How to Report Under ESRS E3: Water and Marine Resources for Non-Big 4 Auditors

What ESRS E3 covers (and what it no longer covers)

ESRS E3 sat originally across two domains: freshwater resources and marine resources. The December 2025 amended ESRS changed this. EFRAG’s technical advice, submitted to the European Commission on 3 December 2025, removed marine resources from E3’s scope entirely. Marine resource disclosures now fall under ESRS E4 (Biodiversity and Ecosystems) and ESRS E5 (Resource Use and Circular Economy), depending on the specific impact type.

What remains in E3 is water. That means freshwater, surface water, groundwater, seawater used in operations, produced water, and third-party water. The standard’s purpose under ESRS E3 paragraph 1 is to establish disclosure requirements that let stakeholders understand how the undertaking affects water resources and how water-related risks affect the undertaking. The double materiality lens applies: impact materiality (does your client’s water use harm water bodies or communities?) and financial materiality (do water-related risks affect your client’s cash flows or enterprise value?).

The interaction with other environmental standards matters for your file. Water pollution goes under ESRS E2 Pollution. Climate-related water risks (droughts, flooding) connect to ESRS E1. Impacts on communities from water use fall under ESRS S3. Your client’s sustainability statement needs to make these cross-references explicit, and your assurance procedures need to check they haven’t double-counted or omitted disclosures that belong in a different standard.

How your client determines whether water is material

ESRS E3 AR 1 directs the undertaking to assess materiality using a four-phase approach that corresponds to the LEAP framework (Locate, Evaluate, Assess, Prepare). The amended ESRS removed the ESRS E3-specific IRO-1 disclosure requirement, consolidating that content into ESRS 2 General Disclosures. But the substance of the materiality assessment hasn’t changed.

Phase 1 (Locate) asks where the undertaking’s operations interface with water risk. ESRS E3 AR 5 and AR 6 require the undertaking to consider river basins as the relevant assessment level and to combine that with an operational risk assessment of its own facilities and those of material suppliers. The WRI Aqueduct Water Risk Atlas is explicitly referenced in ESRS E3 AR 6 as a tool for identifying high-water-stress areas. If the client has operations in Southern Spain, the Po Valley, or parts of the Dutch delta where saltwater intrusion is increasing, Phase 1 should flag these locations immediately.

Phase 2 (Evaluate) requires the undertaking to assess the scale of its dependencies and impacts. This includes water withdrawal volumes, discharge quality, consumption patterns, and whether the undertaking operates in areas where the water body status doesn’t meet the criteria in the EU Water Framework Directive (Directive 2000/60/EC), referenced in ESRS E3 AR 7. For manufacturing clients, this evaluation typically centres on process water. For real estate or logistics clients, the evaluation centres on whether site-level stormwater management affects nearby water bodies.

Phase 3 (Assess) converts those findings into material impacts, risks and opportunities. ESRS E3 AR 4 lists the sub-topics the materiality assessment should cover: water consumption, water withdrawals, water discharges, and water pollution. Under the amended ESRS, marine resources drop out of this list. The double materiality assessment applies in full: the client must assess both whether its water use harms water bodies or communities (impact materiality) and whether water-related risks affect its financial position (financial materiality). A chemical producer with €2M of annual water permit fees and a facility downstream of a frequently drought-stressed basin has financial materiality exposure that’s easy to quantify. A logistics company with office-based operations and municipal water supply probably doesn’t.

For your assurance engagement, the critical question is whether the client’s DMA process actually ran through these phases with site-level data. A DMA that concludes water is not material based on sector averages rather than site-specific analysis won’t hold up. If even one site sits in a high-water-stress area, ESRS E3 paragraph 9 requires disclosure of that fact and the reasons for any absence of a water policy covering it.

The four disclosure requirements in practice

The amended ESRS E3 contains four disclosure requirements after the removal of E3-5 (Anticipated Financial Effects) and the consolidation of IRO-1 into ESRS 2. Each one references the relevant General Disclosure Requirement (GDR) in ESRS 2 as its baseline, then adds E3-specific content.

E3-1: Policies related to water

ESRS E3 paragraph 9 requires disclosure of the undertaking’s policies for managing material water-related impacts, risks and opportunities. Under the amended ESRS, this references ESRS 2 GDR-P as the structural template. The E3-specific additions require the undertaking to describe how its policies address water use, sourcing, treatment, and pollution prevention. If the undertaking has sites in high-water-stress areas, it must disclose how its water management policy covers those locations specifically.

In practice, most non-Big 4 clients in the Netherlands won’t have a standalone water policy. They’ll have an environmental management system (often ISO 14001 certified) that includes water as a subtopic. Your job is to check whether that system produces the disclosures E3-1 demands. A general environmental policy statement that mentions water in passing won’t satisfy paragraph 9 if the DMA identified water as material. The policy must address the specific material impacts the DMA found. If the DMA flagged water consumption at a particular manufacturing site, the policy should describe how the company manages consumption at that site, not just state that “water management is a priority.” The SFDR principal adverse impact indicator #7 (investments in companies without water management policies) also draws on E3-1, which gives the disclosure additional weight for clients with institutional investors.

E3-2: Actions and resources

ESRS E3 paragraphs 15 and 18 require the undertaking to describe actions taken and resources allocated to manage water-related impacts. The amended ESRS simplifies this to reference ESRS 2 GDR-A, but retains the E3-specific requirement to specify whether actions target water avoidance, reduction, reclamation, reuse, or ecosystem restoration.

The assurance risk here is that clients describe intentions rather than actions. A statement like “we plan to reduce water consumption by 15% by 2028” is a target (E3-3), not an action (E3-2). An action is “we installed closed-loop cooling systems at our Eindhoven plant in Q2 2024, reducing freshwater withdrawal by 4,200 m³ per year.” Check for this distinction in the draft sustainability statement. The amended ESRS also requires the undertaking to specify the financial resources allocated to each action. This means your audit file should contain the CapEx or OpEx evidence supporting the stated resource allocation. A water action without a corresponding financial figure is an incomplete disclosure under E3-2 paragraph 18.

E3-3: Targets related to water

ESRS E3 paragraph 20 requires disclosure of water-related targets, following ESRS 2 GDR-T. The undertaking must specify whether targets address water risk areas, whether ecological thresholds informed the target-setting process, and whether targets are mandatory (imposed by legislation) or voluntary.

Paragraph 25 adds that the undertaking must state whether its targets are mandatory or voluntary. This matters for your procedures. A target imposed by a provincial water authority permit is verifiable against the permit conditions. A voluntary target set internally requires you to check the baseline data, the methodology, and whether progress tracking exists. ESRS E3 AR 22 suggests that the Science-Based Targets Initiative for Nature (SBTN) interim guidance can inform ecological threshold setting. In practice, very few mid-market European companies have set science-based water targets. Most voluntary targets are intensity-based (m³ per unit of production or per €M revenue) rather than absolute. Your procedures should document whether the target type is adequate for the identified risk. An intensity target at a site in a high-water-stress area may look good on a per-unit basis while the absolute withdrawal volume keeps growing.

E3-4: Water consumption metrics

ESRS E3 paragraph 26 (in the original standard) requires disclosure of total water consumption in cubic metres. The amended ESRS made the metrics on water withdrawal and water discharges mandatory (previously they sat as voluntary datapoints) while removing the water intensity metric entirely.

Under the amended E3-4, the undertaking reports total water consumption, total water withdrawal (disaggregated by source where material), and total water discharge (disaggregated by destination where material). EFRAG’s methodological guidance clarifies that water consumption equals withdrawal minus discharge, and that the unit of measurement is cubic metres. For sites in high-water-stress areas, the undertaking must provide a site-level breakdown.

Your assurance work on E3-4 is more concrete than any other ESRS E3 disclosure requirement. You need the client’s water meter readings, utility invoices, or production-based estimates (with the methodology documented). If the client uses estimates, ESRS E3 requires disclosure of the calculation methodology and the share of the measure obtained from direct measurement versus sampling, extrapolation, or best estimates. The Financial Ratio Calculator can help you benchmark water consumption intensity against industry peers when assessing whether the client’s reported figures are plausible, though you’ll need sector-specific reference data to make the comparison meaningful.

What changed under the December 2025 Omnibus amendments

EFRAG submitted its final technical advice to the European Commission on 3 December 2025. The amended ESRS E3 is one of the most heavily simplified standards in the set. The ERM analysis of the July 2025 exposure drafts identified a 70.4% reduction in mandatory datapoints for E3, making it the second-largest reduction after E4 (77.8%).

The changes that matter for your engagement fall into four categories.

Marine resources left E3. Any disclosures related to ocean resources, fishing practices, or marine ecosystems now belong in E4 or E5. If your client’s DMA identified marine impacts, you need to check whether those disclosures moved to the correct standard.

E3-IRO-1 was eliminated. The materiality assessment process disclosure is now covered centrally in ESRS 2 General Disclosures. The LEAP approach guidance that previously sat in E3’s application requirements moved to non-mandatory illustrative guidance (NMIG). This means the LEAP framework is no longer a required disclosure structure for E3, though it remains a useful methodology.

E3-5 (Anticipated Financial Effects) was deleted. EFRAG cited immature methodology as the reason. Any financial effects disclosure now falls under the general provisions in ESRS 2. Your client no longer needs to quantify the anticipated monetary impact of water-related risks under E3 specifically.

Water metrics became clearer. Withdrawal and discharge metrics moved from voluntary to mandatory. The water intensity metric was removed. Methodological guidance on calculation methods and units was added to the application requirements. For your procedures, this means the data you need to test is now more precisely defined, which actually makes the engagement easier to scope.

The amended ESRS are not yet legally binding. The European Commission must adopt them through a delegated act, expected by mid-2026. But EFRAG’s December 2025 submission is widely expected to survive largely intact. Wave 1 reporters (large listed companies reporting on FY2024) operate under the original 2023 ESRS. Wave 2 reporters, whose deadline was pushed to FY2027 by the Stop-the-Clock directive (Directive (EU) 2025/794), will likely report under the simplified version. If your client is a Wave 1 reporter, the original E3 with all its voluntary datapoints still applies for FY2024 and FY2025 reporting. If your client falls into Wave 2, plan for the amended version.

The practical effect for your engagement planning is significant. Under the original ESRS E3, a water-intensive client might have needed 15 to 20 hours of assurance procedures on E3 alone (covering IRO-1 process disclosure, five disclosure requirements, and a full set of voluntary and mandatory metrics). Under the amended version, the same client needs closer to 8 to 12 hours, concentrated on the four remaining disclosure requirements with clearer metrics definitions. Scoping your engagement correctly depends on knowing which version applies.

Worked example: Van Leeuwen Papier B.V.

Van Leeuwen Papier B.V. is a mid-sized paper manufacturer based in Apeldoorn, Netherlands, with €67M revenue and 180 employees. The company operates one production facility that uses significant volumes of process water for pulp washing and sheet formation. The facility draws from a local surface water source (the Apeldoorns Kanaal) and discharges treated effluent back into the same watercourse under a provincial Waterschap permit.

Step 1: Materiality assessment

Van Leeuwen’s sustainability team runs the WRI Aqueduct assessment. The Apeldoorn region shows medium-high baseline water stress. Process water consumption is 285,000 m³ per year. The Waterschap permit caps discharge at 240,000 m³ annually with specific limits on suspended solids and biological oxygen demand.

Step 2: Policy disclosure (E3-1)

Van Leeuwen has an ISO 14001-certified environmental management system. The water management section covers procurement (surface water extraction under permit), treatment (on-site effluent treatment plant), and pollution prevention (closed-loop recycling for non-contact cooling water). The policy does not explicitly address product design for water conservation because paper is not a water-consuming end product in the consumer phase.

Step 3: Actions and resources (E3-2)

In 2024, Van Leeuwen invested €420,000 in upgrading its effluent treatment capacity and €85,000 in installing flow meters on all extraction and discharge points. The effluent upgrade reduced suspended solids in discharge by 32%. The flow meters replaced the previous estimation methodology with direct measurement for all water metrics.

Step 4: Targets (E3-3)

Van Leeuwen set a voluntary target to reduce freshwater withdrawal per tonne of paper produced by 12% by 2028, from a 2023 baseline of 4.03 m³/tonne to 3.55 m³/tonne. The target is voluntary (no regulatory mandate requires the reduction). No ecological threshold analysis was performed.

Step 5: Metrics (E3-4)

Van Leeuwen reports total water withdrawal of 285,000 m³ (100% surface water, measured by flow meters installed in 2024). Total water discharge: 238,000 m³ (surface water, measured). Total water consumption: 47,000 m³ (calculated as withdrawal minus discharge). The facility is in a medium-high water stress area per Aqueduct. No breakdown by source type is needed because all withdrawal comes from a single surface water source.

The completed file shows a client with a clear water footprint, measurable metrics, documented actions with verifiable outcomes, and one disclosure gap (absence of ecological threshold analysis in target-setting). A reviewer would see a structured ESRS E3 section that traces from materiality to metrics with supporting evidence at every step.

Practical checklist for your next CSRD engagement

1. Run (or verify the client ran) the WRI Aqueduct assessment for every operational site and material supplier facility. Document the basin-level water stress classification for each location. ESRS E3 AR 5 and AR 6 require this site-level approach.
2. Check whether the client’s DMA separates water from marine resources. Under the amended ESRS, marine disclosures belong in E4 or E5. If the client’s DMA was performed before December 2025, verify that the sustainability statement reflects the updated scope.
3. For E3-4 metrics, obtain the source data behind every water volume figure. ESRS E3 requires disclosure of the share obtained from direct measurement versus estimation. If more than 30% is estimated, document the estimation methodology and test its reasonableness against industry benchmarks or prior-year actuals.
4. Verify that the client discloses whether each water target is mandatory or voluntary (ESRS E3 paragraph 25). For mandatory targets, trace them to the specific permit or regulatory requirement. For voluntary targets, check whether ecological thresholds were considered in the target-setting process (ESRS E3 paragraph 24).
5. Confirm that any site in a high-water-stress area has a site-level metrics breakdown in the sustainability statement, not just a group-level aggregate. If the client has no water policy covering that site, paragraph 9 requires the client to state this fact and explain why.
6. Cross-check the ESRS E3 disclosures against E2 (water pollution), E1 (climate-related water risks), and S3 (community impacts from water use). The most defensible sustainability statement makes these cross-references explicit.

Common mistakes in first-year ESRS E3 filings

• Treating the DMA as a desk exercise: EFRAG’s ESRS E3 AR 6 requires assessment at river basin level combined with operational risk assessment. Companies that rely on sector-level averages rather than site-specific Aqueduct data will produce a DMA that doesn’t satisfy the standard’s granularity requirements. The ERM analysis of the July 2025 exposure drafts confirmed that site-level data remains the expected baseline even under the simplified ESRS. This problem is even more acute for ESRS E4 (Biodiversity and Ecosystems), where the LEAP approach requires GIS-based site screening against protected area databases.
• Confusing actions with targets: E3-2 asks for concrete measures already taken and resources already allocated. E3-3 asks for forward-looking objectives. The distinction matters because your assurance procedures differ: for actions, you test whether they happened and what they achieved; for targets, you test whether the baseline, methodology and progress tracking are sound. Watch for clients who list a target under E3-2 (actions) because it sounds more impressive than the actual completed actions.
• Reporting marine resource disclosures under E3: Under the amended ESRS, marine resources moved to E4 and E5. Companies using pre-Omnibus templates that include marine resource sections under E3 will produce a sustainability statement that doesn’t match the standard structure. If the client’s CSRD software or template was set up before December 2025, flag this with the sustainability team early in the engagement.
• Omitting the mandatory/voluntary classification for targets: ESRS E3 paragraph 25 requires each water target to be classified as mandatory or voluntary. First-year reporters frequently set targets and describe them in detail without stating whether they are regulatory requirements or self-imposed commitments. This matters because the assurance evidence differs: a mandatory target needs to be traced to the specific permit or regulation, while a voluntary target requires evidence of the baseline and methodology.

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Frequently asked questions

Further reading and source references

• ESRS E3, Water and Marine Resources: the topical standard governing water-related disclosures under the CSRD.
• ESRS 1, General Requirements: governs materiality assessment and the LEAP framework guidance.
• EU Water Framework Directive (Directive 2000/60/EC): referenced in ESRS E3 AR 7 for water body status assessment.
• WRI Aqueduct Water Risk Atlas: the screening tool referenced in ESRS E3 AR 6 for identifying high-water-stress areas.