Executive summary

The increasing convergence of voluntary sustainability frameworks and mandatory reporting requirements has created both challenges and opportunities for companies seeking to manage and disclose water-related impacts. This paper analyses the relationship between the Science Based Targets Network (SBTN) Freshwater framework and water components of the Corporate Sustainability Reporting Directive (CSRD), focusing on its technical specifications through the European Sustainability Reporting Standards (ESRS). It finds that the two frameworks, while fundamentally different in purpose, are highly complementary and can be effectively combined to improve both corporate water stewardship and sustainability reporting.

SBTN is a voluntary, science-based framework that enables companies to set basin-specific targets for water quantity and quality based on ecological thresholds, with a strong emphasis on environmental outcomes and real-world impact. In contrast, the EU’s CSRD is a mandatory regulatory framework for large EU companies and non-EU companies with significant EU operations to disclose environmental, social, and governance information in a standardised, comparable, and transparent manner under the ESRS. Following recent EU simplification reforms, the rules now primarily apply to companies with more than 1,000 employees and substantial annual turnover.

Introduction

This crosswalk paper is a comparison between freshwater components for SBTN and CSRD. It discusses overlaps, similarities, and complementarity, and highlights differences in water-related themes. The objective is to help companies and practitioners understand how SBTN Freshwater guidance and ESRS water-related disclosure requirements relate to one another. SBTN Freshwater Version 1.1 currently supports only a subset of ESRS E2 pollution disclosures, primarily nutrients and pesticides, and companies may need to apply additional methods to fully address other pollutants required under CSRD.

Presenting the frameworks

The SBTN is a global collaboration of environmental organisations that helps companies and cities measure, set, and disclose science-based targets aligned with Earth’s ecological limits. SBTN applies a standardised five-step process for target setting: assessing impacts and dependencies; prioritising material locations and pressures; setting targets grounded in scientific thresholds; acting and implementing mitigation and transformation actions; and tracking and publicly reporting progress.

Central to CSRD is a double materiality assessment, through which companies evaluate both how sustainability issues affect their financial performance and how their activities impact people and the environment. The CSRD framework pursues several key objectives: enhancing transparency, standardising reporting, improving accountability, and promoting sustainable finance. Revised simplified standards are expected to apply from the 2027 financial year.

European Sustainability Reporting Standards

The ESRS provides technical specifications for mandatory disclosures under the CSRD. Amongst the 12 standards of the ESRS, the strongest focus on water lies in the topical standards ESRS E2 (Pollution) and ESRS E3 (Water). Some components of ESRS 1 (General Requirements) and ESRS 2 (General Disclosures) also overlap with SBTN around stakeholder engagement and collective action, which is an important component of water stewardship.

Finding alignment and complementarity

SBTN Freshwater and ESRS share several common objectives, though they arrive there through different means. Both strive to drive corporate action on water management and encourage transparency around water impacts, strategies, and outcomes. Both frameworks require companies to begin with a materiality assessment. SBTN Freshwater emphasises basin-level context, directing companies to focus on locations and set targets based on the level of stress that freshwater systems are under. ESRS similarly requires companies to assess material water-related impacts, risks, and opportunities through a double materiality process.

Strategic alignment-using ESRS architecture to disclose SBTN targets and progress

This section provides a detailed mapping between the main ESRS headings and the SBTN five-step approach. SBTN’s freshwater framework aligns with parts of ESRS 2 and more closely with ESRS E3 and ESRS E2. For instance, the impacts, risks, and opportunities process (IRO-1) maps conceptually to Step 1 – Assess. Strategy and business model interaction (SBM-1 / SBM-2) maps to Step 1–2 Assess / Prioritise. Policies and actions related to water and pollution (E2-1, E3-1, E2-2, E3-2) align with Step 4 – Act. Targets related to pollution and water (E2-3, E3-3) relate to Step 3 – Measure, Set & Disclose, while pollution and water consumption metrics (E2-4, E2-5, E3-4) align with Step 5 – Track.

Notable differences, despite alignment

There are fundamental differences in purpose, structure, and level of analysis. ESRS is a regulatory disclosure framework focused on transparency, providing a high-level, company-wide view supported by estimated data. SBTN emphasises action towards measurable outcomes, requiring companies to identify specific high-impact locations like river basins, with prioritisation based on environmental thresholds rather than financial materiality. In terms of structure, ESRS separates water and pollution into distinct standards, whereas SBTN integrates both dimensions into science-based frameworks linking withdrawals and pollution to basin thresholds. The depth of analysis is typically greater in SBTN, particularly regarding value-chain hotspots and basin-level conditions.

Forward-looking alignment: SBTN Freshwater V2

The upcoming SBTN Version 2 enrichment of Step 3 technical guidance is expected to improve alignment with CSRD/ESRS by expanding freshwater guidance to cover groundwater and pesticides. This evolution will broaden the range of water quality parameters relevant to pollution disclosures, making SBTN targets more directly applicable to ESRS E2 requirements. Enhanced guidance on implementation pathways, including collaboration and collective basin-level action, will strengthen connections to governance and policy disclosure expectations under ESRS.

Conclusions

In practice, this integration allows SBTN outputs to inform double materiality assessments, target justification, action planning, and performance tracking, while ESRS ensures that these efforts are formally disclosed in line with regulatory expectations. SBTN focuses on scientific sufficiency and ecological outcomes, whereas ESRS focuses on formal disclosure and comparability. Together, SBTN and CSRD enable companies to move beyond disclosure toward demonstrable, outcome-oriented action on freshwater impacts.