Questions & Answers
Can you explain and give more context to the datapoint in ESRS S1 paragraph 50 (f)?
- Cross-reference to financial statements
- ESRS S1 Disclosure Requirement S1-6
Background
ESRS S1-6 paragraph 50 (f) requires undertakings to disclose: ‘a cross-reference of the information reported under (a) above to the most representative number in the financial statements.’
ESRS S1-6 paragraph 50 (a) requests the ‘total number of employees by head count and breakdowns by gender and by country for countries in which the undertaking has 50 or more employees representing at least 10% of its total number of employees.’
ESRS 1 paragraph 124 addresses the matter of connectivity with financial statements and states: ‘when the sustainability statement includes monetary amounts or other quantitative datapoints that exceed a threshold of materiality and that are presented in the financial statements (direct connectivity between information disclosed in sustainability statements and information disclosed in financial statements), the undertaking shall include a reference to the relevant paragraph of its financial statements where the corresponding information can be found.’
Directive 2013/34/EU, Article 16 describes the ‘Content of the notes to the financial statements relating to all undertakings’ and requires the disclosure of (1)(h) ‘the average number of employees during the financial year.’
Answer
This datapoint requirement is based on the principle of connectivity between the sustainability statement and the financial statement, which is described in ESRS 1 chapter 9.2. In paragraphs 124 and 125 of this chapter, a distinction is made between direct connectivity (paragraph 124) and indirect connectivity (paragraph 125). In both cases, the principle is that monetary or quantitative amounts that exceed the threshold of materiality shall be cross-referenced from the sustainability statement to the financial statements; for indirect connectivity, this means explaining how these amounts relate to the most relevant amounts presented in the financial statements. Where appropriate, a reconciliation may be provided, and it may be presented in tabular form.
On this basis, the objective of ESRS 1 S1-6 paragraph 50 (f) is to cross-check the number of employees required by paragraph 50 (a) against the most appropriate amount disclosed in the financial statements. This includes the average number of employees during the year, disclosed according to Article 16 of the Directive 2013/34/EU as transposed into the laws of each EU Member State, and other relevant data if they are disclosed in the financial statements.
Given that ESRS S1-6 provides some flexibility in terms of methodology for calculating the head count number of employees (i.e., average or at the end of the year), the undertaking is required to disclose the methodology used as per paragraph 50 (d)(ii). If an undertaking uses a different methodology for calculating the head count between the note to the financial statements and this datapoint in ESRS S1-6 (e.g., average for the former, end of the year for the latter), it shall explain the difference in the basis for calculation following the principle of connectivity defined in ESRS 1.
Relations
Paragraph | Content |
|---|---|
9. Linkages with other parts of corporate reporting and connected information | |
9. Linkages with other parts of corporate reporting and connected information | |
9. Linkages with other parts of corporate reporting and connected information | |
a cross-reference of the information reported under (a) above to the most representative number in the financial statements. | |
a cross-reference of the information reported under (a) above to the most representative number in the financial statements. | |
a cross-reference of the information reported under (a) above to the most representative number in the financial statements. |