Questions & Answers
Why in the Flowchart in Appendix E of ESRS 1 are transition plans mentioned together with policies, actions and targets?
- Disclosure of transition plans
- minimum disclosure requirements
- ESRS 1 Appendix E
Background
The question received: ‘What is the logic according to Flowchart E of ESRS 1 for determining Disclosure Requirements for transition plans and processes?’ has been reworded to the above to be clearer.
ESRS 1 Appendix E – Flowchart for determining disclosures under ESRS presents the reasoning to determine disclosures when a topic covered by a topical standard is material. In such case, the related policies, actions and targets shall be disclosed, or it shall be stated that the undertaking does not have policies, actions and/or targets related to the material sustainability matter. The undertaking may report a timeframe in which it aims to have these in place (ESRS 1 paragraph 33).
ESRS 1 Appendix E – Flowchart for determining disclosures under ESRS states: ‘… Disclosure Requirements in relation to action plans, targets, policies, scenario analysis and transition plans are proportionate because they are contingent on the undertaking having these, …’
ESRS 1 Appendix E – Flowchart for determining disclosures under ESRS does not include information on the Disclosure Requirements related to transitions plans (E1-1 and E4-1). It does not include, either, information on the Disclosure Requirements related to the processes in the ESRS S1 to S4: Processes for engaging with stakeholders about impacts (S1-2, S2-2, S3-2 and S4-2) and processes to remediate negative impacts and channels for stakeholders to raise concerns (S1-3, S2-3, S3-3 and S4-3).
ESRS E1-1 paragraph 17 states: ‘In case the undertaking does not have a transition plan in place, it shall indicate whether and, if so, when it will adopt a transition plan.’
The Annex II Acronyms and Glossary of Terms defines ‘Actions’ as: ‘Actions refer to (i) actions and action plans (including transition plans) that are undertaken to ensure that the undertaking delivers against targets set and through which the undertaking seeks to address material impacts, risks and opportunities; and (ii) decisions to support these with financial, human or technological resources.’
The Annex II Acronyms and Glossary of Terms defines ‘Transition plan’ as: ‘A specific type of action plan that is adopted by the undertaking in relation to a strategic decision and that addresses:
(a) a public policy objective; and/or
(b) an entity-specific action plan organised as a structured set of targets and actions, associated with a key strategic decision, a major change in business model, and/or particularly important actions and allocated resources.’
Answer
The flowchart in Appendix E of ESRS 1 provides an illustration of the provisions in ESRS on materiality.
The Flowchart refers to actions (as well as policies and targets) which by definition also comprises transition plans.
Transition plans are an area of disclosure that have characteristics in common with policies, targets, and actions. Climate transition plans for example are effectively action plans to achieve the targets for carbon emissions.