Most of the attention on ESRS E1, the climate standard inside the EU’s sustainability reporting rules, goes to two questions: is climate risk material, and what financial number do you report for it. This piece covers the part in between, the part where a company says what it is doing about the physical risks it has found.
That is climate adaptation. Under ESRS E1 it is not a single disclosure. It is a chain that runs across several requirements: the policy you set, the actions you take, and whether your business can still function under a changed climate. The chain ends in one number an auditor can check: the share of your at-risk assets your adaptation actually covers.
There is a complication. EFRAG, the body that drafts these standards for the European Commission, published amended ESRS in November 2025. The amended draft moves the adaptation requirements around, and quietly asks for less detail on some of them. This piece walks the chain as it stands in the binding 2023 standard and in the amended draft side by side, so a preparer reading either version knows what the other one says.
A note on scope. We cover the physical-risk side of climate adaptation: protecting assets and operations from floods, heat, storms and the other physical effects of a changing climate. We do not cover the mitigation side (cutting emissions, the transition plan, decarbonisation), which is a different subject with a different set of disclosures.
- ESRS E1, the EU’s climate reporting standard, treats adaptation as a chain, not a single disclosure: the policy you set, the actions you take, and whether your business stays resilient under a changed climate.
- The chain ends in one number an auditor can check: the share of your at-risk assets that your adaptation actually covers. That number appears in both the binding 2023 standard and the November 2025 amended draft.
- The amended draft reshapes the chain: the policy disclosure shrank, the breakdown of adaptation actions by type was dropped, and resilience was promoted into its own requirement.
- Watch the renumbering trap. The requirement labelled E1-3 means “actions” in the 2023 standard but “resilience” in the amended draft.
Adaptation is the physical-risk response side of ESRS E1
ESRS E1 splits climate into two halves. One is mitigation: reducing the company’s own contribution to climate change. The other is adaptation. The standard defines it the same way in both versions: “Climate change adaptation relates to the undertaking’s process of adjustment to actual and expected climate change” (ESRS E1, 2023 issuance, paragraph 5; same wording in the November 2025 amended draft, paragraph 7).
In plain terms: mitigation is about your emissions; adaptation is about defending your business from the climate that is already changing. Physical risk and adaptation are two sides of the same coin. Physical risk is the exposure; adaptation is the response. That is why the adaptation disclosures are where a physical-risk preparer spends real time.
The adaptation disclosure runs across four requirements
The disclosures sit in four places, and the November 2025 amended draft renumbered all of them. A “Disclosure Requirement” (DR) is one numbered reporting obligation inside the standard. Here is the chain in both versions:
| What you disclose | 2023 binding standard | Nov 2025 amended draft |
|---|---|---|
| Your adaptation policy | E1-2, paragraph 25(b) | E1-4, paragraph 19 |
| Your adaptation actions and resources | E1-3, paragraphs 26 to 29 | E1-5, paragraphs 20 to 21 |
| Your resilience to climate change | inside the strategy disclosure (SBM-3), paragraph 19 | its own requirement, E1-3, paragraphs 17 to 18 |
| The percentage of at-risk assets your adaptation covers | inside the financial-effects disclosure, E1-9, paragraph 66(b) | inside the financial-effects disclosure, E1-11, paragraph 38(b) |
There is a fifth touchpoint outside the table. The transition plan disclosure (E1-1) is built around mitigation, but both versions let it carry adaptation too: the amended draft notes that a transition plan may be “included in a broader transition plan covering both mitigation and adaptation aspects” (E1-1, paragraph 12 of the November 2025 draft). The four requirements above are where the substantive adaptation disclosures live; the transition plan is where they can be tied into a single forward-looking narrative if a company has one.
One renumber matters more than the rest. In the 2023 standard, E1-3 is the actions requirement. In the amended draft, E1-3 becomes the resilience requirement, and the actions move to E1-5. If you know one version and read the other, this is the trap. The sections below take each link in turn.
The adaptation policy requirement got shorter
In the 2023 standard, the policy requirement is specific. It tells you to “indicate whether and how its policies address” a list of areas, including “climate change adaptation” (ESRS E1, 2023 issuance, paragraph 25). In plain terms: say, point by point, whether you have an adaptation policy and what it does.
The amended draft strips that back. The new policy requirement (E1-4, paragraph 19 of the November 2025 draft) just asks you to disclose your “climate change mitigation and climate change adaptation policies in accordance with the provisions of ESRS 2 GDR-P”, the general rule that governs how any policy is reported. EFRAG explains the cut directly: the original requirement “has been almost entirely deleted”, and the “whether and how policies address” wording “was deleted, following public feedback that questioned its relevance” (EFRAG Basis for Conclusions on the amended ESRS, December 2025, paragraph 289).
So the adaptation policy disclosure survives, but it loses its tailored checklist and falls back on the general policy rule. One thing was added, not removed: the amended draft keeps mitigation and adaptation as a named distinction, which EFRAG says it did to align with IFRS S2, the global climate standard.
The amended draft drops the adaptation-action breakdown
The actions requirement is where the standard asks what you are actually doing and what it costs. Both versions ask for it. The 2023 standard puts it in E1-3: “The undertaking shall disclose its climate change mitigation and adaptation actions and the resources allocated for their implementation” (paragraph 26). The amended draft puts the same obligation in E1-5, paragraph 20.
The detail is where they part. The 2023 standard includes an application requirement, the more granular guidance that sits under the headline rule, telling preparers to “disclose the climate change adaptation actions by type of adaptation solution such as nature-based adaptation, engineering, or technological solutions” (ESRS E1, 2023 issuance, Application Requirement 19(d)). In plain terms: break your adaptation down into categories, for example a restored wetland (nature-based) versus a flood wall (engineering).
That breakdown is not in the amended draft. The amended actions requirement (E1-5, paragraph 21) spells out a breakdown only for mitigation actions, “by decarbonisation lever”, and says nothing equivalent for adaptation. EFRAG describes the revision as reducing “specific examples, detailed connectivity requirements and contextual information to a minimum”, while keeping the mitigation breakdowns (Basis for Conclusions, December 2025, paragraph 290).
Read those together and an asymmetry shows up. The amended draft still tells you to break mitigation actions into types, but no longer tells you to break adaptation actions into types. It asks that you adapt and resource it, not how to categorise what you did. The headline obligation to disclose adaptation actions holds; the prescribed structure for them is gone.
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Resilience became its own disclosure requirement
Resilience is the test of whether your strategy and business model still work under climate change. In the 2023 standard it is tucked inside the broader strategy disclosure (called SBM-3), which asks you to describe “the resilience of its strategy and business model in relation to climate change”, including the scope, the method, and the results of the analysis (paragraph 19).
The amended draft pulls resilience out and makes it a standalone requirement, E1-3. EFRAG reordered the section so it now “start[s] with the identification of [risks] (E1-2), followed by the assessment of resilience in relation to the climate-related risks identified (E1-3)” (Basis for Conclusions, December 2025, paragraph 285). The new requirement adds an explicit ask for your “capacity to adjust or adapt its strategy and business model to climate change over the short, medium and long term” (E1-3, paragraph 18(c) of the November 2025 draft).
EFRAG also says it improved the requirement’s alignment with the equivalent resilience disclosure in IFRS S2 (Basis for Conclusions, paragraph 286). Continuuiti covers the IFRS S2 physical-risk disclosures separately, including how resilience and scenario analysis sit there.
The practical effect: resilience is now a named, standalone obligation rather than a sub-line of a strategy narrative. It is harder to bury, and it sits right after risk identification, where it belongs.
The one number: the share of at-risk assets your adaptation covers
Everything above feeds a single quantitative figure, and it lives in the financial-effects disclosure, not the adaptation sections. Both versions ask for it. The 2023 standard wants “the proportion of assets at material physical risk addressed by the climate change adaptation actions” (E1-9, paragraph 66(b)). The amended draft restates it as “the percentage of the (carrying amount of) assets at material physical risk addressed by adaptation actions at the reporting date” (E1-11, paragraph 38(b)).
In plain terms: of the assets sitting in harm’s way, what share have your adaptation actions actually covered. The number is stable across both versions; only the wording tightened (“carrying amount” is the value an asset is recorded at on the balance sheet, and the amended draft pins the figure to the reporting date).
This figure is reported alongside the gross exposure (the value of at-risk assets before any adaptation), which produces a before-and-after view: here is the exposure, here is how much you have addressed. The mechanics of that figure, how the gross-then-coverage structure works and how the phase-in rules treat it, are covered in Continuuiti’s walk-through of the ESRS E1-9 / E1-11 financial-effects disclosure. The point for this piece is that the coverage percentage is the number your whole adaptation chain has to add up to.
You disclose adaptation only for risks you found material
None of this triggers until a physical risk clears the materiality test. ESRS uses double materiality, and physical risk is assessed through its financial-materiality side: a risk is material if it could affect the company’s financial position or performance. Continuuiti covers that determination in a dedicated piece on double materiality for physical risk, and the upstream identification step (finding and screening the hazards) in its walk-through of the E1-2 risk-identification requirement.
The sequence is worth holding in mind: you find and screen the physical hazards, you decide which are material, and only then do the adaptation disclosures in this piece apply. Adaptation is the response layer; it presumes the risk has already been identified and judged material. For risks in your value chain rather than your own sites, the same logic extends outward, which Continuuiti covers in its piece on value-chain physical risk.
What the coverage percentage needs from your asset data
The coverage percentage is a ratio. The denominator is the value of assets exposed to physical hazards before adaptation. The numerator is the slice of that value your adaptation actions address. To report it credibly, you need a defensible view of which assets sit in harm’s way, under which hazards, over which time horizons, before you net off anything.
That gross exposure base is what Continuuiti produces: forward-looking, scenario-aware, asset-level physical-risk screening across twelve hazards, with flood-damage estimates built on established depth-damage curves (HAZUS and the JRC’s Huizinga functions). We supply the exposure your adaptation is measured against. We do not decide your adaptation actions or set your materiality thresholds; the company maps its own actions onto its own asset footprint to compute the coverage figure.
We are candid about the boundary. Our damage estimates are strongest for flooding. Damage curves for wind, wildfire and drought remain a gap across the industry, not just for us, and we do not model business interruption. Where a number is an estimate, it should be reported as one. The standard agrees: the amended draft requires you to disclose the methodology, assumptions and limitations behind the financial-effects figures.
The adaptation chain under ESRS E1 is wider than the one number it produces, and the November 2025 amended draft reshapes it: the policy disclosure shrank, the prescribed adaptation-action breakdown went away, and resilience was promoted into a requirement of its own. What did not move is the obligation to report how much of your at-risk asset base your adaptation actually covers. Until the amended ESRS is formally adopted, the 2023 standard is the one in force, so a preparer needs to read both. The work that makes the coverage number defensible, the asset-level exposure assessment behind it, is the same in either version.
Frequently asked questions
Is climate adaptation disclosure mandatory under ESRS E1?
Yes. Under ESRS E1, the EU’s climate reporting standard, adaptation is not voluntary. It runs across the policy, actions, and resilience requirements, and the coverage number sits in the financial-effects disclosure. These obligations apply once a physical risk clears the materiality test, meaning it could affect the company’s financial position or performance.
Where does adaptation sit in ESRS E1?
Across four reporting requirements: the adaptation policy, the adaptation actions and resources, the resilience of your strategy and business model, and the percentage of at-risk assets your adaptation covers. The first three describe the response; the fourth is the single number they add up to.
What changed for adaptation in the November 2025 amended ESRS?
Three things. The adaptation policy requirement was thinned to a reference to the general policy rule. The instruction to break adaptation actions down by type, such as nature-based versus engineering, was dropped. And resilience was pulled out of the strategy disclosure into its own requirement. The coverage number stayed in both versions.
What percentage of at-risk assets must adaptation cover under ESRS E1?
ESRS E1 does not set a target percentage. It asks you to report the share of your at-risk assets that your adaptation actions actually cover, alongside the gross value exposed before adaptation. This coverage figure appears in both the 2023 standard (E1-9) and the November 2025 amended draft (E1-11), reported at the value an asset is recorded at on the balance sheet.
What is the difference between climate adaptation and mitigation under ESRS E1?
Mitigation is about cutting your own emissions. Adaptation is about defending your business from climate effects that are already happening, such as floods, heat, and storms. Physical risk is the exposure; adaptation is the response. This piece covers the adaptation side only.
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Sources
- ESRS E1 Climate Change, 2023 issuance (Commission Delegated Regulation (EU) 2023/2772, Annex 1): definition of adaptation (paragraph 5); adaptation policy (E1-2, paragraph 25); adaptation actions (E1-3, paragraph 26 and Application Requirement 19(d)); resilience (SBM-3, paragraph 19); coverage percentage (E1-9, paragraph 66(b)). Binding text, in force.
- EFRAG draft Amended ESRS E1, November 2025 exposure draft: adaptation definition (paragraph 7); adaptation policy (E1-4, paragraph 19); adaptation actions (E1-5, paragraphs 20 to 21); resilience as its own requirement (E1-3, paragraphs 17 to 18); coverage percentage (E1-11, paragraph 38(b)). Not yet adopted; target FY 2027.
- EFRAG Basis for Conclusions on the draft Amended ESRS, December 2025: resilience reordering and standalone status (paragraphs 284 to 286); policy requirement reduction (paragraph 289); actions streamlining and preserved mitigation breakdowns (paragraph 290).
- Continuuiti physical-risk methodology (twelve-hazard screening; HAZUS and JRC Huizinga flood-damage curves; scenario and time-horizon coverage; flood-damage scope and gaps).
