 — the financial effects disclosure cannot be written in a silo

Then build the disclosures from the data outwards, not from the narrative inwards. ESRS E1 rewards reporters who treat climate as an operational and financial discipline, and punishes those who treat it as a communications exercise.

If you are starting from a blank page, our CSRD implementation roadmap for first-time reporters gives you the end-to-end sequence. E1 is the largest single workstream inside that roadmap — give it the resources it deserves, and the rest of your report will be materially easier to defend.