ESRS E3 Explained: A Practitioner's Guide to Water and Marine Resources Reporting
Water is the sustainability topic that most companies underestimate until they look at a map. Once you overlay your operating sites against a basin-level water-stress layer, the picture often changes fast - and so does the relevance of ESRS E3.
This guide walks sustainability and operations teams through everything you need to know about ESRS E3: what it covers, how the double materiality assessment (DMA) determines whether you report under it, what each disclosure requirement actually asks for, and how to build the data infrastructure to answer those questions credibly.
What ESRS E3 covers - and what changed in 2026
ESRS E3 is the topical standard for water and marine resources under the Corporate Sustainability Reporting Directive (CSRD). Its original 2023 architecture covered four sub-topics: water resources (surface water and groundwater), marine resources (extraction and use), water-dependent ecosystems, and ocean health.
On 3 July 2026, the European Commission formally adopted the Delegated Act revising the ESRS as part of the Omnibus I simplification package. That act - now in a two-to-four-month parliamentary scrutiny period before entering into force - makes significant structural changes to E3.
The headline change is a rename and a scope narrowing. Under the revised standards, the standard becomes ESRS E3 - Water, and the marine-resource content is redistributed:
- Marine resource use (fish, gravel, kelp, seabed minerals) moves to ESRS E5 on Resource Use and Circular Economy.
- Marine biodiversity and ecosystem impacts move to ESRS E4 on Biodiversity and Ecosystems.
- The only marine subject remaining inside E3 is the use of seawater - principally desalination intake and cooling-water draw.
For most reporters this is a clarification rather than a substantive change. For ocean-economy companies it requires reorganising the materiality matrix and re-tagging supporting evidence before the FY2027 cycle begins.
The revised ESRS cut mandatory datapoints by more than 60% and total datapoints by more than 70% relative to the first-generation standards. For E3 specifically, the reduction is even steeper - roughly 70% - making it one of the most heavily simplified standards in the set.
Scope reminder (post-Omnibus): Wave 1 large PIEs already reporting are unaffected and continue under the revised standards from FY2027. The new permanent scope covers EU entities with more than 1,000 employees AND more than €450 million net turnover — these companies report for the first time on FY2027 data, filing in 2028. Most former Wave 3 SMEs are now out of mandatory scope entirely. Voluntary early application of the revised standards is permitted for FY2026.
The double materiality gate: who actually needs to report under E3
ESRS E3 is a topical standard - it only applies if your DMA concludes that water and marine resources are material to your business. That can happen through either lens of double materiality:
- Impact materiality: your operations or value chain have significant actual or potential impacts on water availability, quality, or marine ecosystems.
- Financial materiality: water-related risks or opportunities - scarcity, regulatory tightening, licence-to-operate constraints, physical damage from flooding or drought - could materially affect your financial position.
The revised ESRS introduces a more top-down materiality approach, allowing companies to predetermine the most obvious material topics based on their business model and sector before conducting a detailed assessment. In practice, this means that if your sector and footprint make water impacts obviously immaterial, you can scope E3 out with a documented, defensible rationale - without running a full bottom-up LEAP analysis first.
That said, the DMA remains the gate. And for many companies, the answer will be clear before the assessment is complete.
Sectors and situations where E3 almost always screens in
E3 will be front-and-centre on the materiality matrix for companies in food and beverage, textiles, agriculture, chemicals, semiconductors, pulp and paper, mining, and data centres. These sectors are either water-intensive in their own operations or heavily dependent on water-intensive supply chains.
The other key trigger is location. WRI's Aqueduct data finds that 25 countries - representing one-quarter of the world's population - are currently exposed to extremely high water stress annually. If any of your material operating sites sit in those catchments, impact materiality is almost certain to follow.
Areas of high water stress are defined as regions where 40-80% of available renewable water is already being withdrawn for human use. Areas of extremely high stress exceed 80%. The WRI Aqueduct Water Risk Atlas - a free, peer-reviewed tool that classifies catchments across 13 water-risk indicators - is the reference that most assurance providers expect to see in your methodology documentation.
The five disclosure requirements, unpacked
If your DMA concludes E3 is material, you report against five disclosure requirements. Here is what each one actually asks for.
E3-1 - Policies
You must describe your policies for managing material impacts, risks, and opportunities related to water. This means explaining the scope of the policy (own operations only, or extending into the value chain), the commitments made, and - critically - whether any of your sites in areas of high water stress are covered. If at least one site is located in an area of high water stress and is not covered by a policy, the undertaking must state this and provide reasons.
Under the revised ESRS, E3-1 is integrated into the ESRS 2 General Disclosures framework rather than standing alone, which reduces duplication but means your policy disclosures need to be consistent across the whole sustainability statement.
E3-2 - Actions and resources
This requirement asks you to describe the specific actions taken or planned to manage water consumption, withdrawal, discharge, and pollution - and the resources allocated to them. Actions can be mapped to the mitigation hierarchy: avoid, reduce, reclaim and reuse, or restore and regenerate. You must also specify actions and resources directed at sites in areas of water risk, including high-stress areas.
E3-3 - Targets
You must disclose quantified water targets, with enough context to make them meaningful. A 20% reduction target is far more credible - and more informative - when tied to a specific watershed than when stated as a company-wide aggregate. Targets can apply to own operations or extend across the value chain, and you must explain progress and any significant deviations.
E3-4 - Water metrics (the core quantitative block)
This is the substantive numerical disclosure. Under the revised ESRS, the metrics set has been restructured:
| Metric | Status (revised ESRS) | Unit / Notes |
|---|---|---|
| Total water consumption | Mandatory | m³ |
| Water consumption in areas at water risk / high stress | Mandatory | m³ — geographical disaggregation required |
| Water recycled and reused | Mandatory | m³ |
| Water stored and changes in storage | Mandatory | m³ |
| Water withdrawals | Now mandatory (previously voluntary) | m³ — by source type |
| Water discharges | Now mandatory (previously voluntary) | m³ — by destination |
| Water intensity (m³ per €m revenue) | Removed | No longer required |
The removal of the revenue-based water intensity metric is one of the cleaner simplifications - it was frequently misleading across sectors with very different revenue-to-water ratios. The addition of mandatory withdrawal and discharge figures is the more significant change: it gives a complete water-balance picture rather than just the consumption endpoint.
You must also provide contextual information: the quality and availability status of the basins you draw from, and whether your figures are based on direct measurement, sampling and extrapolation, or best estimates.
E3-5 - Anticipated financial effects
E3-5 asks you to estimate the financial effects of material water-related risks and opportunities - what water risk could cost the business in the medium and long term. This is the bridge between environmental and financial materiality. Under the revised ESRS, some of the methodology burden has been centralised in ESRS 2, reducing duplication, but the requirement to connect water risk to financial exposure remains.
The data challenge: where most teams get stuck
The disclosure requirements are not technically complex. The data collection behind them often is.
Companies with multi-site footprints report that watershed-level water data collection alone can consume six to nine months from a standing start. If your first E3 report is due in 2028 (for FY2027), the time to start building your data infrastructure is now — not in late 2026.
Metering and utility bills
Most sites rely on utility invoices for water consumption figures. These are adequate for total consumption but rarely provide the granularity needed for basin-level disaggregation or withdrawal-versus-consumption splits. Where sites draw from multiple sources - municipal supply, on-site wells, surface abstraction - you need source-level metering or a documented allocation methodology.
Water-stress mapping
The first step is overlaying your site list against a recognised water-stress tool. WRI Aqueduct 4.0 is the standard reference: it provides 13 water-risk indicators at sub-basin level, including baseline water stress, water depletion, and interannual variability, with projections to 2080 under multiple climate scenarios. It is free, peer-reviewed, and open-source. Aqueduct is best used as a screening and prioritisation tool; for sites that screen as high or extremely high stress, supplement with local and regional data.
Other recognised tools include the WWF Water Risk Filter and the EU Water Framework Directive basin status classifications.
Connecting E3 to the rest of your ESRS work
E3 does not sit in isolation. Three connections matter most:
- E1 (Climate Change): Physical climate risks - drought, changing precipitation, sea-level rise, glacial lake outbursts - are addressed under E1. Your E3 water-stress mapping and your E1 physical risk assessment should use consistent geographic data and share assumptions.
- E2 (Pollution): Emissions to water bodies, including oceans, and microplastics are addressed under E2. Your E3 discharge metrics and your E2 water-pollution disclosures need to be reconciled so they tell a coherent story.
- E4 (Biodiversity and Ecosystems): Freshwater aquatic ecosystems and the conservation of water-dependent habitats sit in E4. If your water withdrawals affect river flows or wetland hydrology, that impact will appear in both E3 (the volume) and E4 (the ecosystem consequence).
Practical get-ready checklist
Map your sector, operating sites, and value chain against the E3 topic list. Use a top-down approach first: if your sector and footprint make water impacts obviously immaterial, document that rationale. If not, proceed to a full LEAP-based assessment.
Download your site coordinates and run them through the Aqueduct Water Risk Atlas. Flag any sites in high (40–80% withdrawal ratio) or extremely high (>80%) stress basins — these drive your E3-1 policy gap analysis and your E3-4 geographical disaggregation.
For each material site, identify whether consumption data comes from utility bills, sub-meters, or estimates. Determine whether you can split withdrawals by source (municipal, surface, groundwater) and discharges by destination. Note methodology gaps now.
Ensure your policy explicitly covers sites in water-stressed areas. If any stressed site is not covered, document why and set a timeline for inclusion.
Set targets at the site or basin level where impacts are material, not just as company-wide aggregates. Tie targets to watershed context where possible — a science-based or ecologically-informed target is more defensible under audit.
Create a site-level data collection template covering: total consumption (m³), consumption in water-stressed areas, withdrawals by source, discharges by destination, recycled/reused volumes, and stored water. Collect FY2026 data now as a baseline — even if you are not reporting until 2028.
Share your site-level water-stress mapping with the E1 physical risk team and your discharge data with the E2 pollution team. Agree on consistent geographic boundaries and methodology assumptions across all three standards.
Frequently asked questions
Does every CSRD reporter have to disclose under ESRS E3?
No. ESRS E3 is a topical standard that only applies if your double materiality assessment concludes that water and marine resources are material — either because your operations impact water systems, or because water-related risks could affect your financial performance. Companies without material water impacts can scope E3 out, but the DMA must be documented and defensible.
When does the revised ESRS E3 apply?
The revised ESRS — adopted by the European Commission on 3 July 2026 — applies for financial years beginning on or after 1 January 2027. Voluntary early application is permitted for FY2026. The act is currently in a two-to-four-month parliamentary scrutiny period before entering into force. Wave 2 companies (>1,000 employees and >€450m turnover) will file their first reports in 2028 for FY2027 data.
What happened to the marine resources disclosures?
Under the revised ESRS, marine resource use (fish, minerals, kelp) has moved to ESRS E5, and marine biodiversity and ecosystem impacts have moved to ESRS E4. The only marine content remaining in E3 is the use of seawater — mainly desalination intake and cooling-water draw. Companies in ocean-economy sectors need to re-map their materiality matrices accordingly.
Is the water intensity metric still required?
No. The revenue-based water intensity metric (m³ per million euros of net revenue) has been removed from the revised ESRS E3-4. Water withdrawals and discharges, previously voluntary, are now mandatory. Total consumption, consumption in water-stressed areas, recycled/reused volumes, and stored water remain mandatory.
Which tool should we use to identify water-stressed sites?
The WRI Aqueduct Water Risk Atlas (version 4.0) is the reference tool most assurance providers expect to see. It is free, peer-reviewed, and provides sub-basin-level stress scores across 13 indicators, including projections to 2080. Use it for screening and prioritisation, then supplement with local data for sites that score high or extremely high.
How does E3 connect to E1 and E4?
E1 (Climate Change) covers physical water-related risks such as drought, flooding, and changing precipitation — your E3 water-stress mapping and E1 physical risk assessment should share consistent geographic data. E4 (Biodiversity) covers the ecosystem consequences of water use — if your withdrawals affect river flows or wetland hydrology, that impact appears in both E3 (the volume) and E4 (the ecological effect). Coordinating these workstreams early avoids inconsistencies in your sustainability statement.
Where to go from here
The data challenge in ESRS E3 is not conceptual - it is operational. The standard is asking for site-level, basin-disaggregated figures that most companies have never collected systematically. The companies that will find FY2027 reporting manageable are those that start building that infrastructure in 2025 and 2026: auditing their metering, running their sites through Aqueduct, and establishing a consistent data template across the estate.
The DMA remains the gate. But for water-intensive sectors and any company with sites in stressed basins, the question is rarely whether E3 is material - it is how quickly you can get the data to prove it.
This article is guidance to help you understand ESRS E3 and the CSRD reporting requirements. It is not legal or professional advice. Confirm specifics against the primary sources - including the final adopted delegated act once it enters into force - and seek qualified advice before relying on any conclusions for your own reporting.
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