When evaluating a business and looking at the growing stack of mandatory sustainability regulations, the Corporate Sustainability Reporting Directive (CSRD) can feel overwhelming.
Among its detailed guidelines and hefty nine disclosure requirements, the European Sustainability Reporting System (ESRS) E5: Resource Use and Circular Economy has a difficult dichotomy to swallow; it is challenging to understand and report on, but may also be the most powerful and valuable to companies.
Why? Because beyond adding another line in an ESG report, E5 focuses on how businesses fundamentally manage resources; what is bought, how products are designed, how they are sold, and what happens when they leave a customer’s hands. This is where compliance meets strategy.
Why ESRS E5 Matters for Business
Global data makes the business case clear:
- Material extraction accounts for 90% of biodiversity loss and 50% of greenhouse gas emissions (UNEP, 2019). That means our supply chains, not just our factories, carry most of the environmental weight.
- Municipal waste could reach 3.8 billion tonnes by 2050 (UNEP, 2024). Disposal costs will rise, regulations will tighten, and landfill will become an economic liability.
- E-waste hit 62 million tonnes in 2022 (UNITAR, 2024). For electronics companies, that’s both a reputational risk and a lost revenue stream from unrecovered materials.
These are not abstract statistics. They point to risks that show up in procurement costs, regulatory exposure, investor questions and even customer expectations. ESRS E5 makes these risks visible through disclosure.
Which Businesses Need to Report?
Not every company is immediately subject to ESRS E5. Under CSRD, reporting is required for:
- Large EU companies that meet two of the following three criteria:
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- €50 million net turnover or more
- €25 million or more in assets
- 250+ employees
- Listed SMEs (with lighter requirements and longer phase-in periods).
- Non-EU companies generating more than €150 million turnover in the EU, with at least one subsidiary or branch in the region.
This means that medium-to-large manufacturers, retailers, technological firms and resource-intensive companies will increasingly be drawn into reporting. For smaller firms supplying these businesses, pressure will rise indirectly as larger customers will require resource and circularity data.
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