Question-ID: 337

The submitter provided the following background for his question: ‘The following example refers to metrics in the context of water and marine resources. However, it should be noted that the question raised similarly applies to all sustainability matters and metrics and that the subtopic “water” was chosen for illustration purposes only.

Example: The main business of a group is manufacturing and selling a specific product, which is produced in a water-intensive production process in various own facilities. The group further owns and operates several sales corporations abroad, with a limited number of employees working in offices not being involved in production-related activities. The group determines that all topics and subtopics mentioned in ESRS E3 on water and marine resources are material and concludes that all metrics governed by ESRS E3 need to be disclosed.

Furthermore, based on a preliminary estimate, the group notes that its production facilities will bear the vast majority of the amounts of all metric data on this topic, whereas the sales corporations would account for a marginal portion of those metrics, which consequently the group considers not to be material. However, the group is aware of the requirement to calculate the metrics based on own operations, i.e., including the parent company and all the subsidiaries of the group. Therefore, it has established processes and procedures to measure directly and with precision the part of the metrics attributable to the group’s production facilities, whereas it continues to determine the part of the metrics attributable to its sales corporations based on estimations such as average per capita figures. The total metrics disclosed is therefore the total of the portion directly measured and a respective estimate.’

ESRS 1 paragraph 87 states: ’When quantitative metrics and monetary amounts including upstream and downstream value chain information (see chapter 5 of this Standard) cannot be measured directly and can only be estimated, measurement uncertainty may arise.’

ESRS 1 paragraph 89 states: ‘The use of reasonable assumptions and estimates including scenario or sensitivity analysis is an essential part of preparing sustainability-related information and does not undermine the usefulness of that information, provided that the assumptions and estimates are accurately described and 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 of this Standard).’