Below you will find questions and answers, in short, for the following topics:<\/p>\n
When a sustainability matter triggers exposure to both risks and opportunities, should the assessment of materiality be made on each individually or on the combined financial risk and opportunity?<\/p>\n
For example, energy consumption is a financial risk because the cost of energy can fluctuate significantly, but there is also an opportunity in terms of reduced energy costs if the company invests in renewable energy and energy-efficient appliances.<\/p>\n
When the nature of an opportunity or a risk relating to a sustainability matter is different, it shall be assessed separately.<\/p>\n
The positive deviations are not necessarily identified as separate opportunities but assessed together with the risk.<\/p>\n
In the example above, it is the action of investing in renewable energy that creates the opportunity to reduce energy expenses.<\/p>\n
How shall Minimum Disclosure Requirements (MDR) on policies, actions and targets be reported if they related to more than one topical standard?<\/p>\n
The MDRs on policies, actions, metrics and targets shall be applied together with the corresponding DRs in topical and sector-specific ESRS (ESRS 1 par. 13).<\/p>\n
Reference from one part of the sustainability statement to another is allowed, avoiding duplications (ESRS 1 par. 115).<\/p>\n
Can the ESRS 2 datapoints be overlapping with those in topical standards?<\/p>\n
No, the ESRS 2 Disclosure Requirements do not overlap with those in topical ESRS, with the exception of the MDRs in ESRS 2 Chapter 4.2 as they are a checklist to be used for completeness.<\/p>\n
When a datapoint in MDR is already covered by a topical standard, undertakings are not supposed to report twice the same information requirement.<\/p>\n
Some Disclosure Requirements in the topical ESRS further specify the ESRS 2 disclosures in relation to the respective topical matter (see ESRS 2 par. 2).<\/p>\n
Which are the DPs or DRs to consider from ESRS 2 for entity-specific disclosure?<\/p>\n
ESRS 2 GOV-1 to GOV-5, SBM-1 to SBM-3, IRO-1 and the Minimum Disclosure Requirements on policies and actions on metrics and targets, respectively (ESRS 2 par. 60 and 70).<\/p>\n
Is the general meeting to be considered as an \u2018administrative, management and supervisory body\u2019? The general meeting is usually a company\u2019s highest decision-making body.<\/p>\n
No, the general meeting should not be considered an \u2018administrative, management and supervisory body\u2019.<\/p>\n
It is a separate governance body with specific powers attributed to shareholders or owners.<\/p>\n
The general meeting is not addressed by ESRS.<\/p>\n
What does net revenue mean? How is it calculated?<\/p>\n
The terms \u2018revenue\u2019, \u2018total revenue\u2019 and \u2018net revenue\u2019 are to be understood as the amounts presented in the income statement of the undertaking\u2019s financial statements in accordance with the applicable legislation and\/or accounting standards.<\/p>\n
Is the disclosure of monetary amount and proportion of assets at risk over the short-\/medium-\/long-term meant to be broken down by the time horizon (short-\/medium-\/long-term) or by a single aggregate number for assets at risk in any of those time horizons?<\/p>\n
ESRS E1 paragraphs 66 and 67 do not require a breakdown of monetary amount figures by the three time horizons.<\/p>\n
It rather requires the disclosure of a monetary amount that is the result of cumulative financial effects assessed for each of the time horizons (short-, medium- and long-term).<\/p>\n
Please provide more clarity around the requirement to report the anticipated financial effects from chronic and acute physical risks in relation to climate change.<\/p>\n
The monetary amount of the assets that are exposed to impact from chronic and\/or acute climate change events provides a measure of exposure to climate risks.<\/p>\n
The undertaking is required to disclose (Regulation EU 2022\/2453):<\/p>\n
(a) the gross carrying amount of exposures sensitive to impact from chronic climate-change events;<\/p>\n
(b) the gross carrying amount of exposures sensitive to impact from acute climate change events; and<\/p>\n
(c) the gross carrying amount subject to impact from both chronic and acute climate change events.<\/p>\n
Do Gross GHG scopes 1-3 need to be disclosed each year?<\/p>\n
Yes, an undertaking shall disclose and update their Gross Scopes 1, 2, 3 and Total GHG emissions on an annual basis.<\/p>\n
The update of Scope 3 GHG emissions in each significant category shall occur every year on the basis of current activity data.<\/p>\n
The update of the full Scope 3 GHG inventory is required at least every three years or on the occurrence of a significant event or a significant change in circumstances (ESRS E1 par. AR 46 (f)).<\/p>\n
When calculating metrics, including value chain metrics, do we have to consider downstream positions for all four quarters (as of 31.03, 30.06, 30.09, 31.12)?<\/p>\n
ESRS do not require to calculate annual averages based on quarterly figures.<\/p>\n
Can the transitional provision in ESRS 1 paragraphs 132 to 135 (difficulty in gathering value chain information for the first 3 years) be applied to the reporting of Scope 3 emissions in ESRS E1 par. 44 (c)?<\/p>\n
No. The disclosure of Scope 3 emissions is a datapoint derived from EU legislation. Despite these transitional provisions, datapoints derived from EU legislation, such as Scope 3 emissions, shall be reported.<\/p>\n
However, if the average number of employees during the financial year does not exceed 750, the undertaking may omit the datapoints on Scope 3 emissions and total GHG emissions for the first year.<\/p>\n
Which are the recognised quality standards for carbon credit?<\/p>\n
There is currently no list of quality standards for carbon credit recognised by the EU or recommended by EFRAG.<\/p>\n
This list of criteria needs to be met:<\/p>\n
(a) must be verifiable by independent third parties; and<\/p>\n
(b) make requirements and project reports publicly available and at a minimum ensure:<\/p>\n
As long as those criteria are met, an undertaking can consider the carbon credit as a recognised quality standard for carbon credit.<\/p>\n
What is the definition of \u2018projects\u2019 in ESRS E1 paragraph 56 (a) (GHG removals and storage resulting from projects).<\/p>\n
Projects are all activities\/interventions conducted by the undertaking which may lead to GHG removals and storage.<\/p>\n
Examples of GHG removal projects include:<\/p>\n
reforestation\/afforestation, soil carbon enhancement, ecological restoration, blue carbon removals, integration of bioenergy with carbon capture and storage (BECCS) technologies and Direct Air Capture of CO2 with storage (DACCS).<\/p>\n
Projects will usually test new concepts, technologies or products within the operating context of the company and have both a novelty component as well as a transitory nature \u2013 the related activity is operated as a project for a certain limited period.<\/p>\n
What are the definitions of \u2018biogenic removal and storage\u2019, \u2018removal and storage from land use\u2019, \u2018technological removal and storage\u2019 and \u2018hybrid removal and storage\u2019?<\/p>\n
Biogenic removal and storage refers to GHG removal and storage as defined in ESRS, which is classified as biogenic.<\/p>\n
This is produced by living organisms or biological processes but not by fossilized or from fossil sources. One example is forest restoration.<\/p>\n
Removal and storage from land use refers to GHG removal and storage as defined in ESRS resulting from land-use, which is defined, too, in ESRS.<\/p>\n
Additionally, ESRS E1 AR 57 (b) provides examples of such activities (afforestation, reforestation, forest restoration, urban tree planting, agroforestry, building soil carbon).<\/p>\n
Technological removal and storage refers to GHG removal and storage as defined in ESRS, which results from use of technology.<\/p>\n
Such activities may resemble examples provided in ESRS E1 AR 57 (b) (direct air capture).<\/p>\n
Hybrid removal and storage refers to GHG removal and storage as defined in ESRS, which results from combining the use of technology with biogenic removals.<\/p>\n
ESRS E1 AR 57 (b) provides an example of this activity (bioenergy with CO2 capture and storage).<\/p>\n
Undertakings interested in carbon removals and carbon farming are also advised to check the provisional agreement reached on 20 February 2024 by the European Parliament and the Council of the EU for a Carbon Removals and Carbon Farming (CRCF) Regulation.<\/p>\n
The full Q&A compilation for January-July 2024 can be downloaded here: >><\/a><\/p>\n