February 17, 2025
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Skills intelligence software may be key to providing you with the data you need to be ESRS S-1 compliant
The Corporate Sustainability Reporting Directive (CSRD), introduced by the European Union, aims to enhance transparency in sustainability reporting across Europe. It requires both EU businesses and non-EU companies with significant operations in the EU (approximately 50,000 companies) to disclose how sustainability issues impact their operations and financial performance, as well as how their activities affect the environment and society.
The CSRD’s goal is to improve the transparency, comparability, and reliability of sustainability data, helping stakeholders – such as investors, policymakers, and consumers – make well-informed decisions and hold companies accountable for their environmental, social, and governance (ESG) practices.
While the CSRD is implemented in phases (more details can be found here), companies need to familiarise themselves with its detailed standards. Known as the European Sustainability Reporting Standards or ESRS, these standards provide a comprehensive framework for sustainability reporting. They include 12 sector-agnostic standards with two cross-cutting standards and 10 focusing on specific Environmental, Social, and Governance (ESG) topics that have additional sub-topics. These standards lay the groundwork for aligning corporate actions with the EU’s broader climate, environmental, and social goals.
One of the most important standards within this framework is ESRS S1, which focuses on “Own Workforce” and covers employee diversity, fair wages, and working conditions.
Why is it so important?
The CSRD introduces the concept of double materiality, which requires companies to report on both how sustainability factors affect financial performance (financial materiality) and how their operations impact society and the environment (impact materiality). While all companies must comply with the general standards, the specific applicability of the remaining disclosures (94 topics and sub-topics in all) depends on a company’s materiality assessment. Companies can omit topics they deem immaterial, but most workforce-related issues could typically be considered material. This makes ESRS S1 an important material matter to report on for most companies.
In this blog, we will take a closer look at ESRS S1.
ESRS S1 includes 17 disclosure requirements categorised under ‘Impacts, risks and opportunities management’ and ‘metrics and targets’. They are:
Disclosure requirement S1-1 – Policies related to own workforce: The undertaking shall describe its policies adopted to manage its material impacts on its own workforce, as well as associated material risks and opportunities.
Disclosure requirement S1-2 – Processes for engaging with own workforce and workers’ representatives about impacts: The undertaking shall disclose its general processes for engaging with people in its own workforce and workers' representatives about actual and potential impacts on its own workforce.
Disclosure requirement S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns: The undertaking shall describe the processes it has in place to provide for or cooperate in the remediation of negative impacts on people in its own workforce that the undertaking is connected with, as well as channels available to its own workforce to raise concerns and have them addressed.
Disclosure requirement S1-4 – Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions: The undertaking shall disclose how it takes action to address material negative and positive impacts, and to manage material risks and pursue material opportunities related to its own workforce, and the effectiveness of those actions.
Disclosure requirement S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities:
The undertaking shall disclose the time-bound and outcome-oriented targets it may have set related to:
Disclosure requirement S1-6 – Characteristics of the undertaking’s employees: The undertaking shall describe key characteristics of employees in its own workforce.
Disclosure requirement S1-7 – Characteristics of non-employees in the undertaking’s own workforce: The undertaking shall describe key characteristics of non-employees in its own workforce.
Disclosure requirement S1-8 – Collective bargaining coverage and social dialogue: The undertaking shall disclose information on the extent to which the working conditions and terms of employment of its employees are determined or influenced by collective bargaining agreements and on the extent to which its employees are represented in social dialogue in the European Economic Area (EEA) at the establishment and European level.
Disclosure requirement S1-9 – Diversity metrics: The undertaking shall disclose the gender distribution at top management and the age distribution amongst its employees.
Disclosure requirement S1-10 – Adequate wages: The undertaking shall disclose whether or not its employees are paid an adequate wage, and if they are not all paid an adequate wage, the countries and percentage of employees concerned.
Disclosure requirement S1-11 – Social protection: The undertaking shall disclose whether its employees are covered by social protection against loss of income due to major life events, and, if not, the countries where this is not the case.
Disclosure requirement S1-12– Persons with disabilities: The undertaking shall disclose the percentage of its own employees with disabilities.
Disclosure requirement S1-13 – Training and skills development metrics: The undertaking shall disclose the extent to which training and skills development is provided to its employees.
Disclosure requirement S1-14 – Health and safety metrics: The undertaking shall disclose information on the extent to which its own workforce is covered by its health and safety management system and the number of incidents associated with work-related injuries, ill health and fatalities of its own workforce. In addition, it shall disclose the number of fatalities as a result of work-related injuries and work-related ill health of other workers working on the undertaking’s sites.
Disclosure requirement S1-15 – Work-life balance metrics: The undertaking shall disclose the extent to which employees are entitled to and make use of family-related leave.
Disclosure requirement S1-16 – Remuneration metrics (pay gap and total remuneration): The undertaking shall disclose the percentage gap in pay between its female and male employees and the ratio between the remuneration of its highest paid individual and the median remuneration for its employees.
Disclosure requirement S1-17 – Incidents, complaints and severe human rights impacts: The undertaking shall disclose the number of work-related incidents and/or complaints and severe human rights impacts within its own workforce, and any related material fines, sanctions or compensation for the reporting period.
ESRS S1 requires companies to disclose comprehensive data on their workforce, including employee demographics, training and development, diversity, and fair wages. However, beyond compliance, organizations that actively map workforce skills, track competency gaps, and engage in strategic workforce planning gain deeper insights that help improve both compliance and business outcomes.
Our skills management platform MuchSkills complements HRIS systems like SAP SuccessFactors, Workday, BambooHR, and Personio to provide workforce insights and help organizations align with CSRD ESRS S1 disclosures.
MuchSkills helps organisations:
By integrating with leading HRIS platforms like SAP SuccessFactors, Workday, BambooHR, and Personio, MuchSkills empowers organizations to assess, develop, and optimize their workforce while ensuring compliance with evolving regulatory requirements.
To discover more ways MuchSkills can transform your organisation – click the links below to explore!
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