Questions & Answers
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)?
- Metrics calculation
- annual average
Background
[The original question asked, ‘When calculating Indicators including Value Chain for the financial sector (Capital markets, Insurance), do we have to consider downstream positions for all four quarters (as of 31.03, 30.06, 30.09, 31.12)?’ was referring to metrics calculation in the financial sector but, to be more general, the question was changed to the above.
As background to the question, the submitter provided the following: ‘Background is that SFDR requires calculating PAIs for all relevant positions as per quarter end and then build an average.’
ESRS 1 paragraph 19 states: ‘When preparing its sustainability statement, the undertaking shall apply:
(a) the fundamental qualitative characteristics of information, i.e. relevance and faithful representation; and
(b) the enhancing qualitative characteristics of information, i.e. comparability, verifiability and understandability.’
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).’
Answer
ESRS do not require to calculate annual averages based on quarterly figures as required in Article 6 of Commission Delegated Regulation (EU) 2023/363.
Some metrics require the calculation of annual averages (e.g. ESRS S1 Disclosure Requirement S1-6 – Characteristics of the undertaking’s employees). ESRS do not prescribe how to calculate annual averages as long as the calculation method results in information that meets the qualitative characteristics of information (ESRS 1 Chapter 2; see also ESRS 1 paragraph 89).
Supporting Material
Commission Delegated Regulation (EU) 2023/363 of 31 October 2022 states in Article 6: ‘Description of the principal adverse impacts of investment decisions on sustainability factors … 3. Financial market participants shall include in the columns ‘Impact’ in the section ‘Description of the principal adverse impacts on sustainability factors’ in Table 1 of Annex I, figure on impact as the average of impacts on 31 March, 30 June, 30 September and 31 December of each period from 1 January to 31 December.’
Relations
Paragraph | Content |
|---|---|
2. Qualitative characteristics of information | |
Minimum disclosure requirement – Metrics MDR-M – Metrics in relation to material sustainability matters | |
2. Qualitative characteristics of information | |
5. Metrics and targets | |
5. Metrics and targets | |
2. Qualitative characteristics of information | |
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). | |
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). | |
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). |