How to Report Resource Use and Circular Economy Under ESRS E5

When is ESRS E5 material?

ESRS E5 applies only when resource use and circular economy are assessed as material through the double materiality assessment required by ESRS 1. This isn’t a formality. A professional services firm with 200 employees in an office building will almost certainly conclude that E5 is not material. A manufacturer consuming 12,000 tonnes of plastic resin per year will almost certainly conclude that it is.

The materiality assessment under ESRS E5 AR 1 follows EFRAG’s LEAP approach across four phases: locate where resource-related impacts arise, evaluate severity of those impacts, assess the resulting risks and opportunities, then prepare the findings. But the practical shortcut (which ESRS E5 AR 2 makes explicit) is that phases 1 and 2 for E5 rely heavily on the materiality work you’ve already done under ESRS E1, E2, E3, and E4. If the client’s climate assessment identified high energy and material intensity in production, or the pollution assessment flagged substances of concern in outputs, E5 will almost certainly be material too.

Two sub-topics drive the assessment: resource inflows (what goes in) and resource outflows (what comes out, including waste). ESRS E5 AR 4 lists the specific sub-topics: resource use optimisation, intensity of materials and products, renewable versus non-renewable resources, products and materials designed for circularity, waste generation, and waste management. Your materiality documentation should address each sub-topic individually. A client may find inflows material but outflows immaterial, or the reverse.

For the assurance practitioner, the key documentation point is this: if the client determines E5 is not material, ESRS 1 paragraph 30 still requires a brief explanation of the materiality conclusion. That explanation needs to be specific enough that a reviewer can trace the reasoning. Stating that resource use was “not considered significant” without referencing the assessment criteria or the sub-topics evaluated is the kind of gap that generates review findings.

Where E5 materiality gets genuinely difficult is for companies that are primarily service-based but have material physical operations. Consider an IT consulting firm with 2,000 employees across four office buildings, running a data centre with 500 servers refreshed on a four-year cycle. The consulting services themselves have negligible resource inflows. But the data centre consumes rare earth elements, generates electronic waste at end-of-life, and has measurable energy consumption already captured under E1. Whether the data centre’s resource use makes E5 material depends on scale. Your working paper should document the quantitative threshold the client applied and the rationale for the conclusion, not just the outcome.

ESRS E5 AR 2 offers a practical shortcut for the assessment: because circular economy aims at reducing environmental impact across all E-standards, the materiality assessments already conducted under E1 through E4 provide most of the evidence needed for E5. If the client’s E1 assessment identified significant material inputs, or the E4 assessment flagged raw material extraction impacts, those findings carry forward. Your E5 materiality documentation can cross-reference the prior assessments rather than repeating the analysis from scratch.

What does ESRS E5 actually require?

The standard contains six disclosure requirements, split between two categories. The first category covers impacts, risks, and opportunities management. The second covers metrics and targets.

Under impacts, risks, and opportunities management, E5-1 (paragraph 17) requires a description of policies related to resource use and circular economy. E5-2 (paragraph 19, as amended in the November 2025 draft) requires disclosure of the client’s key resource use and circular economy actions. These two requirements are qualitative. They describe what the client does, not how much.

Under metrics and targets, four requirements demand quantitative data. E5-3 (paragraph 22) requires disclosure of targets related to resource use, specifying which layer of the EU waste hierarchy each target relates to. E5-4 (paragraph 29) covers resource inflows. E5-5 (paragraph 34) covers resource outflows, including both products and waste. E5-6 (paragraph 42) addresses anticipated financial effects from resource use and circular economy-related risks and opportunities.

The interaction with other ESRS matters here. ESRS E5 paragraph 7 maps the boundary between E5 and four other environmental standards. Climate change (E1) covers energy consumption. Pollution (E2) covers substances of concern, including microplastics. Water (E3) covers water as a physical resource. Biodiversity (E4) covers impacts on species and habitats from extraction. E5 covers the remainder: the physical flow of materials and products through the client’s operations, and the waste those operations generate.

For your working paper, this means you need a cross-reference matrix. When the client reports total waste generated under E5 paragraph 37, the hazardous waste component may also feed into E2 pollution disclosures. When the client reports material inflows from biological sources, that data may connect to E4 biodiversity impacts. ESRS E5 paragraph 7(e) explicitly notes the interaction between E5 and social standards (ESRS S3) where waste impacts affect communities. Documenting these linkages is part of the assurance work, not optional background.

Resource inflows: what paragraph 29 expects you to document

ESRS E5 paragraph 29 (renumbered to paragraph 12 in the November 2025 amended draft) requires the client to disclose information about the types and circularity of resources entering their operations. This covers materials, products (including packaging), water, and property, plant, and equipment used in the client’s own operations and upstream value chain.

The specific data points under paragraph 31 are where most clients struggle. The client must disclose the total weight of materials used, broken down by the percentage from renewable sources, the percentage from recycled or reused inputs, and the percentage of materials designed for recyclability. ESRS E5 AR 23 specifies that the denominator for these percentages is the overall total weight of materials used during the reporting period. AR 24 adds that usage data should reflect the material in its original state, not adjusted figures like dry weight.

Where clients without existing environmental management systems run into trouble is the distinction between what’s measured and what’s estimated. ESRS E5 AR 6 permits estimation methodologies (including Material Flow Analysis from the European Environment Agency, Product Environmental Footprint methods, and Life Cycle Assessment under ISO 14040/44). But the client must specify which data is from direct measurement and which from estimation. Your working paper needs to document this distinction for every material line item.

The November 2025 amended draft (paragraph 13) tightens the requirement further. The client must now provide a concise description of each key material used, specifying any critical raw materials and strategic raw materials it contains (as defined under the Critical Raw Materials Act, Regulation EU 2024/1252). For a manufacturing client, this means reviewing their bill of materials against the EU’s critical raw materials list. For a service company where E5 is material (rare, but possible for IT hardware-intensive operations), it means documenting the strategic raw materials embedded in the equipment they use.

The CSRD double materiality glossary entry on ciferi.com covers the assessment framework that feeds into this disclosure. The practical question for the assurance practitioner is whether the client’s procurement system can produce weight-based data at the material level. If procurement tracks spend but not weight, the client will need conversion factors, and those factors need documented sources.

A common data gap appears when the client procures through intermediaries. If a packaging manufacturer buys plastic resin from a distributor rather than directly from the petrochemical producer, the distributor may not provide recycled content certificates. The client can’t simply assume 0% recycled content and move on. ESRS E5 paragraph 31(b) asks for the percentage specifically. If the client doesn’t know, they need to disclose that the figure is estimated and explain the estimation basis. In practice, this means the client should request material composition data from their top suppliers by weight, covering at least the suppliers representing 80% of total material spend. Anything below that threshold can be estimated using industry averages from sources like the European Environment Agency or sector-specific associations.

The interaction between E5-4 and product design is another area that surprises first-year reporters. If the client manufactures products that contain recycled input, the same material appears in the inflow data (E5-4) and potentially in the outflow data (E5-5) as a design-for-recyclability characteristic. Double counting is a real risk. ESRS E5 AR 25 addresses this directly: where overlap exists between categories of reused and recycled materials, the client must specify how double counting was avoided and the choices that were made.

Resource outflows and waste: paragraphs 34–40 in practice

Resource outflows under E5-5 split into two distinct disclosures: products and materials (paragraph 35), and waste (paragraphs 37–40).

For products and materials, paragraph 35 requires the client to describe the key products and materials that come out of their production process and that are designed along circular economy principles. The standard specifies four design characteristics: durability, reusability, repairability, and disassembly/recyclability. The client doesn’t need to report all four for every product. They report whichever characteristics are relevant to their outputs.

ESRS E5 AR 26 clarifies that “products and materials” includes packaging. AR 27 specifies that the recyclability rate calculation uses the overall total weight of materials during the reporting period as the denominator (the same denominator used for inflows under AR 23). The designed recyclability rate formula in the amended November 2025 draft is explicit: total weight of recyclable materials incorporated in the product divided by total weight of materials in the product.

For waste, paragraph 37 is the most data-intensive requirement in E5. The client must disclose the total amount of waste generated (in tonnes or kilograms), broken into waste diverted from disposal and waste directed to disposal. Waste diverted from disposal must be further split between hazardous and non-hazardous, then by recovery operation type: preparation for reuse, recycling, and other recovery operations. Waste directed to disposal follows the same hazardous/non-hazardous split, broken by incineration, landfill, and other disposal operations.

This is where many first-year CSRD reports fail. The waste data most clients have comes from invoices from waste management contractors. Those invoices show pickup frequency and sometimes total weight, but rarely classify by treatment method. Getting from “our waste contractor invoices show 340 tonnes collected” to the full paragraph 37 breakdown requires the client to obtain waste transfer notes or treatment certificates from their contractors. ESRS E5 AR 28 notes that the client may disclose engagement in extended producer responsibility schemes or take-back schemes, and AR 30 points to the European Waste Catalogue for classifying waste streams by sector.

Paragraph 38 adds a compositional layer: the client must specify waste streams relevant to their sector or activities. For a packaging manufacturer, that means classifying plastic scrap, paper offcuts, chemical waste from printing processes, and general operational waste separately. For a food producer, it means distinguishing organic waste from packaging waste from process chemicals.

The ISA 520 Analytical Review Calculator can help you benchmark year-over-year waste intensity ratios during your analytical procedures. If the client’s total waste dropped 30% while production volume stayed flat, that’s either a genuine improvement or a data quality issue worth investigating.

Paragraph 40 requires contextual information explaining the waste data. This isn’t optional narrative; it’s where the client explains methodological choices, data gaps, and assumptions. Your working paper should document whether the waste figures are from direct measurement (weighbridge data, waste transfer notes) or from estimation (applying industry conversion factors to pickup volumes). The distinction matters for limited assurance.

One practical data collection approach that works well for mid-market manufacturers: request the client to compile a waste contractor matrix listing every waste contractor, the waste streams they handle, the measurement method (weighed at collection, weighed at treatment facility, or estimated by container volume), and the treatment method applied. Most clients have two to four waste contractors. Compiling this matrix takes the sustainability manager half a day, but it produces the raw data for the entire paragraph 37 disclosure in one exercise. Without it, the data arrives piecemeal over weeks and reconciliation becomes painful.

The waste hierarchy alignment under E5-3 connects to the waste data under E5-5. If the client sets a target to “reduce waste to landfill by 50% by 2028,” that target refers to the landfill line in the paragraph 37 breakdown. The target baseline and the reporting period figure must use the same measurement methodology. If the baseline was estimated from container volumes but the current year uses weighbridge data, the comparison is unreliable, and the client needs to restate the baseline or disclose the methodological change. Your working paper should flag this.

Worked example: Janssen Verpakkingen B.V.

Janssen Verpakkingen B.V. is a mid-market packaging manufacturer based in Tilburg, Netherlands. Revenue: €68M. Two production facilities. Primary outputs: corrugated cardboard packaging and flexible plastic packaging for food industry clients. 142 employees. First CSRD reporting year: FY2025.

1. Materiality assessment

Janssen’s double materiality assessment identified resource use and circular economy as material on both impact and financial dimensions. Impact materiality: the company consumes approximately 9,400 tonnes of paper and cardboard and 2,100 tonnes of plastic resins annually, with direct waste generation from cutting, printing, and forming processes. Financial materiality: virgin plastic resin prices increased 34% between 2022 and 2024, creating procurement cost exposure.

2. E5-1 and E5-2: policies and actions

Janssen has a circular economy policy (adopted January 2025) committing to 40% recycled content in plastic inputs by 2028 and zero waste to landfill by 2027. Current actions include a supplier qualification programme requiring recycled content certificates, and a closed-loop arrangement with their two largest cardboard customers for post-consumer collection.

3. E5-3: targets

Janssen set two resource-use targets. Target 1: increase recycled content in plastic inputs from 18% (FY2024 baseline) to 40% by 2028. This target relates to the “recycling” layer of the waste hierarchy. Target 2: reduce total waste directed to disposal from 380 tonnes (FY2024) to under 100 tonnes by 2027, targeting the “prevention” and “recycling” layers.

4. E5-4: resource inflows

Total material inflows: 11,627 tonnes. Recycled or reused content as a percentage of total: 52.1%.

No critical raw materials or strategic raw materials under Regulation EU 2024/1252 were identified in Janssen’s material inputs.

5. E5-5: resource outflows

Products: Janssen’s corrugated cardboard products are designed for recyclability (designed recyclability rate: 94%, based on mono-material construction). Flexible plastic packaging has a lower designed recyclability rate (61%) due to multi-layer laminate structures in some product lines. Durability and repairability are not applicable to single-use packaging products.

Waste (paragraph 37 breakdown):

Total waste generated: 1,170 tonnes. Non-recycled waste: 358 tonnes (30.6% of total).

6. E5-6: anticipated financial effects

Janssen identified two material financial effects. Risk: virgin plastic resin price volatility (estimated annual exposure of €180K–€350K based on the 2022–2024 price range applied to current non-recycled plastic consumption of 1,722 tonnes). Opportunity: the closed-loop cardboard arrangement reduces procurement costs by approximately €95K annually through preferential pricing on recycled inputs.

The completed file gives a reviewer a full trail from materiality assessment through policies, targets, quantitative inflows, quantitative outflows (including the full paragraph 37 waste breakdown), and financial effects. Each disclosure cross-references the data source and measurement methodology.

Practical checklist for your next ESRS E5 engagement

1. Before fieldwork: confirm whether E5 is material by reviewing the double materiality assessment. Check that the assessment addresses all sub-topics listed in ESRS E5 AR 4 individually, not as a single block.
2. Request the client’s bill of materials with weights (not just spend). If procurement systems track only monetary values, budget time for the client to develop weight conversion factors with documented sources.
3. For resource inflows (E5-4): build a reconciliation between total materials purchased (procurement records) and total materials reported. The gap should be explainable (inventory movements, wastage factors).
4. For waste (E5-5 paragraph 37): request waste transfer notes from every waste contractor. Confirm that treatment method classifications (recycling, incineration, landfill) come from the contractor, not from client assumptions.
5. Cross-reference E5 disclosures against E1 (energy in material processing), E2 (substances of concern in waste streams), and E4 (raw material extraction impacts). Document the cross-references explicitly in the working paper.
6. For the designed recyclability rate: verify that the client’s calculation uses the formula in the amended ESRS E5 (total weight of recyclable materials incorporated in the product divided by total product weight). Check mono-material versus multi-material product classifications.

Common mistakes

• Reporting total waste without the full paragraph 37 breakdown: the EFRAG November 2025 draft retains the requirement for the granular split by treatment type and hazardous/non-hazardous classification. A single “total waste: X tonnes” figure will not satisfy the disclosure requirement.
• Using monetary procurement data as a proxy for material weight without disclosing the estimation methodology: ESRS E5 AR 24 requires that usage data reflect the material in its original state. A spend-to-weight conversion is permitted, but the conversion factors and their sources must be documented.
• Omitting the cross-reference between E5 and other environmental standards: ESRS E5 paragraph 7 explicitly maps the interactions. If the client’s hazardous waste feeds into E2 pollution disclosures but the two figures don’t reconcile, the limited assurance practitioner will have a finding.

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Further reading and source references

• ESRS E5, Resource Use and Circular Economy: the source standard governing all disclosure requirements for resource inflows, outflows, and waste.
• ESRS 1, General Requirements: covers the double materiality assessment framework and transitional provisions.
• Regulation EU 2024/1252, Critical Raw Materials Act: defines the critical and strategic raw materials list referenced by the amended ESRS E5 paragraph 13.
• European Waste Catalogue: the classification system referenced by ESRS E5 AR 30 for categorising waste streams by sector.