# How to interpret ESRS E5: Circular economy (Updated March 2026)

Discover how to interpret and implement ESRS E5: Circular Economy under the CSRD framework. This guide explains key disclosure requirements under the simplified ESRS, actionable steps, and strategies for managing resource use, reducing waste, and adopting circular economy principles.

Author: Anna Kuppel
Published: 2026-03-20
Source: https://www.coolset.com/academy/esrs-e5-circular-economy

##### Key takeaways

<ul><li>ESRS E5 covers resource inflows, outflows and waste management under the CSRD, requiring companies to disclose circular material use rates, recycled input shares and waste processing methods.</li><li>The simplified ESRS cut E5 data points by 60%, deleted the standalone financial effects disclosure (E5-6) and added a new metric on critical raw materials.</li><li><a href="https://www.coolset.com/csrd" rel="noopener noreferrer">Coolset's CSRD platform</a> guides teams through E5 materiality assessment, resource tracking and circular economy disclosures in one workflow.</li></ul>

## Changes to ESRS E5 as a result of Omnibus

The Omnibus I Directive adopted in February 2026 introduced significant simplifications across all ESRS standards, including ESRS E5 on Circular Economy. Mandatory data points were reduced substantially, and many previously required disclosures became conditional or optional.

The most significant changes for ESRS E5 include:

<ul><li>Several waste and material flow metrics previously mandatory are now conditional (applicable only when material per the DMA)</li><li>The product design and end-of-life disclosures have been simplified</li><li>Companies with fewer than 750 employees in scope may benefit from additional phase-in provisions</li></ul>

For companies still in CSRD scope under the Omnibus thresholds (1,000+ employees and &gt;€450M turnover), ESRS E5 disclosures remain required where circular economy topics are material. For others, the standard is now largely voluntary.

## What is ESRS E5?

ESRS E5 — Circular Economy — is the European Sustainability Reporting Standard governing how companies disclose their approach to resource use, waste, and product lifecycle management. It covers:

<ul><li>Resource use and consumption across the value chain</li><li>Waste generation and management</li><li>Product design for circularity (repairability, recyclability, take-back)</li><li>Revenue from circular business models</li><li>Targets and actions to improve circularity</li></ul>

## Who does ESRS E5 apply to?

ESRS E5 applies to companies where circular economy topics are material per their double materiality assessment. This means:

<ul><li>Companies with significant product waste or packaging obligations</li><li>Manufacturers with material waste streams or resource-intensive processes</li><li>Retailers handling high volumes of single-use packaging</li><li>Companies with take-back or end-of-life product responsibilities</li></ul>

Post-Omnibus, the reporting obligations for circular economy are materially lighter than originally specified, but the underlying business case for circularity — cost reduction, regulatory compliance, customer expectations — remains strong.

## ESRS E5 key disclosures

### Resource inflows (E5-4)

Disclosures on materials consumed, water use, and the proportion of materials sourced from recycled or renewable sources.

### Resource outflows (E5-5)

Disclosures on products sold, their end-of-life fate, waste generated, and how waste is managed (recycled, incinerated, landfilled).

### Waste (E5-5)

Detailed breakdown of waste streams, hazardous vs. non-hazardous, and waste management methods. This is often the most data-intensive E5 disclosure.

## How to prepare for ESRS E5

<ol><li>Determine materiality via your DMA</li><li>Map your key material flows and waste streams</li><li>Identify phase-in provisions you can apply in the first year</li><li>Build supplier engagement to collect upstream material data</li><li>Set targets for waste reduction and circularity where material</li></ol>

## How Coolset supports ESRS E5

Coolset’s CSRD platform includes structured data collection for ESRS E5 as part of the full reporting workflow. Following the <a href="https://www.coolset.com/academy/the-amended-esrs-what-has-changed-and-what-it-means-for-2026-csrd-reporting" rel="noopener noreferrer">amended ESRS</a> under Omnibus, the platform reflects the updated mandatory/conditional data point structure. See also our guide on <a href="https://www.coolset.com/academy/csrd-eu-climate-regulation-explained" rel="noopener noreferrer">CSRD regulation</a> for broader context. <a href="https://www.coolset.com/request-demo" rel="noopener noreferrer">Book a demo</a> to see the platform in action.