Questions & Answers
Is MDR-Policy a prerequisite for MDR-Target?
- Targets
- policies
Background
Annex II Acronyms and Glossary of Terms defines ‘targets’ as: ‘Measurable, outcome-oriented and time-bound goals that the undertaking aims to achieve in relation to material impacts, risks or opportunities. They may be set voluntarily by the undertaking or derive from legal requirements on the undertaking.’
Annex II Acronyms and Glossary of Terms defines ‘policies’ as: ‘A set or framework of general objectives and management principles that the undertaking uses for decision-making. A policy implements the undertaking’s strategy or management decisions related to a material sustainability matter. Each policy is under the responsibility of defined person(s), specifies its perimeter of application, and includes one or more objectives (linked when applicable to measurable targets). A policy is validated and reviewed following the undertakings’ applicable governance rules. A policy is implemented through actions or action plans.’
ESRS 2 paragraphs 78 to 80 state:
‘78. The undertaking shall apply the requirements for the content of disclosures in this provision when it discloses information about the targets it has set with regard to each material sustainability matter.
79. The objective of this Minimum Disclosure Requirement is to provide for each material sustainability matter an understanding of:
(a) whether and how the undertaking tracks the effectiveness of its actions to address material impacts, risks and opportunities, including the metrics it uses to do so;
(b) measurable time-bound outcome-oriented targets set by the undertaking to meet the policy’s objectives, defined in terms of expected results for people, the environment or the undertaking regarding material impacts, risks and opportunities;
(c) the overall progress towards the adopted targets over time;
(d) in the case that the undertaking has not set measurable time-bound outcome-oriented targets, whether and how it nevertheless tracks the effectiveness of its actions to address material impacts, risks and opportunities and measures the progress in achieving its policy objectives; and
(e) whether and how stakeholders have been involved in target setting for each material sustainability matter.
80. The undertaking shall disclose the measurable, outcome-oriented and time-bound targets on material sustainability matters it has set to assess progress. For each target, the disclosure shall include the following information …’.
Answer
The Minimum Disclosure Requirement – Policies MDR-P of ESRS 2 Chapter 4.2 is not a prerequisite for the Minimum Disclosure Requirement – Targets of ESRS 2 Chapter 5.
ESRS stipulate disclosures but do not prescribe behaviour. Therefore, they do not prescribe for each target set, which the undertaking also has a policy in place for how to reach. Accordingly, an undertaking might have a target without establishing a policy on how to get there. However, this may not be efficient: while a target can be set without a policy, there is no clear management principle, rule or guidance on how to achieve it, making it unlikely to be met.
If the undertaking has a target without a related policy, the description of the relationship of the target to the policy objectives as required by ESRS 2 paragraph 80 (a) shall make that clear.
To note: Minimum Disclosure Requirements – Actions MDR-A – Actions and resources in relation to material sustainability matters also mentions the situation when actions are implemented without a specific policy (see ESRS 2 paragraph 68).
Relations
Paragraph | Content |
|---|---|
The undertaking shall disclose the measurable, outcome-oriented and time-bound targets on material sustainability matters it has set to assess progress. For each target, the disclosure shall include the following information: | |
The objective of this Minimum Disclosure Requirement is to provide for each material sustainability matter an understanding of: | |
The undertaking shall apply the requirements for the content of disclosures in this provision when it discloses information about the targets it has set with regard to each material sustainability matter. | |
The undertaking shall disclose the measurable, outcome-oriented and time-bound targets on material sustainability matters it has set to assess progress. For each target, the disclosure shall include the following information: | |
The objective of this Minimum Disclosure Requirement is to provide for each material sustainability matter an understanding of: | |
The undertaking shall apply the requirements for the content of disclosures in this provision when it discloses information about the targets it has set with regard to each material sustainability matter. | |
The objective of this Minimum Disclosure Requirement is to provide for each material sustainability matter an understanding of: | |
The undertaking shall disclose the measurable, outcome-oriented and time-bound targets on material sustainability matters it has set to assess progress. For each target, the disclosure shall include the following information: | |
The undertaking shall apply the requirements for the content of disclosures in this provision when it discloses information about the targets it has set with regard to each material sustainability matter. | |
The objective of this Minimum Disclosure Requirement is to provide for each material sustainability matter an understanding of: |