ESRS E5 circular economy: resources and waste to steer

Quick answer. ESRS E5 circular economy is the CSRD sustainability standard dedicated to resource use and the circular economy. It requires publishing resource inflows (materials used, recycled share), outflows (product durability and recyclability) and the waste generated. Its indicators are built from the company's purchasing and inventory data.

Among the CSRD environmental standards, ESRS E5 is the one that speaks most directly to the physical reality of the business: what it consumes as materials, what it puts on the market, and what it discards. It is also the one that connects extra-financial reporting to accounting most naturally, because its indicators rest on purchases, inventories and waste management.

This guide explains what ESRS E5 circular economy covers, which indicators to produce, how to connect them to your accounting data, and who is really concerned after the 2026 simplification. The goal is to turn a standard perceived as abstract into a concrete, usable data approach.

ESRS E5 covers resource use and the circular economy. Its ambition is to measure how the company reduces its reliance on virgin resources, extends the life of its products and limits its waste. It follows the CSRD's double-materiality logic: the company only has to address it if the topic is material, meaning significant in terms of its impacts or risks.

The standard is organised around three families of issues: resource inflows (what the company brings into its activity), resource outflows (the products and services it puts on the market) and waste (what it disposes of or recovers). On top of these three families come the policies, actions and targets the company sets.

The ESRS E5 disclosure requirements follow a now-classic ESRS structure: policies, actions, targets, then quantified indicators. In practice, a company material for E5 describes:

• its policies on resource use and the circular economy;
• the actions taken and the resources allocated to carry them out;
• the quantified targets it sets (reduction of virgin materials, recycling rate, etc.);
• its resource inflows: weight and nature of materials used, share of recycled or reused materials, criticality of resources;
• its resource outflows and waste: durability and recyclability of products, volumes of waste generated, including hazardous waste, and the share directed to recovery or landfill.

Where relevant, the standard also provides for an assessment of the expected financial effects linked to circular-economy issues (supply risks, treatment costs, reuse opportunities).

This is where the chartered accountant adds the most value. ESRS E5 indicators are not collected in an isolated spreadsheet: they are reconstructed from data the company already holds.

Resource inflows are read in purchases and production bills of materials. The volumes of materials, their nature and the recycled share are derived from supplier invoices and item sheets. Waste is traced from tracking slips and the invoices of collection providers. Material accounting, where it exists, becomes a natural foundation for E5 reporting.

The so-called LEAP method is encouraged by the standard to frame the value-chain analysis, upstream and downstream, and to delimit what falls under resource inflows, product outflows and waste. The idea is not to measure everything, but to focus the effort on significant flows.

ESRS E5 is often pushed behind ESRS E1 on climate, seen as more visible. That is a misjudgement for many industrial or trading companies: for them, the circular economy is an immediate cost issue, not just a reporting one. A better-valued material, a reduced waste stream, a product designed to last, these are euros before they are indicators.

Our recommendation is to start from the data already available rather than launch a parallel collection. A company that first structures its material accounting and waste management finds itself halfway to E5 reporting without realising it. Quality extra-financial data is born of quality management data.

An industrial SME of 80 employees produces plastic parts. Asked about ESRS E5, management first deems the topic marginal. The analysis of the flows tells another story: over 12 months, the company buys 600 tonnes of materials, of which only 5 percent is recycled material, generates 90 tonnes of production offcuts, and sends a share to landfill for lack of a recovery channel. By reconstructing these 3 figures from purchases and tracking slips, management discovers a savings pool as much as a reporting topic.

Within 6 months, the company structures a simple tracking: recycled material share at the input, offcut rate, recovery rate at the output. E5 reporting, the day it becomes due or requested by a client, will then be a by-product of steering, not an added constraint.

The scope has changed. The 2026 Omnibus directive raised the CSRD thresholds: sustainability reporting now applies only to companies with more than 1,000 employees and 450 million euros of turnover. Most SMEs are therefore not directly subject to ESRS E5.

But two nuances matter. First, the revision of the ESRS standards carried out in 2025 and 2026 sharply reduced the number of datapoints to publish, refocusing on key materials and removing redundant information: the E5 standard is more accessible than at its origin. Second, a non-subject SME can be asked by a large client, itself subject to the CSRD, that requests circular-economy data within its value chain. Anticipating E5 therefore remains useful, even without a direct obligation.

The classic trap is not the absence of an indicator, it is the unverifiable indicator. A recycling rate put forward without a documented calculation method, a waste volume estimated without supporting evidence, a recycled-material share declared without supplier traceability: all of this collapses as soon as an auditor or client asks for the source.

The safeguard is to build each E5 indicator on traceable accounting or physical data (invoice, tracking slip, item sheet), and to document the calculation method. A reconstructable indicator is a defensible indicator.

• Double materiality: ESRS E5 is only addressed if the topic is material to the company.
• Omnibus thresholds: mandatory reporting above 1,000 employees and 450 million euros of turnover.
• Lighter datapoints: the 2025-2026 revision refocuses E5 on key materials.
• Value chain: a non-subject SME can be asked by a client subject to the CSRD.
• Traceability: each indicator must rest on justifiable accounting or physical data.

To place ESRS E5 within the whole CSRD framework, see our guides on the ESRS E1 climate indicators and on collecting ESRS S1 social data.

• Materiality of the circular economy assessed for the company
• Resource inflows reconstructed from purchases
• Share of recycled or reused materials identified
• Durability and recyclability characteristics of products described
• Waste volumes traced from slips and invoices
• Recovery rate and hazardous-waste share measured
• Calculation method of each indicator documented