CSRD Gender Pay Gap
ESRS S1-12 requires companies to disclose their gender pay gap — the difference between average male and female remuneration across the whole workforce. This is one of the most commercially sensitive CSRD disclosures and overlaps with the EU Pay Transparency Directive effective from 2026.
ESRS S1-12 requires companies to disclose their gender pay gap — the difference between average male and female remuneration across the whole workforce. ESRS S1-12 requires disclosure of the unadjusted gender pay gap — the difference between average gross hourly earnings of male and female employees, expressed as a percentage of average gross hourly earnings of male employees.
What ESRS S1-12 requires
ESRS S1-12 requires disclosure of the unadjusted gender pay gap — the difference between average gross hourly earnings of male and female employees, expressed as a percentage of average gross hourly earnings of male employees.
Unadjusted means: not controlled for role, seniority, experience, or working hours. It reflects the raw average difference in pay between men and women across the entire workforce. This is different from an 'equal pay for equal work' analysis — ESRS S1-12 does not require the adjusted gap.
Calculation: (Average male remuneration − Average female remuneration) ÷ Average male remuneration × 100 = Gender pay gap percentage.
Remuneration scope: ESRS S1-12 covers total remuneration — base salary plus variable pay (bonuses, commissions, profit sharing). Using base salary only understates the gap in organisations where variable pay is concentrated in higher-paying roles dominated by men.
Breakdown: S1-12 requires the gap at total workforce level. Disclosure by employee category (management, professional, administrative) provides additional context but is supplementary — the total workforce figure is the primary metric.
The EU Pay Transparency Directive — the parallel obligation
The EU Pay Transparency Directive (EU 2023/970) requires member state transposition by June 2026. It creates parallel gender pay gap reporting obligations for employers with 100+ employees — overlapping significantly with ESRS S1-12.
Key Pay Transparency Directive requirements: employers must report gender pay gaps by employee category annually (for 250+ employees) or every 3 years (100–249 employees); where the gap exceeds 5% and cannot be justified by gender-neutral criteria, a joint pay assessment with worker representatives is mandatory; individual employees have the right to request information about their own pay and average pay for comparable roles.
For CSRD companies: build one pay gap data infrastructure that satisfies both ESRS S1-12 and the Pay Transparency Directive. The methodology differs slightly — ESRS uses average gross remuneration, the Directive uses hourly earnings — but the underlying payroll data is the same. Coordinate between your sustainability reporting and HR/legal teams to ensure consistency.
Legal review: Before publishing gender pay gap data for the first time, legal review is recommended in jurisdictions with strong employment discrimination law. The disclosed gap can be used as evidence in equal pay litigation — understanding your legal exposure before publication allows you to prepare appropriate context and remediation narratives.
Contextualising and remediating the gender pay gap
Most companies have a gender pay gap — the EU average is approximately 13%. Disclosing a gap without context will generate investor, media, and employee questions. Prepare context and a remediation plan before publication.
Contextual factors to disclose alongside the gap figure: the proportion of women in senior roles vs junior roles (explaining structural gap); the proportion of part-time employees by gender (part-time roles typically have lower hourly rates); the industry benchmark for comparable companies; and trend — is the gap widening or narrowing year-on-year?
Remediation actions: ESRS S1-12 and the Pay Transparency Directive both expect disclosure of actions taken to address the gap — where remediation is required. Effective gap reduction actions include: structured pay equity reviews identifying unjustified individual pay gaps; broadening the pipeline of women into senior roles through development programmes; reviewing job grading to ensure gender-neutral job evaluation; and transparent pay band disclosure to employees.
Target-setting: Some companies set explicit gender pay gap reduction targets — for example, reducing the gap by 2 percentage points per year for 5 years. ESRS S1 target disclosure (S1-5) provides the vehicle for publishing these targets. Targets without action plans are counterproductive — ensure any published target is backed by funded initiatives.
Frequently asked questions
What if our gender pay gap is larger than the industry average?
Disclose it accurately and provide context — the industry benchmark, the structural factors driving the gap, and the remediation actions underway. A large gap disclosed transparently with a credible action plan is better received by investors and employees than a smaller gap with no explanation or action. Assurers will verify the calculation — do not attempt to minimise the disclosed figure through methodology choices.
Do we calculate the gap separately for each country?
ESRS S1-12 requires the gap at group level — one figure for the whole company. Where significant differences exist between countries (due to labour market structure, role distribution, or local pay practices), supplementary country-level disclosure provides useful context. The Pay Transparency Directive requires employer-level reporting — check national transposition for country-specific requirements.
Does a zero gender pay gap mean we have achieved pay equity?
Not necessarily. A zero unadjusted gap could exist alongside significant equal pay issues — where men and women in the same role at the same level are paid differently. The unadjusted gap reflects workforce composition as much as pay decisions. A comprehensive pay equity analysis — controlling for role, level, and experience — is a more complete assessment of pay fairness.