DATE
24.8.2026
AUTHORS
Paulin Streit
.webp)
Kevin Möller
TOPICS
Reporting
Governance & regulation
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Two changes describe ESRS E5 (2026 edition) better than any introduction could. The number of required disclosures has been reduced from six to five. And the question “How much material did you use in total?” has been replaced by “What are your key materials?”
The first is an elimination. The second is a shift: fewer data points, but a decision that the company itself must make and justify. In terms of preparation, this means that part of the work shifts from data collection to the definition phase—and begins there earlier than most schedules anticipate.
Key Points at a Glance
- ESRS E5, “Resource Use and Circular Economy,” as amended on July 3, 2026, includes five disclosure requirements: E5-1 Policies, E5-2 Actions, E5-3 Targets, E5-4 Resource Inputs, and E5-5 Resource Outputs.
- E5-6, regarding the expected financial effects, has been omitted without replacement. For ESRS E1, the corresponding entry was continued as E1-11—but not for E2 through E5.
- E5’s own disclosure requirement, ESRS 2 IRO-1, has been eliminated. E5 now refers only to ESRS 2 IRO-2; the process of determining materiality is covered entirely in ESRS 2.
- E5-1, E5-2, and E5-3 refer to the general disclosure requirements GDR-P, GDR-A, and GDR-T in ESRS 2 for their content. The only issue specific to E5 is how circular economy and ecodesign principles are embedded in key products.
- E5-4 is transitioning from a comprehensive materials inventory to a system focused on key materials, including the identification of critical and strategic raw materials.
- E5-5 now requires a "designed recyclability rate" for key products and packaging, as well as the percentage of waste whose fate is unknown.
- For the 2026 fiscal year, there is a choice between three options. None of the eight relief provisions that can be adopted individually apply to E5—all of them originate from ESRS 1.
What does ESRS E5 cover regarding resource use and the circular economy?
ESRS E5 “Resource Use and Circular Economy” is the topic-specific standard for EU sustainability reporting on material use, product design, and waste. The revised version dated July , 2026, contains five disclosure requirements: E5-1 Policies, E5-2 Actions, E5-3 Targets, E5-4 Resource Inputs, and E5-5 Resource Outputs. The previous disclosure requirement E5-6 on expected financial impacts has been removed.
ESRS E5 (European Sustainability Reporting Standard E5 “Resource Use and Circular Economy”): A topic-specific environmental standard for EU sustainability reporting on material use, product design, and waste. Initial version as Annex I to Delegated Regulation (EU) 2023/2772 of July 31, 2023, with six disclosure requirements; revised version as an annex to Delegated Act C(2026) 5010 of July 3, 2026, with five disclosure requirements.
E5 is thus one of the more compact topic-specific standards—and one of the most data-intensive. The first three reporting requirements are descriptive, while the last two involve quantitative calculations. This is precisely where the effort comes in: E5-4 and E5-5 require weights, percentages, and ratios that, in most companies, are not stored in a single system but are scattered across purchasing, production, waste disposal contracts, and engineering. You can find a classification of all twelve standards and how they interact in our overview of all ESRS standards.
Like any topic-specific standard, E5 applies only if resource use and the circular economy have been identified as material in the dual materiality analysis. This preliminary determination determines the overall scope of work and is addressed in ESRS 1 and ESRS 2, not in E5.
What has changed compared to the 2023 set
The number of reporting requirements has been reduced from six to five, and the titles of the remaining five remain unchanged. The actual changes are as follows: E5-1 through E5-3 now refer to ESRS 2 for their content, E5-4 changes its data collection logic, and E5-5 includes two new metrics. The following table compares the two versions.
| 2023 Edition | 2026 Edition | What Has Changed |
|---|---|---|
| ESRS 2 IRO-1Description of the processes for identifying and assessing material resource use and circular economy-related impacts, risks, and opportunities | not applicable | E5’s own process description has been removed. E5 now refers only to ESRS 2 IRO-2; the materiality assessment process is addressed once in ESRS 2 rather than being repeated in each topic-specific standard. |
| E5-1Policies Related to Resource Use and the Circular Economy | E5-1Policies Related to Resource Use and the Circular Economy | Title unchanged; content delegated to ESRS 2 GDR-P. The only part remaining in E5 is the explanation of how circular economy principles or ecodesign requirements are incorporated into key products and circular economy services. |
| E5-2Actions and resources related to resource use and the circular economy | E5-2Actions and resources related to resource use and the circular economy | Title unchanged; content fully delegated to ESRS 2 GDR-A. No additions specific to E5. |
| E5-3Targets related to resource use and the circular economy | E5-3Targets related to resource use and the circular economy | Title unchanged; content fully delegated to ESRS 2 GDR-T. The illustrative list of possible target species from the 2023 version is no longer part of the reporting requirements. |
| E5-4Resource inflows | E5-4Resource inflows | Transition from a full inventory to key materials: Description of key materials, including the identification of critical and strategic raw materials, total weight, breakdown, and secondary resources (paragraphs 13(a) through (d)). The proportion of sustainably sourced biological materials is no longer included in the list. |
| E5-5Resource outflows | E5-5Resource outflows | New: Designed recyclability rate for key products and packaging (formulas in AR 3) and percentage of waste with unknown disposition. No longer included in the list: Comparison of product durability with the industry average, as well as the amount and percentage of non-recycled waste. |
| E5-6Anticipated financial impacts of material resource use and risks and opportunities related to the circular economy | not applicable | Deleted without replacement. For ESRS E1, the equivalent was continued as E1-11; for E2, E3, E4, and E5, it was not. The transitional rule in Appendix C of 2023—waivable in the first year, qualitative for three years—is therefore no longer applicable. |
Original English titles as set forth in the delegated act of July 3, 2026. An official German translation will not be available until publication in the Official Journal of the European Union; the German terms used in this article are working translations.
What was eliminated without replacement
Two disclosure requirements are no longer included in the 2026 version. The first is E5-6, regarding the expected financial effects of risks and opportunities associated with resource use. It has been eliminated without replacement. This is not a general rule for the revised set, but rather a decision made on a standard-by-standard basis: In ESRS E1, the corresponding disclosure requirement was retained as E1-11, whereas in E2, E3, E4, and E5, it was not.
The second is the E5’s own version of ESRS 2 IRO-1, which described how the company identifies material impacts, risks, and opportunities related to resource use. This description was included again in every topic-specific standard in 2023. In the 2026 version, E5 now refers only to ESRS 2 IRO-2; the process itself is addressed once in ESRS 2 instead of twelve times.
What's New
Two new metrics have been added in E5-5, along with a set of calculation rules. The Designed Recyclability Rate for key products and their packaging is required for the first time; Application Requirement AR 3 provides formulas for this. Also new is the proportion of waste whose final disposition is unknown, expressed as a percentage of the total waste generated.
In addition, there are the application requirements AR 4 through AR 7, which set out guidelines for reporting on waste streams, presenting material weights, and classifying recovery and disposal methods in accordance with the EU Waste Framework Directive. These rules are not mere formalities—they determine whether two companies arrive at the same figure using the same calculation.
The Five Disclosure Requirements in Detail
The five disclosure requirements are divided into two sections. E5-1 and E5-2 are part of the “Impacts, Risks, and Opportunities Management” section, while E5-3 through E5-5 are part of the “Metrics and Targets” section. The content of the first three largely refers to ESRS 2.
E5-1 — Concepts Related to Resource Use and the Circular Economy
E5-1 requires the disclosure of strategies for resource use and the circular economy in accordance with the requirements of ESRS 2 GDR-P. The standard no longer prescribes specific content in this regard.
What has changed: The content has been delegated to GDR-P. One requirement remains specific to E5: the company explains how circular economy principles or ecodesign requirements are embedded in its key products and circular economy services. This is the most substantively demanding line in the standard because it requires a statement about product development, not about reporting.
E5-2 — Measures and Resources
E5-2 requires the disclosure of significant measures related to resource use and the circular economy in accordance with the requirements of ESRS 2 GDR-A.
What has changed: Full delegation to GDR-A, without any additional requirements of its own. The 2023 version still contained specific requirements in this regard; these have now been incorporated into the general disclosure requirements.
E5-3 — Objectives
E5-3 requires the disclosure of targets for resource use and the circular economy in accordance with the requirements of ESRS 2 GDR-T.
What has changed: Full delegation to GDR-T. The 2023 version listed specific target areas as examples—increasing circular product design, raising the proportion of recycled materials, minimizing the use of primary raw materials, and ensuring the sustainable procurement of renewable resources. This list is no longer part of the disclosure requirements in the 2026 version.
E5-4 — Inflows of Resources
E5-4 requires information on key materials: a description of these materials, identifying critical and strategic raw materials; the total weight of all key materials; a breakdown by weight or proportion; and the secondary resources used, by weight or proportion (paragraph 13, subparagraphs (a) through (d)).
What has changed: It is the shift in the standard’s approach. The 2023 version asked for the total weight of all products used, as well as technical and biological materials—in other words, it focused on completeness. The 2026 version asks for key materials—in other words, it focuses on relevance. Another new feature is the explicit identification of critical and strategic raw materials, which aligns the standard with the EU’s raw materials legislation. The percentage of sustainably sourced biological materials is no longer included in the list.
In practice, this simply shifts the effort to an earlier stage. Those who already collect material data on a product-by-product basis—for example, as part of a life cycle assessment—have a solid foundation for E5-4. Those who, up to now, have only known purchasing volumes in euros will first need to establish a volume-based view.
E5-5 — Outflows of Resources
E5-5 is divided into two parts. For products, the expected service life, information on reparability, and the designed recyclability rate of the key products and their packaging must be disclosed (paragraph 15). For waste, the waste streams must be described, and the total weight, the proportions of recovery—preparation for reuse, recycling, and other recovery—the proportions of disposal, the proportion with unknown disposition, and the quantities of radioactive waste must be reported (paragraphs 16 and 17).
What has changed: Two new metrics have been added—the Designed Recyclability Rate and the proportion with unknown disposition. The calculation rules are set forth in AR 3 through AR 7. The comparison of expected product lifespan with the industry average—which was required by the 2023 version—as well as the total volume and the proportion of non-recycled waste are no longer included in the list of requirements in the 2026 version.
From MDR to GDR: How ESRS E5 Builds on ESRS 1 and ESRS 2
The old minimum disclosure requirements MDR-P, MDR-A, and MDR-T have been replaced by general disclosure requirements in ESRS 2. There are four: GDR-P for concepts, GDR-A for actions and resources, GDR-M for parameters, and GDR-T for targets. ESRS 1 explicitly states this as a directive to apply “ESRS 2 General Disclosures GDR-P, GDR-A, GDR-M, and GDR-T for policies, actions, metrics, and targets” (paragraph 29(b)(i)).
For E5, this means: E5-1 refers to GDR-P, E5-2 to GDR-A, and E5-3 to GDR-T. Anyone who reads the disclosure requirements for E5 without referring to the GDRs in ESRS 2 is only reading half the requirement. This is the most common misinterpretation of the revised set: The topic-specific standards have become shorter, but the requirements have not.
A second point is more important in practice than it sounds. The GDR are expressly subject to the materiality principle. The question, therefore, is no longer whether a minimum set of requirements has been formally met, but whether the disclosure is material to the company—and this assessment must be justified and documented.
Which set applies to my company, and when?
For fiscal years beginning in 2026, there is an option to choose; starting with the fiscal year 2027, the revised version will be mandatory. In both cases, this is contingent upon the delegated act entering into force.
| Fiscal Year | Applicable Version | What that means |
|---|---|---|
| Fiscal Year 2025 | 2023 Set | No right to vote. Delegated Regulation (EU) 2023/2772, as amended by Delegated Regulation (EU) 2025/1416, applies—for E5, this means six disclosure requirements, including E5-6. |
| Fiscal Year 2026 | Voting RightsThree options | First, the 2023 set as is. Second, the revised version in its entirety. Third, the 2023 set with some of the eight exemptions listed in Article 2, paragraph 1, subparagraph (b)—none of which apply to ESRS E5. The chosen option must be specified in the sustainability statement (Article 2, paragraph 2). |
| Starting in fiscal year 2027 | 2026 Edition | Mandatory. Article 3 specifies that this applies to fiscal years beginning on or after January 1, 2027—meaning, for E5, five disclosure requirements excluding E5-6. |
The two versions containing the revised text are contingent on the delegated act entering into force. As of the date of this article, that has not yet occurred.
The exemptions under the intermediate approach are exhaustively listed in Article 2, paragraph 1, subparagraph (b). There are eight of them, and they all originate from ESRS 1: top-down approach to materiality analysis, disproportionate effort, acquisitions and disposals, key figures for non-material activities, partial scope of the value chain, joint ventures, presentation of taxonomy disclosures, and the executive summary. None of these eight exemptions relates to ESRS E5. Therefore, anyone who sticks with the 2023 set for 2026 and applies only individual exemptions will report E5 unchanged according to the 2023 version—with six disclosure requirements, including E5-6.
Which transitional rules from the 2023 set are no longer applicable
For ESRS E5, Appendix C of the 2023 set provided for a concession: E5-6 could be omitted in the first reporting year and reported on a purely qualitative basis for the first three years. This rule is no longer applicable in the 2026 version—not because the deadline has expired, but because E5-6 no longer exists.
A common misconception concerns the employee-based exemptions. The threshold of 750 employees, which still appears in many overviews as a relaxation of environmental standards, applied to ESRS E4 and social standards S1 through S4—not to E5. This relaxation never applied to E5. Anyone who has included it in their reporting schedule for E5 is working with an assumption that was already incorrect as of 2023.
In addition, there is a change in the scope of application: Under Directive (EU) 2026/470 of February 24, 2026, only companies with more than 1,000 employees and net revenue exceeding 450 million euros are covered. Both criteria must be met cumulatively. A threshold of 750 employees can therefore no longer exempt anyone who is subject to reporting requirements in the first place.
Why Implementation Fails in Practice
Three requirements from E5 regularly require the most effort in projects—not because they are technically difficult, but because the data is stored in places where no one is responsible for reporting.
"Designed Recyclability" is a design specification, not an accounting figure
The Designed Recyclability Rate cannot be derived from ERP data. It requires knowledge of a product’s materials, how they are joined, and whether those joints can be separated at the end of the product’s life. This information is generated during the design phase and is often found in bills of materials, CAD data, and supplier specifications—rarely in a format that can be used to calculate a rate.
In projects with manufacturing companies, the typical pattern is this: The bill of materials exists, but the material assignment is incomplete, and for purchased parts, the material composition is missing entirely. The most reliable approach is therefore to first define the key products, then complete the material data for these few products, and only then perform the calculations. Any attempt to determine the ratio across the entire portfolio generally fails because of the purchased parts.
The number of people whose whereabouts are unknown is the most troubling new figure
The percentage of waste with an unknown destination is the only new metric that can make a company look bad without it having done anything wrong. Waste disposal contracts typically end with the waste collector. What happens afterward—preparation for reuse, recycling, other recovery, incineration, or landfilling—is often not specified in the documentation, at least not in sufficient detail to allow for classification under the Waste Framework Directive.
The result is a procurement task, not a reporting task: Waste disposal contracts and documentation requirements must include details on the recycling route. Anyone who realizes this only during the reporting year will report a high proportion of unknown waste and will not be able to reduce it until the following year, because contracts have fixed terms. Our advice is to include this clause in the next regular contract renewal, regardless of when E5 is reported for the first time.
The list of key materials is a decision, not an analysis
The shift from “all materials” to “key materials” seems to ease the burden but initially places the burden of proof on the company. The standard does not specify a quantity threshold. The company decides which materials are key materials and must be able to justify this selection during an audit.
What has proven effective in projects is a transparent combination of usage volume, value share, substitution risk, and classification as a critical or strategic raw material—documented along with the thresholds that were actually established. A list without documented selection criteria is difficult to defend during an audit, precisely because the standard allows for discretion in this area. This varies by industry: In metal processing, the proportion of secondary materials is actually high, but documentation regarding batches and suppliers is often incomplete; in the packaging sector, E5 overlaps with the requirements of the Packaging Ordinance, which simplifies data collection when both are implemented together.
Our assessment: fewer data points, greater burden of proof
Our assessment: E5 is the standard for which simplifying the 2026 set saves the least amount of work. The Commission cites a reduction of over 60 percent in mandatory data points for the entire system. With E5, one mandatory data point is eliminated—and the “Designed Recyclability Rate” is added, a metric that many companies have yet to begin collecting. For data-intensive manufacturing companies, the overall workload may increase.
The second point is the shift in the nature of the work. Whereas completeness was once required, selection is now required. Completeness is laborious but verifiable. Selection is faster but requires a documented rationale—and that doesn’t come from reporting, but from discussions with purchasing, product development, and quality. Anyone who views this change as a way to lighten their workload and skips the definition phase simply shifts the problem to the verification stage.
In practice, we recommend prioritizing three things regardless of the set you choose: defining key products and key materials using documented criteria; including information on recycling routes in waste disposal contracts; and collecting material data for the few products that actually need to be reported in E5-5. All three are worthwhile regardless of whether you stick with the old set for 2026—and all three take longer than a typical reporting schedule allows. Whether E5 is material for you at all is determined in advance by the CSRD reporting process through the materiality analysis.
Frequently Asked Questions About ESRS E5
Is the E5-6 reporting requirement still in effect?
That depends on the fiscal year. In the revised version dated July 3, 2026, E5-6 regarding the expected financial effects has been omitted without replacement; in that version, ESRS E5 now has only five disclosure requirements. Those who continue to use the 2023 set for the 2026 fiscal year will continue to report E5-6, because none of the eight individually applicable exemptions affect ESRS E5. Starting with the 2027 fiscal year, this disclosure requirement is officially eliminated.
What are key materials according to ESRS E5?
Key materials are those that the company itself identifies as essential to its resource inflows. The standard does not specify a quantity threshold or a fixed definition. Required are a description of these materials, including the identification of critical and strategic raw materials, the total weight, a breakdown by weight or proportion, and the secondary resources used. Because the standard allows for discretion, the selection process should be documented along with the criteria actually applied.
How is the designed recyclability rate calculated?
The revised version of ESRS E5 provides formulas for the Designed Recyclability Rate in Application Requirement AR 3, separately for products and for packaging. This metric must be disclosed for key products and their packaging. The calculation requires material data from the design phase, specifically the material composition and the separability of components at the end of life. It cannot be derived from accounting or purchasing data alone.
Which version of the ESRS applies to the 2026 fiscal year?
For fiscal years beginning between January 1 and December 31, 2026, there is a choice between three options: the 2023 set as is, the revised version in its entirety, or the 2023 set with some of the eight simplifications listed in Article 2(1)(b). The selected option must be disclosed in the sustainability statement. The two latter options are subject to the delegated act of July 3, 2026, entering into force.
Were there any relief measures for companies with fewer than 750 employees under ESRS E5?
No. The employee-based exemptions in Appendix C of the 2023 set applied to ESRS E4 as well as to social standards ESRS S1 through S4, but not to ESRS E5. For E5, Appendix C provided only for the exemption specified in E5-6: omission in the first reporting year and purely qualitative reporting for the first three years. Following the expansion of the scope of application to companies with more than 1,000 employees and more than 450 million euros in net revenue, a threshold of 750 employees can no longer provide relief to any entity subject to reporting requirements.
Do I need a life cycle assessment to report on ESRS E5?
A life cycle assessment is not required. ESRS E5 specifies quantities, proportions, and ratios regarding material use, product design, and waste—not a life cycle impact assessment. However, organizations that already prepare life cycle assessments or product carbon footprints typically have the material data for E5-4 and the designed recyclability rate in E5-5 available in a usable format. Those who only know procurement volumes in euros must first establish a volume-based overview.
What should I report if the whereabouts of my waste are unknown?
The revised version of ESRS E5 requires a specific disclosure for precisely this purpose: the proportion of waste whose final disposition is unknown, expressed as a percentage of the total waste generated. A high proportion must be disclosed and not estimated. It can only be reduced through waste management contracts by contractually specifying the method of recycling or disposal. Because contracts have fixed terms, this change will not take effect until the following year.
Conclusion: The standard is shrinking, but the groundwork is not
ESRS E5 eliminates one disclosure requirement and adds one metric. Anyone who assumes this will mean less work is underestimating two things: the Designed Recyclability Rate requires design data, and the Key Materials List requires a justified selection. Neither of these arises during the reporting process, but rather before it.
A robust preparation process therefore consists of three steps that make sense regardless of the version chosen: defining key products and key materials with documented criteria, including the recycling route in waste disposal contracts, and completing the material data for the few products subject to reporting requirements. Those who wait until the fiscal year is underway will, in the first year, primarily be reporting gaps.
Align ESRS E5 with the 2026 version
A brief initial consultation will determine whether resource use and the circular economy are material for your organization, which version applies to your fiscal year, and how to define and document key materials and waste streams so that the information is relevant to the audit.
Arrange an initial consultationSources and Legal Bases
- European Commission: Delegated Regulation C(2026) 5010 final of July 3, 2026, amending Delegated Regulation (EU) 2023/2772, including Articles 1, 2, and 3. ec.europa.eu (PDF) (as of August 2026).
- European Commission: Annex to C(2026) 5010 final — ESRS E5 “Resource Use and the Circular Economy” (paragraphs 8 through 17, AR 3 through AR 7) and ESRS 1, paragraph 29. ec.europa.eu (PDF) (as of August 2026).
- EFRAG Knowledge Hub: ESRS E5 as amended by the Delegated Act of July 3, 2026 — Disclosure Requirements E5-1 through E5-5. knowledgehub.efrag.org (accessed in August 2026).
- EFRAG Knowledge Hub: ESRS E5 as amended by Set 1, including the Quick Fix — Disclosure Requirements ESRS 2 IRO-1 and E5-1 through E5-6. knowledgehub.efrag.org (accessed in August 2026).
- Commission Delegated Regulation (EU) 2023/2772 of July 31, 2023, Annex I — ESRS E5 and ESRS 1, Appendix C (Transitional Provisions). eur-lex.europa.eu (as of December 22, 2023).
- Directive (EU) 2026/470 of the European Parliament and of the Council of February 24, 2026 — Expanding the scope of application to include companies with more than 1,000 employees and net revenue exceeding 450 million euros. eur-lex.europa.eu (OJ L of February 26, 2026).
- European Commission: “Commission Adopts Revised Sustainability Reporting Standards” — Reduction in mandatory data points by over 60 percent. finance.ec.europa.eu (July 3, 2026).
- Council of the European Union: Transmission of the delegated act, document ST 11667/2026. data.consilium.europa.eu (PDF) (July 9, 2026).
- Accountancy Europe: “Swift ESRS Delegated Act Adoption” — Status of the review period by the Parliament and the Council. Secondary source for assessing the status of the proceedings. accountancyeurope.eu (as of July 16, 2026).
