CSRD Circular Economy (ESRS E5)

What ESRS E5 requires

E5-1 Policies related to resource use and circular economy: Circular economy strategy — product design for longevity, repairability, recyclability; waste prevention commitments; take-back and extended producer responsibility programme policies.

E5-2 Actions and resources: Specific circular economy actions with allocated resources — material substitution investments, packaging redesign to reduce virgin material use, product-as-a-service business model transitions, repair service launches.

E5-3 Targets: Recycled content targets, waste reduction targets, landfill diversion targets, product return rate targets. For companies subject to EU Extended Producer Responsibility (EPR) schemes, link E5-3 targets to EPR compliance obligations.

E5-4 Resource inflows: Total materials used by weight (tonnes), broken down by renewable and non-renewable; percentage of recycled or reclaimed input materials; critical raw material dependency and concentration risk.

E5-5 Resource outflows: Products and materials leaving the organisation — waste generated by type and disposal route (diverted from disposal: recycled, reused, composted vs directed to disposal: landfill, incineration); product recyclability at end of life; take-back programme volumes.

E5-6 Anticipated financial effects: Financial impacts from resource efficiency risks and opportunities — raw material price volatility and supply chain concentration risk; revenue from circular business models; cost of EPR compliance.

Resource inflow data collection — the weight challenge

ESRS E5-4 resource inflow disclosure requires total materials used by weight — in tonnes. This sounds straightforward but creates a significant data collection challenge: most procurement systems track by spend (€) or by unit count, not by weight.

For manufacturing companies: Bill of materials data specifies the weight of each material per unit produced. Multiply by production volume to get total annual material consumption by material type. This is the most accurate approach — the data exists in product engineering systems but may not be routinely extracted for reporting.

For retail and distribution companies: Purchase volumes from suppliers in tonnes where available. Where suppliers invoice by unit rather than weight, use material-specific conversion factors (kg per unit from product specifications).

Critical raw materials: ESRS E5-4 requires disclosure of critical raw material (CRM) dependency. The EU CRM list (2023) includes 34 materials — lithium, cobalt, rare earth elements, silicon metal, and others. Identify which CRMs are in your products or production processes and quantify annual consumption. This is particularly relevant for electronics, EV battery, and renewable energy equipment manufacturers.

Renewable vs non-renewable classification: Bio-based materials (natural rubber, wood fibre, vegetable oils) are renewable; fossil-derived plastics, metals, and minerals are non-renewable. Composites require breakdown by component. This classification drives the renewable material percentage — a key metric for circular economy strategy communication.

Linking E5 to EU Ecodesign and EPR regulations

ESRS E5 does not exist in a regulatory vacuum — it connects directly to two major EU product regulations that are intensifying requirements for manufacturers and retailers.

Ecodesign for Sustainable Products Regulation (ESPR): ESPR will progressively set minimum requirements for product durability, repairability, recyclability, and recycled content for priority product categories from 2025 onwards. ESRS E5 targets should align with ESPR compliance roadmaps — what you commit to in E5-3 targets must be achievable given your ESPR compliance obligations.

Extended Producer Responsibility (EPR): EU member states operate EPR schemes for packaging, electronics (WEEE), batteries, and end-of-life vehicles. EPR requires producers to fund collection and recycling of their products at end of life. ESRS E5-5 product outflow disclosure — particularly take-back volumes and end-of-life recyclability — directly evidences EPR scheme compliance.

EU Packaging and Packaging Waste Regulation (PPWR): The revised PPWR (adopted 2024) sets mandatory recycled content requirements and recyclability standards for all packaging categories. ESRS E5-4 recycled input materials percentage and E5-5 packaging waste disclosure provide the metrics for tracking PPWR compliance progress.

For companies facing ESPR and PPWR compliance: align your E5 targets with the regulatory timeline. If ESPR requires 30% recycled content in your product category by 2030, your E5-3 target should reference this pathway — demonstrating to investors that your circular economy strategy addresses regulatory risk proactively.

Frequently asked questions