Question-ID: 58

The transitional provisions apply to undertakings or groups not exceeding on their balance sheet dates the average number of 750 employees during the financial year (on a consolidated basis where applicable). The option is to omit the information required by all the disclosure requirements in the following topical standards: ESRS E4, ESRS S1, ESRS S2, ESRS S3 and ESRS S4.

The regime of these provisions varies depending on the topical standard. The transitional provisions on ESRS S1 only apply to the first year of preparation of the undertaking’s sustainability statement. For ESRS E4, ESRS S2, ESRS S3 and ESRS S4, the provisions apply to the first two years of preparation of the sustainability statement.

When information about a topic is omitted, the undertaking is nevertheless required to include the topic in the scope of the materiality assessment. When information required by one of these topical standards is omitted but the topic is assessed to be material, ‘de minimis’ disclosures shall be reported covering the material topic in question (ESRS 2 paragraph 17).

The materiality assessment covers the environmental, social and governance matters connected to the undertaking as established by the CSRD (i.e., a climate-first approach or an environmental only approach was not the intention of the co-legislators); the sustainability statement is to include a holistic view of sustainability matters regardless of whether social standards are subject to transitional provisions. Hence, the ESRS 2 paragraph 17 provision aims at ensuring that there is a certain level of ‘minimal disclosures’ that are required regardless of whether the undertaking chooses to apply the transitional provisions.

The transitional provisions allow undertakings to provide less granular information than what is required after the transition period. The information to be provided for the matters are more summarised (i.e., as briefly as referred to in the text) than the requirements set out in the five topical standards mentioned above. The main simplifications in paragraph 17 compared to paragraph 48 of ESRS 2 are the following:

(a) Paragraph 48 (a): Under ESRS 2 paragraph 17, the undertaking may choose to disclose at topic, subtopic or sub-subtopic level, and separate disclosure of material impacts, risks and opportunities is not required. The undertaking is not required to disclose where in its business model, its own operations and its upstream and downstream value chain material IROs are concentrated.

(b) Paragraph 48 (b) relates to how the undertaking takes into account material impacts on its strategy and business model. This information related to impacts can be disclosed at a summarised level without all the granularity required by the datapoints therein.

(c) Paragraph 48 (c) to (h) sets requirements to disclose more detailed information about material IROs. As these are not required to be identified in the transition period, these datapoints do not form part of the ‘de minimis’ disclosures. While this is not a requirement, in the transitional period it may be helpful to briefly disclose the information on paragraph 48 (c) to contextualise the material impacts identified.

ESRS 2 paragraph 17 (b) to (e) provides de minimis information corresponding to disclosure requirements in topical standards in case an undertaking elects not to disclose topical information in the transition period. The transitional provision requires a summarised description of the policies, actions and targets and does not require to fulfil the detailed datapoints in MDR (P, T, A) in ESRS 2 and/or topical standards.

Finally, for metrics, the undertaking is to apply judgement to fulfil the requirements of metrics in topical standards. Such judgement relates to the number and nature of metrics disclosed (i.e., the undertaking may disclose a reduced number of metrics and not all the metrics that are material) and the level of granularity of the metric (for example, the metric may be presented at a global level without breakdowns).