Questions & Answers
The current EU legislation requires to monitor substances of concern in chemicals but not in articles. If no (or only partial) information (including due to suppliers’ lack of responsiveness) is available on substances of concern contained in the manufactured articles, what should the company disclose?
- Substances of concern
- SoC
Background
E2 paragraph 15 states: ‘The undertaking shall indicate, with regard to its own operations and its upstream and downstream value chain, whether and how its policies address the following areas where material …
(b) substituting and minimising the use of substances of concern; and …’.
ESRS E2 paragraph 34 states: ‘The disclosure required by paragraph 32 shall include the total amounts of substances of concern that are generated or used during the production or that are procured, and the total amounts of substances of concern that leave its facilities as emissions, as products, or as part of products or services split into main hazard classes of substances of concern.’
ESRS E2 paragraph 35 states: ‘The undertaking shall present separately the information for substances of very high concern.’
ESRS E2 paragraph AR 13 states: ‘Where actions extend to upstream or downstream value chain engagements, the undertaking shall provide information on the types of actions reflecting these engagements.’
ESRS E2 paragraph AR 19 states: ‘The targets may cover the undertaking’s own operations and/or the value chain.’
ESRS E2 paragraph AR 28 states: ‘In order for the information to be complete, substances in the undertaking’s own operations and those procured shall be included (e.g. embedded in ingredients, semi-finished products, or the final product).’
ESRS 1 paragraph 71 states: ‘With reference to policies, actions and targets, the undertaking’s reporting shall include upstream and/or downstream value chain information to the extent that those policies, actions and targets involve actors in the value chain. With reference to metrics, in many cases, in particular for environmental matters for which proxies are available, the undertaking may be able to comply with the reporting requirements without collecting data from the actors in its upstream and downstream value chain, especially from SMEs, for example, when calculating the undertaking’s GHG Scope 3 emissions’.
ESRS 1 paragraph 34 states: ‘When disclosing information on metrics for a material sustainability matter according to the Metrics and Targets section of the relevant topical ESRS, the undertaking: …
(b) may omit the information prescribed by a datapoint of a Disclosure Requirement if it assesses such information to be not material and concludes that such information is not needed to meet the objective of the Disclosure Requirement.’
Regulation (EC) No 1907/2006 (REACH), Article 3 defines ‘article’ as 'an object which during production is given a special shape, surface or design which determines its function to a greater degree than does its chemical composition’. Regulation (EC) No 1907/2006 (REACH), Article 33 on the ‘Duty to communicate information on substances in articles’ states: ‘1. Any supplier of an article containing a substance meeting the criteria in Article 57 and identified in accordance with Article 59(1) in a concentration above 0,1 % weight by weight (w/w) shall provide the recipient of the article with sufficient information, available to the supplier, to allow safe use of the article including, as a minimum, the name of that substance. 2. On request by a consumer, any supplier of an article containing a substance meeting the criteria in Article 57 and identified in accordance with Article 59(1) in a concentration above 0,1 % weight by weight (w/w) shall provide the consumer with sufficient information, available to the supplier, to allow safe use of the article including, as a minimum, the name of that substance’.
Answer
If substances of concern (and/or substances of very high concern) in articles represent a material topic for the undertaking:
(a) for the metrics disclosure of ESRS E2 paragraphs 34 and 35, the undertaking shall consider both those within its production processes as well as the ones entering its own operations through procurement as an ingredient, semi-finished products, or final products. If the metric cannot be determined through direct data collection, e.g. by obtaining it from suppliers, after making a reasonable effort to do so, it shall be estimated by using proxies. Reference is made to ‘ID 504 – Disclosure Requirements on material metrics when information is not available; and
(b) the undertaking shall, in any case, report on the related policies, actions and targets (PAT) it has in place in relation to the material topic. ESRS E2 provides in particular specific indications on the extension of the reporting under the PAT to the value chain. Concerning policies, the undertaking must disclose whether and how its policies support the substitution and minimisation of the use of substances of concern. This information is to be provided also for its upstream and downstream value chain. With regard to actions, undertakings shall report on upstream and downstream value chain engagements when present. The extension of targets to value chain entities is, however, optional.
Concerning the specific case of substances of very high concern (SVHC) in articles, Regulation (EC) No 1907/2006 (REACH) requires communicating SVHC content where specific thresholds are exceeded.
To note: Information to be collected from value chain entities can be omitted during a three-year phase-in period if certain conditions are met in accordance with ESRS 1 Chapter 10.2 Transitional provision related to Chapter 5 Value chain, unless it is prescribed under EU legislation.
See [Draft] Question 29 ESRS require undertakings to use estimates if they cannot obtain all necessary value chain information after having made reasonable efforts to do so (ESRS 1 General requirements paragraph 69). What constitutes ‘reasonable effort’? from the European Commission on the interpretation of certain legal provisions in Directive 2013/34/EU (Accounting Directive).
Relations
Paragraph | Content |
|---|---|
With reference to policies, actions and targets, the undertaking’s reporting shall include upstream and/or downstream value chain information to the extent that those policies, actions and targets involve actors in the value chain. With reference to metrics, in many cases, in particular for environmental matters for which proxies are available, the undertaking may be able to comply with the reporting requirements without collecting data from the actors in its upstream and downstream value chain, especially from SMEs, for example, when calculating the undertaking’s GHG Scope 3 emissions. | |
When disclosing information on metrics for a material sustainability matter according to the Metrics and Targets section of the relevant topical ESRS, the undertaking: | |
In order for the information to be complete, substances in the undertaking’s own operations and those procured shall be included (e.g., embedded in ingredients, semi- finished products, or the final product). | |
The targets may cover the undertaking’s own operations and/or the value chain. | |
Where actions extend to upstream or downstream value chain engagements, the undertaking shall provide information on the types of actions reflecting these engagements. | |
The undertaking shall present separately the information for substances of very high concern. | |
The disclosure required by paragraph 32 shall include the total amounts of substances of concern that are generated or used during the production or that are procured, and the total amounts of substances of concern that leave its facilities as emissions, as products, or as part of products or services split into main hazard classes of substances of concern. | |
substituting and minimising the use of substances of concern, and phasing out substances of very high concern, in particular for non-essential societal use and in consumer products; and | |
With reference to policies, actions and targets, the undertaking’s reporting shall include upstream and/or downstream value chain information to the extent that those policies, actions and targets involve actors in the value chain. With reference to metrics, in many cases, in particular for environmental matters for which proxies are available, the undertaking may be able to comply with the reporting requirements without collecting data from the actors in its upstream and downstream value chain, especially from SMEs, for example, when calculating the undertaking’s GHG Scope 3 emissions. | |
When disclosing information on metrics for a material sustainability matter according to the Metrics and Targets section of the relevant topical ESRS, the undertaking: |