Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards

| Ecosystem service… | Actual or potential dependencies | Actual or potential dependencies |

| --- | --- | --- | | ... | Change of functionality | Financial loss | | … | Limited, moderate or significant | Limited, moderate or significant | | … | … | … | | Site location | Threatened species, protected areas, key biodiversity areas | Actual or potential impacts | Actual or potential impacts | Actual or potential impacts | Actual or potential impacts | | --- | --- | --- | --- | --- | --- | | … | … | Frequency of occurrence | Speed of impact | Severity of impact | Potential for mitigation | | … | … | High, medium or low | <1 year or 1-3 years or >3 years | High, medium or low | High, medium or low | | … | … | … | … | … | … |

• With regard to AR 7(e), the undertaking may consider using the table below:

Where are the raw materials produced or sourced from?	Absolute weight of raw materials (and percentage of the raw material weight)
In areas with species listed on the IUCN Red List of Threatened Species, the Birds and Habitats Directive or on national lists of threated species	…
In officially recognised protected Areas	…
In other Key Biodiversity Areas	…

Disclosure Requirement E4-2 – Policies related to biodiversity and ecosystems

• AR 11.The policies described under this Disclosure Requirement may be integrated in broader environmental or sustainability policies covering different subtopics.

• AR 12.The undertaking may also provide information on how the policy refers to the production, sourcing or consumption of raw materials, and in particular how it:

• (a) limits procurement from suppliers that cannot demonstrate that they are not contributing to significant damage to protected areas or key biodiversity areas (e.g., through certification);

• (b) refers to recognised standards or third-party certifications overseen by regulators; and

• (c) addresses raw materials originating from ecosystems that have been managed to maintain or enhance conditions for biodiversity, as demonstrated by regular monitoring and reporting of biodiversity status and gains or losses.

• AR 13.The undertaking may disclose connections and alignment with other global goals and agreements such as the SDGs 2, 6, 14 and 15 or any other well established global convention related to biodiversity and ecosystems.

• AR 14.When disclosing policies related to social consequences of biodiversity and ecosystems related dependencies and impacts under 23 (f), the undertaking may notably refer to the Nagoya Protocol and the Convention for Biological Diversity (CBD).

• AR 15.When disclosing information about whether and how its policies address the social consequences of biodiversity and ecosystems-related impacts under paragraph 23(f), the undertaking may provide information in relation to:

• (a) the fair and equitable sharing of the benefits arising from the utilisation of genetic resources; and

• (b) the free, prior and informed consent for access to genetic resources.

• AR 16.The undertaking may also explain how its policy enables it to:

• (a) avoid negative impacts on biodiversity and ecosystems in its own operations and related upstream and downstream value chain;

• (b) reduce and minimise its negative impacts on biodiversity and ecosystems in its operations and throughout the upstream and downstream value chain that cannot be avoided;

• (c) restore and rehabilitate degraded ecosystems or restore cleared ecosystems following exposure to impacts that cannot be completely avoided and/or minimised; and

• (d) mitigate its contribution to material biodiversity loss drivers.

• AR 17.When disclosing its policies, if referring to third-party standards of conduct, the undertaking may disclose whether the standard used:

• (a) is objective and achievable based on a scientific approach to identifying issues, and realistic in assessing how these issues can be addressed on the ground under a variety of practical circumstances;

- (b) is developed or maintained through a process of ongoing consultation with stakeholders with balanced input from all relevant stakeholder groups, including producers, traders, processors, financiers, local people and communities, indigenous peoples, and civil society organisations representing consumer, environmental and social interests, with no group holding undue authority or veto power over the content;

• (c) encourages a step-wise approach and continuous improvement, both in the standard and its application of better management practices, and requires the establishment of meaningful targets and specific milestones to indicate progress against principles and criteria over time;

• (d) is verifiable through independent certifying or verifying bodies, which have defined and rigorous assessment procedures that avoid conflicts of interest, and are compliant with ISO guidance on accreditation and verification procedures or Article 5(2) of Regulation (EC) No 765/2008; and

• (e) conforms to the ISEAL Code of Good Practice.

Disclosure Requirement E4-3 – Actions and resources related to biodiversity and ecosystems

• AR 18.The undertaking may relate significant monetary amounts of CapEx and OpEx required to implement the actions taken or planned to:

• (a) the relevant line items or notes in the financial statements;

• (b) the key performance indicators required under article 8 of Regulation (EU) 2020/852 and under Commission Delegated Regulation (EU) 2021/2178; and

• (c) if applicable, the CapEx plan required by Commission Delegated Regulation (EU) 2021/2178.

• AR 19.The undertaking may disclose whether it considers an ‘avoidance’ action plan, which prevents damaging actions before they take place. Avoidance often involves a decision to deviate from the business-as-usual project development path. An example of avoidance is altering the biodiversity and ecosystem footprint of a project to avoid destruction of natural habitat on the site and/or establishing set-asides where priority biodiversity values are present and will be conserved. At a minimum, avoidance should be considered where there are biodiversity and ecosystem-related values that are in one of the following categories: particularly vulnerable and irreplaceable, of particular concern to stakeholders, or where a cautious approach is warranted due to uncertainty about impact assessment or about the efficacy of management measures. The three main types of avoidance are defined below:

• (a) avoidance through site selection (Locate the entire project away from biodiversity-sensitive areas);

• (b) avoidance through project design (Configure infrastructure to preserve biodiversity-sensitive areas); and

• (c) avoidance through scheduling (Time project activities to account for patterns of species behaviour (e.g., breeding, migration) or ecosystem functions (e.g., river dynamics).

• AR 20.With regard to key actions, the undertaking may disclose:

• (a) a list of key stakeholders involved (e.g., competitors, suppliers, retailers, other business partners, affected communities and authorities, government agencies) and how they are involved, mentioning key stakeholders negatively or positively impacted by actions and how they are impacted, including impacts or benefits created for affected communities, smallholders, indigenous peoples or other persons in vulnerable situations;

• (b) where applicable, an explanation of the need for appropriate consultations and the need to respect the decisions of affected communities;

• (c) a brief assessment of whether the key actions may induce significant negative sustainability impacts;

- (d) an explanation of whether the key action is intended to be a one-time initiative or systematic practice;

- (e) an explanation of whether the key action plan is carried out only by the undertaking, using the undertaking’s resources, or whether it is part of a wider initiative to which the undertaking significantly contributes. If the key action plan is part of a wider initiative, the undertaking may provide more information on the project, its sponsors and other participants;

• (f) a description of how it contributes to systemwide change, notably to alter the drivers of biodiversity and ecosystem change, e.g., through technological, economic, institutional, and social factors and changes in underlying values and behaviours;

• AR 21.In the context of this Disclosure Requirement, ‘local and indigenous knowledge’ refer to the understandings, skills and philosophies developed by societies with long histories of interaction with their natural surroundings. For rural and indigenous peoples, local knowledge informs decision-making about fundamental aspects of day-to-day life.

Metrics and targets

Disclosure Requirement E4-4 – Targets related to biodiversity and ecosystems

• AR 22.The undertaking may specify whether the target addresses shortcomings related to the Substantial Contribution criteria for Biodiversity as defined in the delegated acts adopted pursuant to Article 15(2) of Regulation (EU) 2020/852. Where the Do No Significant Harm (DNSH) criteria for Biodiversity as defined in delegated acts adopted pursuant to Article 10(3), Article 11(3), Article 12(2), Article 13(2), and Article 14(2) of Regulation (EU) 2020/852 are not met, the undertaking may specify whether the target addresses shortcomings related those DNSH critera.

• AR 23.When disclosing information required under paragraph 29 for the purpose of setting targets the undertaking shall consider the need for an informed and willing consent of local and indigenous peoples, the need for appropriate consultations and the need to respect the decisions of these communities.

• AR 24.The targets related to material impacts may be presented in a table as illustrated below:

Type of target according to mitigation hierarchy	Baseline value and base year	Target value and geographical scope	Target value and geographical scope	Target value and geographical scope	Connected policy or legislation if relevant
Type of target according to mitigation hierarchy	Baseline value and base year	2025	2030	Up to 2050
Avoidance
Minimisation
Rehabilitation and restoration
Compensation or offsets

• AR 25.The targets related to the potentially material sustainability matters listed in paragraph AR 4 of this Standard, may be presented in a table as illustrated below:

Type of target according to sustainability matter	Baseline value and base year	Target value and geographical scope	Target value and geographical scope	Target value and geographical scope	Connected policy or legislation if relevant
Type of target according to sustainability matter	Baseline value and base year	2025	2030	Up to 2050	Connected policy or legislation if relevant

- AR 26.Measurable targets related to biodiversity and ecosystems may be expressed as:

• (a) size and location of all habitat areas protected or restored, whether directly or indirectly controlled by the undertaking, and whether the success of the restoration measure was or is approved by independent external professionals;

• (b) recreated surfaces (environments in which management initiatives are implemented so as to create a habitat on a site where it did not exist initially); or

• (c) number or percentage of projects / sites whose ecological integrity was improved (e.g., installation of fish passes, wildlife corridors).

Disclosure Requirement E4-5 – Impact metrics related to biodiversity and ecosystems change

• AR 27.When preparing the information required under this Disclosure Requirement, the undertaking shall consider and may describe:

• (a) the methodologies and metrics used and an explanation for why these methodologies and metrics are selected, as well as their assumptions, limitations and uncertainties, and any changes in methodologies made over time and why they occurred;

• (b) the scope of the metrics and methodologies, for example:
• i. undertaking, site, brand, commodity, corporate business unit, activity;
• ii. aspects (as set out in paragraph AR 4) covered.

• (c) the biodiversity components of the metrics: species specific, ecosystem specific;

• (d) the geographies covered by the methodology and an explanation of why any relevant geographies were omitted;

• (e) how the metrics integrate ecological thresholds (e.g., the biosphere integrity and land-system change, *planetary boundaries*) and allocations;

• (f) the frequency of monitoring, key metrics being monitored, and the baseline condition/value and baseline year/period, as well as the reference period;

• (g) whether these metrics rely on primary data, secondary data, modelled data or on expert judgement, or a mixture of these;

• (h) an indication of which action is measured and monitored via the metrics and how they relate to the achievement of targets;

• (i) whether metrics are mandatory (required by legislation) or voluntary. If they are mandatory, the undertaking may indicate the relevant legislation; if voluntary, the undertaking may refer to any voluntary standard or procedure used; and

• (j) whether the metrics are informed by or correspond to expectations or recommendations of relevant and authoritative national, EU-level or intergovernmental guidelines, policies, legislation or agreements, such as the Convention for Biological Diversity (CBD) or IPBES.

• AR 28.The undertaking shall disclose metrics that are verifiable and that are technically and scientifically robust considering the appropriate time scales geographies, and may disclose how its selected metrics correspond to those criteria. To ensure that the metric is relevant there should be a clear relationship between the indicator and the purpose of the measurement. Uncertainties should be reduced as far as possible. Data or mechanisms used should be supported by well-established organisations and updated over time. Robust modelled data and expert judgment can be used where data gaps exist. The methodology shall be sufficiently detailed to allow for meaningful comparison of impacts and mitigation activities over time. Information gathering processes and definitions must be systematically applied. This enables a meaningful review of the undertaking’s performance over time and helps internal and peer comparison.

• AR 29.If a metric corresponds to a target, the baseline for both shall be aligned. The biodiversity baseline is an essential component of the larger biodiversity and ecosystems management process. The baseline is necessary to inform impact assessment and management planning, as well as monitoring and adaptive management.

• AR 30.Methodologies available to collect data and measure the undertakings’ impacts on biodiversity and ecosystems may be separated into three categories as follows:

• (a) primary data: collected in-situ using on the ground surveys;

• (b) secondary data: including geospatial data layers that are overlaid with geographic location data of business activities.
• i. At the species level, data layers on the ranges of different species can be used to predict the species that may be present at different locations. This includes operation sites and sourcing locations. Different range layers will have different levels of accuracy depending on certain factors (e.g., whether species ranges have been refined based on availability of habitat). Information on the threat status of the species, and the activities that threaten them, can provide an indication of the likely contribution that business activities may be having on driving population trends and threat status.
• ii. At the ecosystem level, data layers reflecting change in the extent and condition of ecosystems can be applied, including levels of habitat fragmentation and connectivity.

• (c) modelled biodiversity state data: Model-based approaches are commonly used for measuring ecosystem level indicators (e.g., extent, condition, or function). Models quantify how the magnitude of different pressures affects the state of biodiversity. These are referred to as pressure-state relationships and are based on globally collected data. Modelling results are applied locally to estimate how undertaking-level pressures will cause changes in ecosystem condition.An impact driver generally has three main characteristics: magnitude (e.g., amount of contaminant, noise intensity), spatial extent (e.g., area of land contaminated) and temporal extent (duration of persistence of contaminant).

• AR 31.With regard to life cycle assessment for land-use, the undertaking may refer to the ‘Land-use related environmental indicators for Life Cycle Assessment’ by the Joint Research Center.

• AR 32.With regard to the introduction of invasive alien species, the undertaking may disclose the pathways and number of invasive alien species and the extent of surface covered by invasive alien species.

• AR 33.With regard to metrics on the extent and condition of ecosystems, useful guidance can be found in the work of the United Nations System of Environmental Economic Accounting Ecosystem Accounting (UN SEEA EA).

• AR 34.The undertaking may disclose in units of area (e.g., m2 or ha) on land-use using guidance provided by the Eco-Management and Audit Scheme (EMAS) ([^E0089]):

• (a) total use of land;

• (b) total sealed area;

• (c) total nature-oriented area on site; and

• (d) total nature-oriented area off site.

• AR 35.The undertaking may disclose, for example, land cover change, which is the physical representation of the drivers ‘habitat modification’ and ‘industrial and domestic activities’, i.e., the man-made or natural change of the physical properties of the earth’s surface at a specific location.

• AR 36.Land cover is a typical variable that can be assessed with earth observation data.

- AR 37.When reporting on material impacts related to the ecosystems, the undertaking may, in addition to the extent and condition of ecosystems, also consider the functioning of ecosystems by using:

• (a) a metric that measures a process or function that the ecosystem completes, or that reflects the ability of the ecosystem to undertake that specific process or function: e.g. net primary productivity, which is a measure of plant productivity based on the rate at which energy is stored by plants and made available to other species in the ecosystem. It is a core process that occurs for ecosystems to function. It is related to many factors, such as species diversity, but does not measure these factors directly; or

• (b) A metric that measures changes to the population of scientifically identified species under threat.

- AR 38.At the ecosystem level, data layers reflecting change in the extent and condition of ecosystems may be applied, including levels of **habitat

fragmentation** and connectivity.

Disclosure Requirement E4-6 – Anticipated financial effects from material biodiversity and ecosystem-related risks and opportunities

• AR 39. The undertaking may include an assessment of its related products and services at risk over the short-, medium- and long-term, explaining how these are defined, how financial amounts are estimated, and which critical assumptions are made.

- AR 40. The quantification of the anticipated financial effects in monetary terms under paragraph 45(a) may be a single amount or a range.

ESRS E5

RESOUCE USE AND CIRCULAR ECONOMY

TABLE OF CONTENTS	TABLE OF CONTENTS
	Objective
	Interactions with other ESRS
	Disclosure Requirements
–	ESRS 2 General disclosures
	Impact, risk and opportunity management
—	Disclosure Requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities
—	Disclosure Requirement E5-1 – Policies related to resource use and circular economy
—	Disclosure Requirement E5-2 – Actions and resources related to resource use and circular economy
	Metrics and targets
—	Disclosure Requirement E5-3 – Targets related to resource use and circular economy
—	Disclosure Requirement E5-4 – Resource inflows
—	Disclosure Requirement E5-5 – Resource outflows
—	Disclosure Requirement E5-6 – Anticipated financial effects from resource use and circular economy-related impacts, risks and opportunities
Appendix A:	Application Requirements
–	ESRS 2 General disclosures
	Impact, risk and opportunity management
—	Disclosure requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities
—	Disclosure Requirement E5-1 – Policies related to resource use and circular economy
—	Disclosure Requirement E5-2 – Actions and resources in relation to resource use and circular economy
	Metrics and targets
—	Disclosure Requirement E5-3 - Targets related to resource use and circular economy
—	Disclosure Requirement E5-4 - Resource inflows
—	Disclosure Requirement E5-5 - Resource outflows
—	Disclosure Requirement E5-6 – Anticipated financial effects from resource use and circular economy-related risks and opportunities

Objective

• 1.The objective of this Standard is to specify Disclosure Requirements which will enable users of the sustainability statement to understand:

• (a) how the undertaking affects resource use, including resource efficiency, avoiding the depletion of resources and the sustainable sourcing and use of renewable resources (referred to in this Standard as ‘resource use and circular economy’) in terms of material positive and negative actual or potential impacts;

• (b) any actions taken, and the result of such actions, to prevent or mitigate actual or potential negative impacts arising from resource use, including its measures to help decoupling its economic growth from the use of materials, and to address risks and opportunities;

• (c) the plans and capacity of the undertaking to adapt its strategy and business model in line with circular economy principles including but not limited to minimising waste, maintaining the value of products, materials and other resources at their highest value and enhancing their efficient use in production and consumption;

• (d) the nature, type and extent of the undertaking’s material risks and opportunities related to the undertaking’s impacts and dependencies, arising from resource use and circular economy, and how the undertaking manages them; and

• (e) the financial effects on the undertaking over the short-, medium- and long-term of material risks and opportunities arising from the undertaking’s impacts and dependencies on resource use and circular economy.

• 2.This Standard sets out Disclosure Requirements related to ‘resource use’ and ‘circular economy’ and in particular on:

• (a) resource inflows including the circularity of material resource inflows, considering renewable and non-renewable resources; and

• (b) resource outflows including information on products and materials; and

- (c) waste.

• 1. Circular economy means an economic system in which the value of products, materials and other resources in the economy is maintained for as long as possible, enhancing their efficient use in production and consumption, thereby reducing the environmental impact of their use, minimising waste and the release of hazardous substances at all stages of their life cycle, including through the application of the waste hierarchy. The goal is to maximise and maintain the value of the technical and biological resources, products and materials by creating a system that allows for durability, optimal use or re-use, refurbishment, remanufacturing, recycling and nutrient cycling.

• 4.This Standard builds on relevant EU legislative frameworks and policies including the EU Circular Economy Action Plan, Directive 2008/98/EC of the European Parliament and of the Council ([^E0090]) (Waste Framework Directive) and the EU industrial strategy.

• 5.To evaluate the transition from business as usual, meaning an economy in which finite resources are extracted to make products that are used and then thrown away (‘take-make-waste’), to a circular economic system, this Standard relies on the identification of the physical flows of resources, materials and products used and generated by the undertaking through Disclosure Requirement E5-4 Resource inflows and Disclosure Requirement E5-5 Resource outflows.

Interactions with other ESRS

• 6.Resource use is a major driver of other environmental impacts such as climate change, pollution, water and marine resources and biodiversity. A circular economy is a system that tends towards sustainable use of resources in extraction, processing, production, consumption and management of waste. Such system brings multiple environmental benefits, in particular, the reduction of material and energy consumption and emissions into the air (greenhouse gas emissions or other pollution), the limitation of water withdrawals and discharges and the regeneration of nature limiting the impact on biodiversity.

• 7.To provide a comprehensive overview of which other environmental matters could be material to resource use and circular economy, relevant disclosure requirements are covered in other environmental ESRS as follows:

• (a) ESRS E1 Climate change, which addresses, in particular, GHG emissions and energy resources (energy consumption);

• (b) ESRS E2 Pollution, which addresses, in particular, emissions to water, air and soil as well as substances of concern;

- (c) ESRS E3 Water and marine resources, which addresses, in particular, water resource (water consumption) and marine resources; and

- (d) ESRS E4 Biodiversity and ecosystems, which addresses, in particular, ecosystems, species and raw materials.

• 8.The undertaking’s impacts related to resource use and circular economy, in particular impacts related to waste, can affect people and communities. Material negative impacts on affected communities from resource use and circular economy attributable to the undertaking are covered in ESRS S3 Affected communities. The efficient and circular use of resources also benefits competitiveness and economic wellbeing

- 9.This Standard should be read in conjunction with ESRS 1 General requirements and ESRS 2 General disclosures.

Disclosure Requirements

ESRS 2 General disclosures

• 10.The requirements of this section should be read in conjunction with and reported alongside the disclosures required by ESRS 2 chapter 4 Impact, risk and opportunity management.

Impact, risk and opportunity management

Disclosure Requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities

• 11.The undertaking shall describe the process to identify material impacts, risks and opportunities related to resource use and circular economy, in particular regarding resource inflows, resource outflows and waste, and shall provide information on:

• (a) whether the undertaking has screened its assets and activities in order to identify its actual and potential impacts, risks and opportunities in its own operations and its upstream and downstream value chain, and if so, the methodologies, assumptions and tools used in the screening;

• (b) whether and how the undertaking has conducted consultations, in particular, with affected communities.

Disclosure Requirement E5-1 – Policies related to resource use and circular economy

• 12.The undertaking shall describe its policies adopted to manage its material impacts, risks and opportunities related to resource use and circular economy.

• 13.The objective of this Disclosure Requirement is to enable an understanding of the extent to which the undertaking has policies that address the identification, assessment, management and/or remediation of its material impacts, risks and opportunities related to resource use and circular economy.

• 14.The disclosure required by paragraph 12 shall contain the information on the policies the undertaking has in place to manage its material impacts, risks and opportunities related to resource use and circular economy in accordance with ESRS 2 MDR-P Policies adopted to manage material sustainability matters.

• 15.In the summary, the undertaking shall indicate whether and how its policies address the following matters where material:

• (a) transitioning away from use of virgin resources, including relative increases in use of secondary (recycled) resources;

• (b) sustainable sourcing and use of renewable resources.

• 16.Policies shall address material impacts, risks and opportunities in its own operations and along its upstream and downstream value chain.

Disclosure Requirement E5-2 – Actions and resources related to resource use and circular economy

• 17.The undertaking shall disclose its resource use and circular economy actions and the resources allocated to their implementation.

• 18.The objective of this Disclosure Requirement is to enable an understanding of the key actions taken and planned to achieve the resource use and circular economy-related policy objectives and targets.

• 19.The description of the resource use and circular economy-related actions and resources allocated shall follow the principles defined in ESRS 2 MDR-A Actions and resources in relation to material sustainability matters.

• 20.In addition to ESRS 2 MDR-A, the undertaking may specify whether and how an action and resources cover:

• (a) higher levels of resource efficiency in use of technical and biological materials and water, particularly in relation to critical raw materials and rare earths as listed in the Raw Materials Information System;

• (b) higher rates of use of secondary raw materials (recyclates);

- (c) application of circular design, leading to increased product durability and optimisation of use, and higher rates of: Reuse, Repair, Refurbishing, Remanufacture, Repurposing and Recycling.

• (d) application of circular business practices such as (i) value retention actions (maintenance, repair, refurbishing, remanufacturing, component harvesting, upgrading and reverse logistics, closed loop systems, second-hand retailing), (ii) value maximisation actions (product-service systems, collaborative and sharing economy business models), (iii) end-of-life actions (recycling, upcycling, extended producer responsibility), and (iv) systems efficiency actions (industrial symbiosis);

• (e) actions taken to prevent waste generation in the undertaking’s upstream and downstream value chain; and

• (f) optimistation of waste management in line with the waste hierarchy.

Metrics and targets

Disclosure Requirement E5-3 – Targets related to resource use and circular economy

• 21.The undertaking shall disclose the resource use and circular economy-related targets it has set.

• 22.The objective of this Disclosure Requirement is to enable an understanding of the targets the undertaking has adopted to support its resource use and circular economy policy and to address its material impacts, risks and opportunities.

• 23.The description of the targets shall contain the information requirements defined in ESRS 2 MDR-T Tracking effectiveness of policies and actions through targets.

• 24.The disclosure required by paragraph 21 shall indicate whether and how the undertaking’s targets relate to resource inflows and resource *outflows, including waste* and products and materials, and, more specifically to:

• (a) the increase of circular product design (including for instance design for durability, dismantling, reparability, recyclability etc);

• (b) the increase of circular material use rate;

• (c) the minimisation of primary raw material;

• (d) sustainable sourcing and use (in line with the cascading principle) of renewable resources;

• (e) the waste management, including preparation for proper treatment; and

• (f) other matters related to resource use or circular economy.

• 25.The undertaking shall specify to which layer of the waste hierarchy the target relates.

• 26.In addition to ESRS 2 MDR-T, the undertaking may specify whether ecological thresholds and entity-specific allocations were taken into consideration when setting targets. If so, the undertaking may specify:

• (a) the ecological thresholds identified, and the methodology used to identify such thresholds;

• (b) whether or not the thresholds are entity-specific and if so, how they were determined; and

• (c) how responsibility for respecting identified ecological thresholds is allocated in the undertaking.

• 27.The undertaking shall specify as part of the contextual information, whether the targets it has set and presented are mandatory (required by legislation) or voluntary.

Disclosure Requirement E5-4 – Resource inflows

• 28.The undertaking shall disclose information on its resource inflows related to its material impacts, risks and opportunities.

• 29.The objective of this Disclosure Requirement is to enable an understanding of the resource use in the undertaking’s own operations and its upstream value chain.

• 30.The disclosure required by paragraph 28 shall include a description of its resource inflows where material: products (including packaging) and materials (specifying critical raw materials and rare earths), water and property, plant and equipment used in the undertaking’s own operations and along its upstream value chain.

• 31.When an undertaking assesses that resource inflows is a material sustainability matter, it shall disclose the following information about the materials used to manufacture the undertaking’s products and services during the reporting period, in tonnes or kilogrammes:

• (a) the overall total weight of products and technical and biological materials used during the reporting period;

• (b) the percentage of biological materials (and biofuels used for non-energy purposes) used to manufacture the undertaking’s products and services (including packaging) that is sustainably sourced, with the information on the certification scheme used and on the application of the cascading principle; and

• (c) the weight in both absolute value and percentage, of secondary reused or recycled components, secondary intermediary products and secondary materials used to manufacture the undertaking’s products and services (including packaging).

• 32.The undertaking shall provide information on the methodologies used to calculate the data. It shall specify whether the data is sourced from direct measurement or estimations, and disclose the key assumptions used.

Disclosure Requirement E5-5 – Resource outflows

- 33.The undertaking shall disclose information on its resource outflows, including waste, related to its material impacts, risks and opportunities.

• 34.The objective of this Disclosure Requirement is to provide an understanding of:

• (a) how the undertaking contributes to the circular economy by i) designing products and materials in line with circular economy principles and ii) increasing or maximising the extent to which products, materials and waste processing are recirculated in practice after first use; and

• (b) the undertaking’s waste reduction and waste management strategy, the extent to which the undertaking knows how its pre-consumer waste is managed in its own activities.

Products and materials

• 35.The undertaking shall provide a description of the key products and materials that come out of the undertaking’s production process and that are designed along circular principles, including durability, reusability, repairability, disassembly, remanufacturing, refurbishment, recycling, recirculation by the biological cycle, or optimisation of the use of the product or material through other circular business models.

- 36.Undertakings for which outflows are material shall disclose:

• (a) The expected durability of the products placed on the market by the undertaking, in relation to the industry average for each product group;

• (b) The reparability of products, using an established rating system, where possible;

• (c) The rates of recyclable content in products and their packaging.

Waste

• 37.The undertaking shall disclose the following information on its total amount of waste from its own operations, in tonnes or kilogrammes:

• (a) the total amount of waste generated ;

• (b) the total amount by weight diverted from disposal, with a breakdown between hazardous *waste and non-hazardous waste and a breakdown by the following recovery* operation types:
• i. preparation for reuse;
• ii. recycling; and
• iii. other recovery operations.

• (c) the amount by weight directed to disposal by waste treatment type and the total amount summing all three types, with a breakdown between hazardous *waste* and non-hazardous waste. The waste treatment types to be disclosed are:
• i. incineration;
• ii. landfill; and
• iii. other disposal operations;

• (d) the total amount and percentage of non-recycled waste ([^E0091]).

• 38.When disclosing the composition of the waste, the undertaking shall specify:

• (a) the waste streams relevant to its sector or activities (e.g. tailings for the undertaking in the mining sector, electronic waste for the undertaking in the consumer electronics sector, or food waste for the undertaking in the agriculture or in the hospitality sector); and;

• (b) the materials that are present in the waste (e.g. biomass, metals, non-metallic minerals, plastics, textiles, critical raw materials and rare earths).

• 39.The undertaking shall also disclose the total amount of hazardous waste and radioactive waste generated by the undertaking, where radioactive waste is defined in Article 3(7) of Council Directive 2011/70/Euratom ([^E0092]).

• 40.The undertaking shall provide contextual information on the methodologies used to calculate the data and in particular the criteria and assumptions used to determine and classify products designed along circular principles under paragraph 35. It shall specify whether the data is sourced from direct measurement or estimations; and disclose the key assumptions used.

Disclosure Requirement E5-6 – Anticipated financial effects from material resource use and circular economy-related risks and opportunities

• 41.The undertaking shall disclose the anticipated financial effects of material risks and opportunities arising from resource use and circular economy-related impacts.

• 42.The information required by paragraph 41 is in addition the information on current financial effects on the entity’s financial position, financial performance and cash flows for the reporting period required under ESRS 2 SBM-3 para 48 (d). The objective of this Disclosure Requirement is to provide an understanding of:

• (a) anticipated financial effects due to material risks arising from material resource use and circular economy-related impacts and dependencies and how these risks have or could reasonably be expected to have) a material influence on the undertaking’s financial position, financial performance performance, and cash flows over the short-, medium- and long-term; and

• (b) anticipated financial effects due to material opportunities related to resource use and circular economy.

- 43.The disclosure shall include:

• (a) a quantification of the anticipated financial effects in monetary terms before considering resource use and circular economy-related actions, or where not possible without undue cost or effort, qualitative information. For financial effects arising from material opportunities, a quantification is not required if it would result in disclosure that does not meet the qualitative characteristics of information (see ESRS 1 Appendix B Qualitative characteristics of information);

• (b) a description of the effects considered, the impacts and dependencies to which they relate and the time horizons in which they are likely to materialise;

- (c) the critical assumptions used to quantify the anticipated financial effects, as well as the sources and level of uncertainty of those assumptions.

Appendix A

Application Requirements

This appendix is an integral part of the ESRS E5. It supports the application of the disclosure requirements set out in this standard and has the same authority as the other parts of the standard.

ESRS 2 GENERAL DISCLOSURES

Impact, risk and opportunity management

Disclosure requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities

• AR 1.When conducting a materiality assessment on environmental subtopics, the undertaking shall assess the materiality of resource use and circular economy in its own operations and its upstream and downstream value chain, and may consider the four phases below, also known as the LEAP approach:

• (a) Phase 1: locate where in the undertaking’s own operations and along its upstream and downstream value chain the interface with nature takes place;

• (b) Phase 2: evaluate the dependencies and impacts;

• (c) Phase 3: assess the material risks and opportunities;

• (d) Phase 4: prepare and report the results of the materiality assessment.

• AR 2.With regard to ESRS E5, phases 1 and 2 rely mainly on the materiality assessments conducted under ESRS E1 (including energy consumption), ESRS E2 (pollution), ESRS E3 (marine resources, water consumption) and ESRS E4 (biodiversity, ecosystems, raw materials). Indeed, circular economy eventually aims at reducing the environmental impact of the use of products, materials and other resources, minimizing waste and the release of hazardous substances and hence at reducing impacts on nature. This application requirement focuses mainly on the third phase of this LEAP approach, while the fourth phase addresses the outcome of the process.

• AR 3.The process to assess the materiality of impacts, dependencies, risks and opportunities shall consider the provisions in ESRS 2 IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities and IRO-2 Disclosure Requirements in ESRS covered by the undertaking’s sustainability statement.

• AR 4.The sub-topics related to resource use and circular economy covered by the materiality assessment include:

• (a) resource inflows including the circularity of material resource inflows, considering resource use optimisation, intensity of materials and products and renewable and non-renewable resources;

• (b) resource outflows related to products and services; and

• (c) waste, including hazardous *waste and non-hazardous waste management.*

• AR 5.In Phase 3, to assess its material risks and opportunities based on the results of Phases 1 and 2, the undertaking may:

• (a) identify transition risks and opportunities in its own operations and its upstream and downstream value chain, including the risk of staying in a business-as-usual scenario:
• i. policy and legal, e.g., bans on the extraction and use of non-renewable resources, regulations on waste treatment;
• ii. technology, e.g., introduction on the market of new technologies to replace existing use of products and materials;
• iii. market, e.g., shifting supply, demand and financing;
• iv. reputation, e.g. changing societal, customer or community perceptions.

• (b) identify physical risks including depletion of stock and use of virgin and non-virgin renewable resources, and of non-renewable resources;

• (c) identify opportunities categorised by:
• i. resource efficiency: e.g., transition to more efficient services and processes requiring less resources, eco-design for longevity, repair, reuse, recycle, by- products, take-back systems, decoupling activity from extraction of materials, intensifying circular material use, creation of a system that allows for dematerialization (e.g., digitisation, improving utilisation rates, weight reduction); practices to ensure products and materials are collected, sorted, and reused, repaired, refurbished, remanufactured;
• ii. markets: e.g., demand for less resource-intense products and services, and new consumption models such as product-as- a-service, pay-per-use, sharing, leasing;
• iii. financing: e.g., access to green funds, bonds or loans;
• iv. resilience: e.g., diversification of resources and business activities (e.g., start a new business unit to recycle new materials), investing in green infrastructures, adopting recycling and circularity mechanisms that reduce the dependencies, capability of the undertaking to safeguard future stocks and flows of resources; and
• v. reputation.

• AR 6.The undertaking may consider the following methodologies to assess its impacts, risks and opportunities in its own operations and along its upstream and downstream value chain:

• (a) Commission Recommendation 2021/2279 on the use of the Environmental Footprint methods to measure and communicate the life cycle environmental performance of products and organizations (Annex I – Product Environmental Footprint; Annex III – Organisation Environmental Footprint); and

• (b) Material Flow Analysis (MFA) from the European Environment Agency.

• AR 7.When providing information on the outcome of the materiality assessment, the undertaking shall consider:

• (a) a list of business units associated to resource use and circular economy material impacts, risks and opportunities in the context of the products and services of the undertaking and the waste it generates;

• (b) a list and prioritisation of the material resources used by the undertaking;

- (c) the material impacts and risks of staying in business as usual;

• (d) the material opportunities related to a circular economy;

• (e) the material impacts and risks of a transition to a circular economy; and

• (f) the stages of the value chain where resource use, risks and negative impacts are concentrated.

Disclosure Requirement E5-1 – Policies related to resource use and circular economy

• AR 8.The policies described under this Disclosure Requirement may be integrated in broader environmental or sustainability policies covering different subtopics.

- AR 9.When providing information on its policies, the undertaking shall consider whether and how its policies address:

• (a) the waste hierarchy: (a) prevention; (b) preparing for re-use; (c) recycling; (d) other recovery, e.g., energy recovery; and (e) disposal. In this context, the waste treatment cannot be considered as a recovery;

• (b) the prioritisation of the avoidance or minimisation waste (Re-use, Repair, Refurbish, Remanufacture and Repurpose) over waste treatment (Recycling). The concepts of eco-design ([^E0093]), waste as a resource or post- consumer waste (at the end of a consumer-product lifecycle), should also be taken into consideration.

• AR 10.When defining its policies, the undertaking may consider the Paper on ‘Categorisation system for the circular economy’, which describes circular design and production models, circular use models, circular value recovery models and circular support along the principles of the nine circular economy‘R’ strategies or principles: refuse, rethink, reduce, re-use, repair, refurbish, remanufacture, repurpose and recycle.

Disclosure Requirement E5-2 – Actions and resources in relation to resource use and circular economy

• AR 11.When providing information under paragraph 17 and considering that resources are shared and that circular economy strategies may require collective actions, the undertaking may specify the actions taken to engage with its upstream and downstream value chain and/or its local network on the development of collaborations or initiatives increasing the circularity of products and materials.

• AR 12.In particular, the undertaking may specify the following:

- (a) how it contributes to circular economy, including for instance smart waste collection systems;

- (b) the other stakeholders involved in the collective actions: competitors, suppliers, retailers, customers, other business partners, local communities and authorities, government agencies;

• (c) a description of the organisation of the collaboration or initiative, including the specific contribution of the undertaking and the roles of the different stakeholders in the project.

• AR 13.The actions may cover the undertaking’s own operations and/or its upstream and downstream value chain.

Metrics and targets

Disclosure Requirement E5-3 - Targets related to resource use and circular economy

• AR 14.If the undertaking refers to ecological thresholds to set targets, it may refer to the guidance provided by the Science-Based Targets Initiative for Nature (SBTN) in its interim guidance (Initial Guidance for Business, September 2020) or any other guidance with a scientifically acknowledged methodology that allows to set science-based targets by identifying ecological thresholds and, if applicable, organisation-specific allocations. Ecological thresholds can be local, national and/or global.

• AR 15.When providing information on targets, the undertaking shall prioritise targets in absolute value.

• AR 16.When providing information targets according to paragraph 24, the undertaking shall consider the production phase, the use phase, and the end of functional life of products and materials.

- AR 17.When providing information on targets related to virgin renewable raw material under paragraph 24(c), the undertaking shall consider how those targets may impact biodiversity loss, also in light of ESRS E4.

• AR 18.The undertaking may disclose other targets under paragraph 24(f) including in relation to sustainable sourcing. If so, the undertaking shall explain the definition of sustainable sourcing it has adopted and how it relates to the objective set out in paragraph 22.

• AR 19.The targets may cover the undertaking’s own operations and/or its upstream and downstream value chain.

• AR 20.The undertaking may specify whether the target addresses shortcomings related to the Substantial Contribution criteria for Circular Economy as defined in the delegated acts adopted pursuant to Article 13(2) of Regulation (EU) 2020/852. Where the Do No Significant Harm (DNSH) criteria for Circular Economy as defined in delegated acts adopted pursuant to Article 10(3), Article 11(3), Article 12(2), Article 14(2), and Article 15(2) of Regulation (EU) 2020/852 are not met, the undertaking may specify whether the target addresses shortcomings related those DNSH criteria.

Disclosure Requirement E5-4 - Resource inflows

• AR 21. Resource inflows may cover the following categories: IT equipment, textiles, furniture, buildings, heavy machinery, mid-weight machinery, light machinery, heavy transport, mid-weight transport, light transport and warehousing equipment. With regard to materials, resource inflow indicators include raw materials, associated process materials, and semi-manufactured goods or parts.

- AR 22.When the undertaking is subject to paragraph 31, it may also provide transparency on the materials that are sourced from by-products/waste stream (e.g., offcuts of a material that has not previously been in a product).

• AR 23.The denominator of the percentage indicator required under paragraphs 31(b) and 31(c) is the overall total weight of materials used during the reporting period.

• AR 24.The reported usage data are to reflect the material in its original state, and not to be presented with further data manipulation, such as reporting it as ‘dry weight’.

• AR 25.In cases where there is an overlap between categories of reused, recycled, the undertaking shall specify how double counting was avoided and the choices that were made.

Disclosure Requirement E5-5 - Resource outflows

• AR 26.Products and materials information to be provided under paragraph 35 refers to all materials and products that come out of the undertaking’s production process and that a company puts on the market (including packaging).

• AR 27.When compiling the rate, the undertaking shall use as denominator the overall total weight of materials used during the reporting period.

• AR 28.The undertaking may disclose its engagement in product end-of-life waste management, for example through extended producer responsibility schemes or take-back schemes.

• AR 29.Type of waste is to be understood as hazardous waste or non-hazardous waste. Some specific waste, such as radioactive waste, may also be presented as a separate type.

• AR 30.When considering the waste streams relevant to its sectors or activities, the undertaking may consider the list of waste descriptions from the European Waste Catalogue.

• AR 31.Examples of other types of recovery operations under paragraph 37(b)iii may be found in Annex II of Directive 2008/98/EC (Waste Framework Directive).

• AR 32.Examples of other types of disposal operations under paragraph 37(c)iii may be found in Annex I of Directive 2008/98/EC (Waste Framework Directive).

- AR 33.When providing contextual information under paragraph 40 the undertaking may:

• (a) explain the reasons for high weights of waste directed to disposal (e.g., local regulations that prohibit landfill of specific types of waste);

• (b) describe sector practices, sector standards, or external regulations that mandate a specific disposal operation; and

• (c) specify whether the data has been modelled or sourced from direct measurements, such as waste transfer notes from contracted waste collectors.

Disclosure Requirement E5-6 – Anticipated financial effects from material resource use and circular economy-related risks and opportunities

- AR 34.When providing information under paragraph 42(b), the undertaking may illustrate and describe how it intends to strengthen value retention.

• AR 35.The undertaking may include an assessment of its related products and services at risk over the short-, medium- and long-term, explaining how these are defined, how financial amounts are estimated, and which critical assumptions are made.

- AR 36.The quantification of the anticipated financial effects in monetary terms under paragraph 43(a) may be a range.

ESRS S1

OWN WORKFORCE

TABLE OF CONTENTS	TABLE OF CONTENTS
	Objective
	Interaction with other ESRS
	Disclosure requirements
–	ESRS 2 General disclosures
	Strategy
—	Disclosure Requirement related to ESRS 2 SBM-2 – Interests and views of stakeholders
—	Disclosure Requirement related to ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model
	Impacts, risks and opportunities management
—	Disclosure Requirement S1-1 – Policies related to own workforce
—	Disclosure Requirement S1-2 – Processes for engaging with own workforce and workers’ representatives about impacts
—	Disclosure Requirement S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns
—	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
	Metrics and targets
—	Disclosure Requirement S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities
—	Disclosure Requirement S1-6 – Characteristics of the undertaking’s employees
—	Disclosure Requirement S1-7 – Characteristics of non-employees in the undertaking’s own workforce
—	Disclosure Requirement S1-8 – Collective bargaining coverage and social dialogue
—	Disclosure Requirement S1-9 – Diversity metrics
—	Disclosure Requirement S1-10 – Adequate wages
—	Disclosure Requirement S1-11 – Social protection
—	Disclosure Requirement S1-12– Persons with disabilities
—	Disclosure Requirement S1-13 – Training and skills development metrics
—	Disclosure Requirement S1-14 – Health and safety metrics
—	Disclosure Requirement S1-15 – Work-life balance metrics
—	Disclosure Requirement S1-16 – Remuneration metrics (pay gap and total remuneration)
—	Disclosure Requirement S1-17 – Incidents, complaints and severe human rights impacts
Appendix A:	Application Requirements
–	Objective
–	ESRS 2 General Disclosures
	Strategy
—	Disclosure Requirement related to ESRS 2 SBM-2 – Interests and views of stakeholders
—	Disclosure Requirement related to ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction of with strategy and business model
	Impacts, risks and opportunities management
—	Disclosure Requirement S1-1 – Policies related to own workforce
—	Disclosure Requirement S1-2 – Processes for engaging with own workforce and workers’ representatives about impacts
—	Disclosure Requirement S1- 3 – Processes to remediate negative impacts and channels for own workers to raise concerns
—	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
	Metrics and targets
—	Disclosure Requirement S1-5 – Targets related to managing material impacts, advancing positive impacts, as well as to risks and opportunities
—	Disclosure Requirement S1-6 – Characteristics of the Undertaking’s Employees
—	Disclosure Requirement S1-7 – Characteristics of non-employees in the undertaking’s own workforce
—	Disclosure Requirement S1-8 – Collective bargaining coverage and social dialogue
—	Disclosure Requirement S1-9 – Diversity metrics
—	Disclosure Requirement S1-10 – Adequate Wages
—	Disclosure Requirement S1-11 – Social protection
—	Disclosure Requirement S1-12 – Persons with disabilities
—	Disclosure Requirement S1-13 – Training and Skills Development metrics
—	Disclosure Requirement S1-14 – Health and safety metrics
—	Disclosure Requirement S1-15 – Work-life balance
—	Disclosure Requirement S1-16 – Remuneration metrics (pay gap and total remuneration)
—	Disclosure Requirement S1-17 – Incidents, complaints and severe human rights impacts
Appendix A.1:	Application Requirements for ESRS 2 related disclosures
Appendix A.2:	Application Requirements for ESRS S1-1 Policies related to own workforce
Appendix A.3:	Application Requirements for ESRS 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
Appendix A.4:	Application Requirements for ESRS S1–5 Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities

Objective

• 1.The objective of this Standard is to specify disclosure requirements which will enable users of the sustainability statement to understand the undertaking’s material impacts on its own workforce, as well as related material risks and opportunities, including:

• (a) how the undertaking affects its own workforce, in terms of material positive and negative actual or potential impacts;

• (b) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential negative impacts, and to address risks and opportunities;

• (c) the nature, type and extent of the undertaking’s material risks and opportunities related to its impacts and dependencies on its own workforce, and how the undertaking manages them; and

• (d) the financial effects on the undertaking over the short-, medium- and long-term of material risks and opportunities arising from the undertaking’s impacts and dependencies on its own workforce.

• 2.In order to meet the objective, this Standard also requires an explanation of the general approach the undertaking takes to identify and manage any material actual and potential impacts on its own workforce in relation to the following social, including human rights, factors or matters:

• (a) working conditions, including:
• i. secure employment;
• ii. working time;
• iii. adequate wages;
• iv. social dialogue;
• v. freedom of association, the existence of works councils and the information, consultation and participation rights of workers;
• vi. collective bargaining, including the rate of the undertaking’s workforce covered by collective agreements;
• vii. work-life balance; and
• viii. health and safety.

• (b) equal treatment and opportunities for all, including:
• i. gender equality and equal pay for work of equal value;
• ii. training and skills development;
• iii. employment and inclusion of persons with disabilities;
• iv. measures against violence and harassment in the workplace; and
• v. diversity.

• (c) other work-related rights, including those that relate to:
• i. child labour;
• ii. forced labour;
• iii. adequate housing; and
• iv. privacy.

• 3.This Standard also requires an explanation of how such impacts, as well as the undertaking’s dependencies on its own workforce, can create material risks or opportunities for the undertaking. For example, on the matter of equal opportunities, discrimination in hiring and promotion against women can reduce the undertaking’s access to qualified labour and harm its reputation. Conversely, policies to increase the representation of women in the workforce and in upper levels of management can have positive effects, such as increasing the pool of qualified labour and improving the undertaking’s reputation.

- 4.This Standard covers an undertaking’s own workforce, which is understood to include both people who are in an employment relationship with the undertaking (‘employees’) and non-employees who are either people with contracts with the undertaking to supply labour (‘self-employed people’) or people provided by undertakings primarily engaged in ‘employment activities’ (NACE Code N78). See Application Requirement 3 for examples of who falls under own workforce. The information required to be disclosed with regard to non-employees shall not affect their status pursuant to applicable labour law.

• 5.This Standard does not cover workers in the undertaking’s upstream or downstream value chain; these categories of workers are covered in ESRS S2 Workers in the value chain.

• 6.The Standard requires undertakings to describe their own workforce, including key characteristics of the employees and non-employees that are part of it. This description provides users with an understanding of the structure of the undertaking’s own workforce and helps to contextualise information provided through other disclosures.

• 7.The objective of the Standard is also to enable users to understand the extent to which the undertaking aligns or complies with international and European human rights instruments and conventions, including the International Bill of Human Rights, the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, the International Labour Organization’s Declaration on Fundamental Principles and Rights at Work and ILO fundamental conventions, the UN Convention on Persons with Disabilities, the European Convention of Human Rights, the revised European Social Charter, the Charter of Fundamental Rights of the European Union, the EU policy priorities as set out by the European Pillar of Social Rights, and Union legislation, including the EU labour law acquis.

Interaction with other ESRS

- 8.This Standard shall be read in conjunction with ESRS 1 General principles and ESRS 2 General requirements.

• 9.This Standard shall be read in conjunction with ESRS S2 Workers in the value chain, ESRS S3 Affected communities and ESRS S4 Consumers and end-users.

- 10. The reporting under this Standard shall be consistent, coherent and where relevant clearly linked with reporting on the undertaking’s value chain workers under ESRS S2, in order to ensure effective reporting.

Disclosure requirements

ESRS 2 General disclosures

• 11.The requirements of this section should be read in conjunction with the disclosures required by ESRS 2 on Strategy (SBM). The resulting disclosures shall be presented alongside the disclosures required by ESRS 2, except for ESRS 2 SBM-3, for which the undertaking has an option to present the disclosures alongside the topical disclosure.

Strategy

Disclosure Requirement related to ESRS 2 SBM-2 – Interests and views of stakeholders

• 12.When responding to ESRS 2 SBM-2, the undertaking shall disclose how the interests, views, and rights of people in its own workforce, including respect for their human rights, inform its strategy and business model. The undertaking’s own workforce is a key group of affected stakeholders.

Disclosure Requirement related to ESRS 2 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model

• 13.When responding to ESRS 2 SBM-3 paragraph 48, the undertaking shall disclose:

• (a) whether and how actual and potential impacts on its own workforce as identified in ESRS 2 IRO-1 Description of the processes to identify and assess material impacts, risks and opportunities: (i) originate from or are connected to the undertaking’s strategy and business models, and (ii) inform and contribute to adapting the undertaking’s strategy and business model; and

• (b) the relationship between its material risks and opportunities arising from impacts and dependencies on own workforce and its strategy and business model.

• 14.When fulfilling the requirements of paragraph 48, the undertaking shall disclose whether all people in its own workforce who could be materially impacted by the undertaking are included in the scope of its disclosure under ESRS 2. These material impacts shall include impacts that are connected with the undertaking’s own operations and its value chain, including through its products or services, as well as through its business relationships. In addition, the undertaking shall provide the following information:

• (a) a brief description of the types of employees and non-employees in its own workforce subject to material impacts by its operations, and specify whether they are employees, self- employed people, or people provided by third party undertakings primarily engaged in employment activities;

• (b) in the case of material negative impacts, whether they are either (i) widespread or systemic in contexts where the undertaking operates (for example, child labour or forced labour or compulsory labour in specific countries or regions outside the EU), or (ii) related to individual incidents (for example, an industrial accident or an oil spill);

• (c) in the case of material positive impacts, a brief description of the activities that result in the positive impacts, the types of employees and non-employees in its own workforce that are positively affected or could be positively affected; the undertaking may also disclose whether the positive impacts occur in specific countries or regions;

• (d) any material risks and opportunities for the undertaking arising from impacts and dependencies on its own workforce;