ESRS E5: Resource Use and Circular Economy

ESRS E5: Resource Use and Circular Economy is the environmental thematic standard within the European Sustainability Reporting Standards (ESRS) dedicated to how companies use materials and advance towards the circular economy. Its central focus is measuring and reporting physical resource flows: what enters the company, what leaves it and the waste it generates.

ESRS E5 is part of the set of standards implementing the Corporate Sustainability Reporting Directive (CSRD) and was developed by EFRAG. Like all thematic ESRS standards, it is only mandatory when resource use and circularity are material to the company according to its double materiality assessment.

What ESRS E5 covers

Contrary to what is sometimes assumed, E5 does not cover water (that falls under ESRS E3) or land use from a nature perspective (that is ESRS E4). E5 focuses on materials and waste: the consumption of virgin versus recycled resources, product durability and repairability, and the quantity and destination of waste.

What information ESRS E5 requires

Following the common structure of thematic ESRS standards, E5 organises disclosures into several blocks. Two disclosure requirements are particularly characteristic:

1. Resource inflows (E5-4)

The company discloses the resources entering its operations and upstream value chain: materials used, their origin and the proportion of recycled or sustainably sourced materials versus virgin materials.

2. Resource outflows and waste (E5-5)

The company discloses products and materials leaving the company and, most notably, the waste generated: quantities, types (hazardous and non-hazardous) and their destination according to the waste hierarchy (preparation for reuse, recycling, recovery or disposal).

3. Impacts, policies, actions, targets and metrics

Like other thematic standards, E5 requires a description of impacts, risks and opportunities, circularity policies and actions (ecodesign, reuse, recycling, industrial symbiosis) and associated targets and metrics, such as the recycling rate.

Relationship with waste regulation

E5 builds on the European circular economy and waste framework, led by the Waste Framework Directive 2008/98/EC and the Ecodesign for Sustainable Products Regulation (ESPR), which reinforces product durability and repairability.

The ESRS revision in 2026

Following the Omnibus I package (Directive (EU) 2026/470, published in the Official Journal of the EU on 26 February 2026), the European Commission tasked EFRAG with simplifying the ESRS. The draft delegated act with the revised ESRS was put out for public consultation between May and June 2026 and reduces mandatory data points by more than 60%. Application is planned from the 2027 financial year, with early voluntary adoption possible already in 2026. Until the delegated act is formally adopted (expected by end 2026), the 2023 ESRS remain the legal reference, including for E5.

Who it applies to

ESRS E5 applies to companies required to report under the CSRD when resource use and circular economy is a material topic. Following Omnibus, that universe is smaller: from the 2027 financial year the obligation is concentrated on companies with more than 1,000 employees and more than €450 million in turnover. It is particularly relevant for manufacturing, packaging, textiles, construction, electronics and consumer goods.

Why it matters

• Efficiency and costs: reducing the consumption of virgin materials and waste generates direct savings.
• Supply resilience: circularity reduces dependence on critical raw materials.
• Compliance and market: aligns the company with European product and waste regulation and with circularity demand.

Compliance with ESRS E5 starts with understanding the company's material and waste flows and its environmental footprint. At Manglai we help organisations measure their environmental impact and prepare the sustainability information required by the ESRS and CSRD. Discover how Manglai can help you.