Question-ID: 1013

(1) Is the ESRS 1 Disclosure Requirement GOV-3 on ‘the proportion of variable remuneration dependent on sustainability-related targets and/or impacts’ (ESRS 2 paragraph 29(d)) calculated:

(a) as a percentage of variable remuneration;

(b) as a percentage of fixed remuneration; or

(c) as a percentage of total remuneration (fixed and variable)?

The ESRS 2 paragraph 29(d) metric shall be calculated as (a) a percentage of variable remuneration.

ESRS 2 paragraph 29(d) requires the ‘proportion of variable remuneration dependent on sustainability-related targets and/or impacts’ to be disclosed. According to this wording, the numerator is the proportion of the variable remuneration dependent on sustainability-related targets and/or impacts, and the denominator is the variable remuneration.

Though not explicitly stated in ESRS 2 Disclosure Requirement GOV-3 (paragraph 29(d)), it shall be assumed that remuneration is the amount recognised in the current period, i.e. the amount recognised as an expense (i.e. regardless of whether or not it is paid out) under the applicable accounting GAAP in the financial statements. This shall be done considering connectivity with financial statements in line with the elements listed in the definition of ‘annual total remuneration’ in Annex II and consistent with ESRS E1 paragraph 13, which explicitly refers to the ‘remuneration recognised’.

(2) Is the percentage to be disclosed under ESRS E1 Disclosure requirement related to ESRS 2 GOV-3 Integration of sustainability-related performance in incentive schemes based on the same denominator as under question (1) above?

No, it is not. The ESRS E1 paragraph 13 metric shall be calculated as a percentage of total remuneration.

ESRS E1 paragraph 13 requires the ‘percentage of remuneration recognised’ to be disclosed. The phrase used requires that the denominator be the remuneration recognised, i.e. the total of fixed and variable remuneration recognised, and that the numerator be the ‘remuneration recognised … that is linked to climate-related considerations’.

To note: There is no reason why the term ‘remuneration’ as used in both ESRS 1 paragraph 29 and ESRS E1 paragraph 13 in respect of the administrative, management and supervisory bodies is not to be read as being consistent with the definition of ‘annual total remuneration’, as defined in Annex II Acronyms and Glossary of Terms in respect of own workforce.