AR 1 for para. 4

(General-purpose)

The terms ‘general-purpose financial reports’ and ‘general-purpose sustainability statements ’ refer to reports that:

AR 2 for para. 11

(Entity-specific topics)

Depending on the undertaking’s facts and circumstances, there may be topics other than those covered in ESRS topical requirements that the undertaking shall cover following its materiality assessment. This may be the case where its business model and strategy are associated with material impacts , risks and opportunities that do not correspond to ESRS topics.

AR 3 for para. 11

(Requirements for entity-specific disclosures)

When developing entity-specific disclosures, the undertaking shall ensure that:

AR 4 for para. 11

(Entity-specific disclosures and metrics)

When determining the usefulness of metrics for inclusion in its entity-specific disclosures, the undertaking shall ensure that:

AR 5 for para. 12

(Sources for entity-specific disclosures)

In developing its entity-specific disclosures, the undertaking may use available best practices, frameworks or reporting standards, such as IFRS industry-based guidance and GRI Standards (including GRI topics and sector standards).

AR 6 for paras. 19–20

(Information considered as a whole)

To meet the objective of its sustainability statement set out in paragraph 3, the undertaking shall consider whether the sustainability statement, taken as a whole, provides a fair presentation of its material impacts , risks and opportunities . This assessment shall consider the overall picture conveyed by the information disclosed across the sustainability statement and not individual disclosures in isolation. This can result in the addition of entity-specific information, as well as the implementation of the provision in paragraph 24, by using the criteria for information materiality in paragraph 23.

Making use of one or more of the provisions in Chapters 5.4, 7.3, 7.4, or 7.7 is not detrimental to fair presentation provided that the undertaking gives explanations that enable users to understand the consequences on the reported information and the resulting limitations.

AR 7 for para. 20(b)

(Additional information in other reporting frameworks)

Other reporting frameworks refer to ‘additional information’ as the content that an undertaking shall disclose beyond the requirements provided in the standards to ensure a fair presentation. In ESRS, the term ‘entity-specific disclosures’ serves the same purpose.

AR 8 for para. 23

(Decisions)

When considering the decision-usefulness of information, the undertaking shall take into account the information that groups of such users need, without aiming to meet all the specific information needs of each individual user.

AR 9 for para. 27

(‘Top-down’ approach)

A top-down approach enables the undertaking to avoid unnecessary work when assessing the materiality or non-materiality of its impacts , risks or opportunities for a topic or sub-topic. In general, a top-down approach does not require the undertaking to carry out the materiality assessment at the level of individual impacts, risks and opportunities. In some cases, a more granular level of assessment may be necessary, if it could reasonably be expected to lead to a different conclusion about the materiality of the undertaking’s impacts, risks or opportunities for a topic or sub-topic.

Following a top-down approach, the materiality conclusion can be reached at topic level for combined impacts, risks and opportunities.

AR 10 for paras. 27–28

(Combining approaches)

The undertaking may combine a ‘top-down approach’ for some topics with a ‘bottom-up’ analysis for others.

AR 11 for para. 27

(Geographies)

Geographies or geographic contexts can be analysed at different levels (country, region, county, water basin, ecosystem or site ) according to their relevance for the assessment.

AR 12 for para. 29

(ESRS 2 General Disclosures DRs)

The DRs in ESRS 2 General Disclosures are fundamental in nature and therefore likely to result in material information for all undertakings.

AR 13 for para. 32

(Reasonable and supportable information and identifying impacts, risks and opportunities)

In accordance with the use of reasonable and supportable information that is available to the undertaking at the reporting date without undue cost or effort (Chapter 7.4):

AR 14 for para. 32

(Usual internal and external sources)

The undertaking may consider the following usual internal and external sources to support the materiality assessment: the undertaking’s sustainability due diligence and general risk management processes; its engagement with affected stakeholders ; peer experience; reports and statistics, scientific data, and expert advice.

AR 15 for para. 32

(Characteristics of severity and time horizon)

When conducting its materiality assessment (see paragraphs 27 and 32), the undertaking need not analyse:

AR 16 for para. 32

(Level of the materiality assessment)

The following paragraphs support the determination of the level at which the materiality assessment takes place. The level of aggregation or disaggregation adopted for reporting purposes is determined separately from the level at which the materiality assessment takes place and in accordance with the provisions of Chapter 3.3.2 Level of aggregation and disaggregation.

For geographies identified under paragraph 32(b), the undertaking may need to consider the specific context to assess the materiality of impacts , risks , or opportunities . This may be necessary if, for example, the materiality or non-materiality of an impact, risk or opportunity for a topic or sub-topic cannot be established without considering the specific context or if the specific context could reasonably be expected to affect the conclusion about the materiality of the impact, risk or opportunity in question.

For environmental topics , factors that influence the existence of negative impacts in a specific context of the geography include, among others: local air, water and soil quality; water availability in areas with water stress ; and presence of threatened species and ecosystems in biodiversity-sensitive areas .

As it relates to nature-related impacts and dependencies , the first three steps of the LEAP approach (locate, evaluate, assess) provide a valuable reference for how to:

For social topics, factors that influence the existence of negative impacts in a specific context of the geography include, among others: conflict-affected and high-risk areas, and the presence of vulnerable populations such as indigenous peoples or migrant workers.

AR 17 for para. 37

(Materiality assessment for undertakings managing investments at certain conditions)

Where the undertaking manages investments subject to a fiduciary duty on behalf of its clients pursuant to a mandate agreed with those clients without retaining risks or rewards of ownership, that undertaking is not expected to assess the impacts , risks and opportunities related to those investments.

AR 18 for paras. 38–39

(Examples of impacts connected)

The following are two examples of impacts that are connected with the undertaking:

AR 19 for paras. 38–39

(Qualitative considerations and quantitative thresholds)

In the ‘top-down’ approach, qualitative considerations may be sufficient to derive a conclusion on materiality . In a ‘bottom-up’ approach the undertaking may use either qualitative considerations or quantitative thresholds, depending on the nature of the impact , available data and other circumstances.

AR 20 for paras. 38–39

(Steps in the impact materiality assessment)

The undertaking shall consider the following steps in impact materiality assessment:

AR 21 for paras. 38–39

(Terms used in other reporting frameworks)

The term ‘most significant impacts’ is used in some existing reporting frameworks to refer to impacts that are described in ESRS as ‘material impacts’.

AR 22 for paras. 40-41

(Scale, scope and irremediable character)

The severity of an impact is assessed based on its scale, scope and irremediable character:

Any of the three characteristics (scale, scope and irremediable character) can make a negative impact severe.

AR 23 for para. 42

(Stakeholders)

The typical categories of affected stakeholders of an undertaking are: workers and workers’ representatives in the undertaking’s own workforce and in its upstream and downstream value chains , communities affected by its business operations or upstream and downstream value chain activities, and consumers and end-users of its products and services. Consideration of affected stakeholders requires particular attention to the stakeholders within these categories who are in particularly vulnerable situations.

Nature may be considered a silent affected stakeholder.

AR 24 for para. 42

(Engagement with affected stakeholders)

If the undertaking engages with affected stakeholders as part of its due diligence process (if any) to identify, assess and address negative impacts , the results of this engagement provide a valuable input to its materiality assessment, without the need to put in place a separate engagement process for the materiality assessment. However, the undertaking may also seek direct input into its materiality assessment from affected stakeholders or their representatives (such as employee representatives or trade unions), as well as users of sustainability reporting and other experts. This includes feedback on the undertaking’s conclusions regarding the identification of material impacts, risks or opportunities , as well as regarding the topics to be reported.

AR 25 for para. 42

(Workers’ representatives)

In accordance with Directive 2013/34/EU (Accounting Directive) as amended by the Corporate Sustainability Reporting Directive, the management of the undertaking shall inform workers’ representatives at the appropriate level and discuss with them the relevant information and the means of obtaining and verifying sustainability information. Such a process and, where applicable, the related communication to the relevant administrative, management and supervisory bodies constitute a valuable element of engagement with stakeholders.

AR 26 for para. 43(a)

(Consideration of implemented policies and actions)

As an illustration, for the consideration of implemented policies and actions in the materiality assessment in relation to paragraph 43(a), when an oil spill occurs, the effort to contain the spill is considered as mitigation, while the repair of the damage or harm that was caused by the spill is considered as remediation .

AR 27 for para. 43(b)

(Policy in isolation)

If a policy implies future actions to ensure that it is effective in reducing the severity or likelihood of an impact , the existence of that policy and of the related future actions shall not be considered in assessing the materiality of the impact in question.

AR 28 for para. 43(c)

In the cases described in paragraph 43(c), the undertaking shall adapt its approach to the materiality assessment as appropriate to meet the information needs of users , as described in paragraph 23.

AR 29 for para. 48

(Internal risk management)

The internal risk management framework is a valuable input to the materiality assessment of risks and opportunities . For credit institutions and insurance undertakings, the applicable prudential regulatory frameworks may inform the materiality assessment.

AR 30 for para. 49

(Dependencies)

Dependencies may affect:

AR 31 for para. 49

(Contribution to financial effects)

When assessing the materiality of risks and opportunities , the undertaking shall consider their contribution to financial effects over short, medium and long term using:

AR 32 for para. 51

(Impacts or risks arising from actions)

The following is an illustration of such situations. The climate-mitigation transition plan results in material negative impacts or risks related to own workforce . To promote connected information (see Chapter 9.1), the undertaking:

AR 33 for para. 52

(Material geographies)

The undertaking shall consider disaggregating reported information by material geographies (see AR 11) at appropriate level, when the severity of the underlying material impacts is highly dependent on the characteristics of the context of those geographies, or when there are significant differences in the undertaking’s activities affecting those geographies.

The adopted level of aggregation shall not obscure interconnections between impacts, risks, and their drivers that exist in specific geographic contexts, such as cumulative effects on ecosystems or shared resources.

AR 34 for para. 53

(Inappropriate level of aggregation)

Information may be obscured where an inappropriate level of aggregation could influence the decision of primary users of general-purpose financial statements or the decisions of other users of the general-purpose sustainability statements . An inappropriate level of aggregation of impacts , risks and opportunities may result from aggregating those which do not have shared characteristics or disaggregating those which have shared characteristics. Information is obscured when material information is hidden by immaterial information.

AR 35 for para. 61

(Subsidiary with different reporting period)

When including subsidiaries with different reporting periods in the consolidated sustainability statement , the undertaking may make use of applicable accounting provisions that deal with those circumstances.

AR 36 for para. 61

(Joint operations share)

Without prejudice to the relief in paragraph 92, the undertaking shall classify as ‘ own operations ’ the impacts , risks and opportunities connected with the share of its joint operation's assets, liabilities, revenues and expenses recognised in the financial statements.

AR 37 for paras. 62-63

(Value chain reporting for undertakings managing investments at certain conditions)

Where the undertaking manages investments subject to a fiduciary duty on behalf of its clients pursuant to a mandate agreed with those clients without retaining risks or rewards of ownership, that undertaking is not expected to provide data on those investments.

AR 38 for para. 63

(Metrics and value chain)

The undertaking is required to include entity-specific metrics to cover its upstream and downstream value chain when this is necessary in accordance with paragraph 11, as the metrics defined in ESRS topical standards only cover own operations, with the exception of GHG emissions (ESRS E1-8).

AR 39 for para. 71

(Leased assets)

For example, the lessee and not the lessor is the one causing pollution , using energy or consuming water in a leased factory. The lessee therefore assesses the material impacts connected with the use of the leased assets in its own operations.

AR 40 for para. 84(b)

(Revise comparatives)

The undertaking is not required to revise the comparative figure for new information received if the revised comparatives do not provide useful information, such as when the estimation methodology for the relevant metric relies systematically at the reporting date on an input from the previous period.

AR 41 for para. 89

(About judgements)

In preparing its sustainability statement , the undertaking makes various judgements, beyond those involving estimations, that can significantly affect the reported information, such as when:

AR 42 for para. 89

(Use of reasonable and supportable assumptions and estimates)

The use of reasonable estimates, including when developing scenario or sensitivity analysis, is an essential part of preparing the undertaking’s sustainability statement . It does not undermine the usefulness of that information provided that the significant assumptions and estimates are explained. Even a high level of measurement uncertainty would not necessarily prevent such an assumption or estimate from providing useful information or meeting the qualitative characteristics of information (see Appendix B).

AR 43 for para. 89

(Use of reasonable and supportable assumptions and estimates)

The requirement in paragraph 88(b) relates to the estimates that require the most difficult, subjective or complex judgements.

AR 44 for para. 92

(Relief and scope 3 GHG emissions)

When preparing the information on gross scope 3 GHG emissions , within the boundaries defined in this standard and in AR 19 of ESRS E1 Climate Change, paragraph AR 24 of ESRS E1 Climate Change applies.

AR 45 for para. 94

(Reasonable and supportable information available without undue cost or effort)

Reasonable and supportable information covers factors that are specific to the undertaking, as well as general conditions in the external environment. Reasonable and supportable information includes information about past events, current conditions and forecasts of future conditions. The undertaking is not required to carry out an exhaustive search for such information.

When assessing whether the preparation of a disclosure would involve undue cost or effort at the reporting date, the undertaking shall consider, individually or jointly, criteria such as:

In assessing the availability of information, the undertaking:

AR 46 for para. 99 (Prior period errors)

Prior period errors are omissions from, and misstatements in, the undertaking’s sustainability statement for one or more prior periods. Such errors arise from a failure to use, or the misuse of, reliable information that:

Such errors include: the effects of mathematical mistakes, mistakes in applying the definitions for metrics or targets , oversights or misinterpretations of facts, and fraud.

Corrections of errors are distinguished from changes in estimates. Estimates may need to be revised as additional information becomes known.

AR 47 for para. 101

(Information that can be omitted)

The fact that undertakings not established in the Union are not required to report the same information may not be used to justify the omission of information under paragraph 101 point (a).

AR 48 for para. 111

(Presentation of more detailed information)

The undertaking may use internal references across different parts or subparts (including appendices) in the sustainability statement to facilitate the understanding of linkages that exist between different items of information. These internal references are not incorporation by reference.

AR 49 for para. 113(a)

(Connections within the sustainability statement)

Connections within the sustainability statement include:

AR 50 for para. 115

(Currency to be used)

For monetary amounts the undertaking shall use the same currency as in the financial statements.

AR 1 for para. 4(a)

Differences from the reporting boundary used in the consolidated financial statements may arise when a subsidiary is excluded from consolidation because it is financially non-material (ESRS 1 General Requirements, paragraph 62).

AR 2 for para. 6

Reliefs, options or other specific provisions to be considered are the following:

The undertaking may present the information required under paragraph 6 in the General Information section of its sustainability statement or alongside the relevant disclosures to which the information pertains.

AR 3 for para. 9

The undertaking may present the information required in paragraph 9 either in the general part of its sustainability statement or alongside the relevant topical disclosures.

AR 4 for para. 10

The undertaking may present the information required in paragraph 10 either in the general part of its sustainability statement or within the content index as referred to in ESRS 2 General Disclosures IRO-2, AR 29 if it chooses that option.

AR 5 for para. 12

For the purposes of this disclosure, the management of material impacts , risks and opportunities includes the due diligence process put in place.

AR 6 for para. 12(a)

The board’s gender diversity shall be calculated as the average ratio of female to male board members (10).

AR 7 for para. 12(b)

Sustainability-related expertise refers to expertise that the bodies directly possess or have access to.

AR 8 for para. 12(c)

The description of the responsibilities shall consist of an overview of how the responsibilities of each body or individual for material impacts , risks and opportunities and related topics are reflected in the undertaking’s terms of reference, board mandates and other related policies .

AR 9 for para. 16

The undertaking may present the information required in paragraph 16 in the form of a table, cross-referencing the main steps of its due diligence process to the relevant disclosures in its sustainability statement .

AR 10 for para. 18

The undertaking shall consider the completeness and integrity of the data, and the accuracy of estimation results, as aspects that are relevant in the context of the risk management associated with the reporting process.