ESRS E5 Explained: Resource Use and Circular Economy Reporting Requirements

At a Glance

• ESRS E5 covers resource use and circular economy and is one of five environmental standards under CSRD
• It only applies where circular economy and resource use are identified as material through the double materiality assessment
• ESRS E5 has five disclosure requirements covering policies, actions, targets, resource inflows, and resource outflows (which now encompasses both product design and operational waste metrics).
• The Omnibus reduced the number of mandatory data points in ESRS E5, materiality-based scoping, which now has more flexibility
• Most manufacturing, retail, construction, and food and beverage companies will find ESRS E5 material
• Companies with existing circular economy programmes have a head start on disclosure; the strategy work and the reporting work are largely the same work

Introduction

ESRS E5 is one of the least understood of the ESRS environmental standards. That is partly because circularity is newer territory than climate for most sustainability teams. It is also because the standard is more flexible than E1: it applies only where material, and what needs to be disclosed depends heavily on what a company actually does.

For sustainability managers working through a CSRD gap analysis, this creates a specific kind of uncertainty. Carbon accounting has mature methodologies and emission factors to lean on. E5 doesn’t: it asks for granular data that standard Enterprise Resource Planning systems have never had a business reason to track. Most companies don’t know the exact percentage of post-consumer recycled content buried in their multi-component assemblies, or what actually happens to their products at end of life. Between the detailed nature of the standard, the adjustments introduced by the Omnibus, and the hard operational reality that many organizations are starting from zero on these circularity data points, it is not immediately obvious how much preparation effort it warrants for your business.

What Is ESRS E5 and When Does It Apply?

ESRS E5 is the CSRD standard for resource use and the circular economy. It sits within the environmental block of the ESRS framework alongside E1 (climate change), E2 (pollution), E3 (water and marine resources), and E4 (biodiversity and ecosystems).

The standard covers two interconnected areas. The first is resource use: how companies affect the depletion of non-renewable resources and the regeneration of renewable ones. The second is the circular economy, how companies are transitioning away from linear, take-make-waste models toward systems that keep products and materials at their highest value for as long as possible.

Unlike ESRS E1, ESRS E5 is not assumed to be material for every company in scope. It applies only where circular economy and resource use are identified as material through the double materiality assessment(DMA). This distinction matters for scoping purposes: a company cannot simply default to reporting under E5 without having completed that assessment first.

Which Sectors Are Most Likely to Find It Material?

The sectors where ESRS E5 is most commonly material include the following:

• Manufacturing – companies with significant raw material inputs, production waste, and product end-of-life considerations
• Retail – particularly where packaging volumes are high, or product take-back obligations apply
• Construction – resource-intensive operations with substantial material waste streams
• Energy – material-intensive generation and network assets, with significant end-of-life and decommissioning flows
• Infrastructure – large material footprints across buildout and maintenance, with substantial civil works and end-of-life material streams
• Food and beverage – biological materials, packaging, and food waste all fall within E5’s scope
• Packaging – by definition, packaging sits at the core of E5’s resource inflow and outflow requirements

Service businesses may find that ESRS E5 is not material to their operations. That is a legitimate outcome, but it must be documented. Auditors will expect to see the reasoning behind a non-material determination, not just an absence of disclosures.

The Five Disclosure Requirements

ESRS E5 contains five topical disclosure requirements, referenced throughout EFRAG documentation as E5-1 through E5-5. The first three are qualitative and establish your strategic framework, while the final two are quantitative and represent the core data collection challenge. Here is what each requires in practice:

E5-1: Policies Related to Resource Use and Circular Economy

E5-1 requires disclosure of any policies the company has adopted to manage its material impacts, risks, and opportunities related to the circular economy, resource efficiency, and waste reduction. This covers how policies facilitate the transition away from virgin resource use and toward the sustainable sourcing of renewable materials.

This disclosure is only required where such policies exist and are relevant to material impacts. If the company integrates circular economy principles or eco-design requirements in its key products and services, it shall explain how this is done. If a company has no formal policy on the circular economy, it must say so and may indicate a timeframe for developing one. There is no requirement to create a policy solely for reporting purposes, but the absence of a policy is itself a disclosure.

E5-2: Actions and Resources Allocated to Circular Economy

E5-2 covers the key actions the company has taken or planned to address material resource use impacts, along with the operational resources (such as budget and headcount) allocated to those initiatives. Actions must be tied to the waste hierarchy: companies need to specify which level of the hierarchy each action addresses, prioritizing prevention and reuse over simple disposal.

This is where companies with active circular economy programmes have an advantage. If you already have a programme with defined initiatives and a budget line, the disclosure framework largely mirrors the structure you are already using.

E5-3: Targets Related to Resource Use and Circular Economy

E5-3 requires disclosure of measurable, time-bound targets on circularity, resource efficiency, or waste reduction. These targets must be linked to the company’s material impacts, specifying whether they address material inflows, outflows, or increases in circular product design.

Companies are not required to set targets for reporting purposes. If no targets exist in relation to a material impact, the only required disclosure is that fact. This is a meaningful relief for year-one reporters, but where targets do exist, they must be disclosed in full.

E5-4: Resource Inflows

E5-4 is the first quantitative disclosure requirement and typically where companies face their most significant data collection challenge. It requires:

• Total Mass Tracked: Disclosure of the key materials used, expressed by absolute weight and their relative percentage of the total weight of all key materials.
• Material Category Breakdown: Separation of inflows into clear technical materials (such as plastics, metals, or synthetic fibers) and biological materials (such as paper, wood, or cotton).
• Circular Sourcing Proportions: The breakdown of each key material expressed in absolute weight or as a percentage of the total weight, specifying the secondary resources used.
• Critical Focus Areas: Explicitly highlighting any high-risk elements, such as critical raw materials or rare earth elements, present in the supply chain.

The data must specify whether it is sourced from direct measurement or estimation, and key assumptions must be disclosed. For many companies, procurement data systems are not structured to produce this information readily, making E5-4 a year-two or year-three target for full compliance.

E5-5: Resource Outflows

E5-5 now covers everything leaving the business: it replaces the earlier revenue-based circular turnover metric with two separate reporting areas, one for product design and one for operational waste:

Products & Materials (Circular Design)

• Expected Durability: Qualitative or quantitative information on the expected durability of key products placed on the market.
• Repairability: Qualitative or quantitative information detailing the extent to which key products are repairable.
• Recyclability Rates: The designed recyclability rate of key products and their packaging, calculated mathematically by weight.

Operational Waste Data

For operational waste, the reporting focus shifts to physical volumes and explicit disposal pathways. Companies are required to disclose the following:

• Waste stream descriptions: A qualitative breakdown of the undertaking’s specific waste streams.
• Total waste generated: The absolute weight of physical waste generated from your own operations.
• Waste diverted from disposal: The weight of materials sent to preparation for reuse, recycling, or other recovery operations, split by hazardous and non-hazardous waste.
• Waste directed to disposal: The weight of materials routed to landfill, incineration, or other disposal operations, also split by hazardous and non-hazardous waste.
• Unknown final destinations: The standard explicitly requires tracking the proportion of any generated waste whose ultimate final destination remains unknown.
• Radioactive waste volume: Companies must disclose the absolute total weight of radioactive waste generated by their own operations, as defined by EU directives.

E5-5 is the disclosure most directly linked to a company’s circular strategy. Combining waste and product metrics into one requirement makes it a mixed bag in practice. Waste volumes are usually the easier half: most companies already track them through waste management contracts and environmental permits, and the remaining work is mostly a matter of restructuring existing data to match the disclosure format. The product design half is harder. Companies that have already mapped their product portfolio against circularity criteria will find it far more manageable than companies starting from scratch.

Summary: Year-One Difficulty by Disclosure

A practical year-one approach for most companies is to complete E5-1, E5-2, E5-3 with reasonable confidence, begin data collection for E5-4 and E5-5, and use the phased approach permitted under the ESRS transitional provisions where applicable.

What the Omnibus Changed for ESRS E5

The Omnibus Directive, approved in December 2025, made significant changes to the CSRD, but it is important to be precise about what it actually changed for ESRS E5.

The key changes at a glance:

• Total data points across the framework were cut by more than 70%, with mandatory data points reduced by around 61%, and all optional metrics were removed
• The double materiality assessment now follows a top-down approach, removing the need for an exhaustive, bottom-up check of every individual subtopic
• The standalone financial effects disclosure that once sat separately within E5 has been removed; forward-looking financial impacts of circular risks are now reported under the general disclosures in ESRS 2 (SBM-3)
• Product design and operational waste, previously separate, are now consolidated into a single disclosure, E5-5
• Policies, actions, and targets are now governed centrally through general disclosure requirements, reducing duplicate reporting across topical standards

What this means in practice: If the circular economy is material to your business, you are responsible for five topical disclosure requirements instead of six. The Omnibus gives you more flexibility on how much detail to report within each requirement, based on the nature and scale of your actual impacts. Document your scoping decisions clearly. Auditors will review them.

The ESRS technical standards continue to be updated. The position described here reflects the framework as of July 2026, based on the EFRAG ESRS Knowledge Hub and the officially adopted simplified ESRS Delegated Act. Verify the current position against the latest EFRAG technical guidance before finalising your report.

How ESRS E5 Connects to the Double Materiality Assessment

A company cannot determine whether ESRS E5 applies without completing a double materiality assessment. The DMA is the mechanism that determines scope. Without it, any ESRS E5 disclosures lack the foundation they require.

The DMA looks at materiality from two directions:

Impact materiality asks whether the company’s resource use and waste generation have a material impact on people and the environment. A manufacturer using significant volumes of virgin plastics, a food producer generating substantial food waste, or a retailer responsible for high packaging volumes would typically find impact materiality present.

Financial materiality asks whether resource-related risks and opportunities have a material effect on the company’s financial performance. Rising raw material costs, supply chain disruption from resource scarcity, regulatory requirements on packaging and waste (such as the EU’s Packaging and Packaging Waste Regulation), and reputational exposure from poor waste performance are all potential financial materiality triggers.

Either direction can trigger ESRS E5 applicability. In practice, most manufacturing and retail companies will find it material from both directions simultaneously.

The practical implication: The DMA is not just a compliance exercise that precedes reporting. The questions it asks about resource use, waste, and circular economy are the same questions that a good circular economy strategy should already be asking. Companies that have done serious work on circular strategy will find that their DMA for ESRS E5 is largely a formalisation of analysis they have already done.

How ESRS E5 Connects to the Wider ESRS Framework

Companies working on ESRS E5 often look at it in isolation, but circular economy data collection heavily overlaps with your environmental and social reporting streams. Mapping these boundaries early prevents duplicate work and vendor fatigue.

How ESRS E5 Connects to ESRS E1

ESRS E1 tracks greenhouse gas emissions and energy use. ESRS E5 tracks physical material flows: weights, percentages, and how waste is processed. The two are complementary rather than competing, and the boundary is deliberate.

The most common overlap is packaging. Packaging materials and their recyclability sit within E5. The transport emissions from distributing those packaged goods sit within E1 Scope 3, Category 4.

A useful rule of thumb: if the question is about tonnes of material, it belongs in E5. If it’s about tonnes of CO2, it belongs in E1.

How ESRS E5 Connects ESRS E4

Circular strategy is one of the more direct levers a company has for reducing its wider environmental footprint. E5 tracks what a company buys, bio-based materials or virgin wood, for example. ESRS E4 looks at what that extraction does to ecosystems.

Moving toward circular, bio-based inputs directly reduces the kind of land-use and deforestation impact E4 is concerned with. When you assess resource inflows under E5-4, it is worth screening the same suppliers for E4 biodiversity dependencies at the same time, rather than running two separate exercises.

How ESRS E5 Connects to Social Topics

The materials a company sources are inseparable from the people who extract and handle them. Requesting data from suppliers on material origin, secondary content, or take-back arrangements for E5 uses the same procurement channels needed for social due diligence.

ESRS S2 (Workers in the Value Chain) requires visibility into supplier labour practices. Combining circularity data requests with human rights and ethical sourcing questionnaires means suppliers get one request instead of several, and the company gets both sets of data from a single conversation.

How ESRS E5 Connects to PPWR

ESRS E5 and the EU Packaging and Packaging Waste Regulation (PPWR) overlap directly on packaging materials. PPWR sets binding targets on recycled content, recyclability, and packaging reduction that will require exactly the kind of material flow data ESRS E5 asks companies to disclose. Companies subject to both will find that the data collection effort serves double duty: the recycled content percentages and material weight data required under E5-4 and E5-5 are largely the same inputs PPWR compliance will demand. Building your ESRS E5 data infrastructure with PPWR requirements in mind avoids collecting the same information twice.

How to Prepare for ESRS E5 Reporting

Most companies approaching ESRS E5 for the first time have more usable data than they realise. The preparation work is less about starting from scratch and more about connecting what already exists to the disclosure structure.

A four-step approach:

1. Complete or review your double materiality assessment. Confirm whether ESRS E5 applies and at what scope. If you have already run a DMA, check that circular economy and resource use were assessed as standalone subtopics, not just as a footnote to climate. If you have not yet run a DMA, this is the necessary first step.
2. Audit your existing data, and use estimates where needed. Most companies already track operational waste data, which now directly supports E5-5. The harder side is usually procurement, which feeds E5-4. You don’t need a perfect data connection with every supplier on day one. The standard allows reliable estimates, sector averages, and proxy data while you build toward better primary data over time.
3. Review your existing circular economy policies, targets, and actions against E5-1, E5-2, and E5-3. The qualitative disclosures are achievable in year one even where quantitative data is incomplete. If you have a circular economy programme, a waste reduction target, or a packaging policy, these translate directly into E5 disclosures. The disclosure work and the strategy work are largely the same work.
4. Engage your external auditor early on in the methodology for E5-4 and E5-5. These are the most technically demanding disclosures. Auditors need to understand your measurement approach (whether you are using direct measurement or estimation, what assumptions you are making, and how you are defining your reporting boundary) before the report is drafted. Starting this conversation late creates unnecessary risk.

How The Overview Effect Can Help

The Overview Effect works with mid-market companies across the Netherlands on CSRD readiness, gap analysis, double materiality assessments, and sustainability reporting implementation. For ESRS E5 specifically, we help teams scope the standard correctly against their DMA outcomes, map out practical estimation methodologies for baseline reporting years, structure supplier data collection for E5-4 and E5-5, and build the qualitative disclosures for E5-1, E5-2, and E5-3 from their existing circular economy work.

If you are trying to figure out where to start or how to make the case internally, book a free consultation and see how we can support you.

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