Questions & Answers
Since it is not feasible to provide water consumption data and all the contextual information needed for 200-300 sites in one report, how should contextual information for 200-300 sites be provided?
- Water consumption
- consolidated data
- multiple sites
Background
ESRS 1 paragraph 31 states: ‘The applicable information prescribed within a Disclosure Requirement, including its datapoints, or an entity-specific disclosure shall be disclosed when the undertaking assesses, as part of its assessment of material information, that the information is relevant from one or more of the following perspectives:
(a) the significance of the information in relation to the matter it purports to depict or explain; or
(b) the capacity of such information to meet the users’ decision-making needs, including the needs of primary users of general-purpose financial reporting described in paragraph 48 and/or the needs of users whose principal interest is in information about the undertaking’s impacts.’
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:
(a) shall include the information prescribed by a Disclosure Requirement if it assesses such information to be material; and
(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.’
ESRS 1 paragraph 54 states: ‘When needed for a proper understanding of its material impacts, risks and opportunities, the undertaking shall disaggregate the reported information: (a) by country, when there are significant variations of material impacts, risks and opportunities across countries and when presenting the information at a higher level of aggregation would obscure material information about impacts, risks or opportunities; or (b) by significant site or by significant asset, when material impacts, risks and opportunities are highly dependent on a specific location or asset.’
ESRS 1 paragraph 56 states: ‘Where data from different levels, or multiple locations within a level, is aggregated, the undertaking shall ensure that this aggregation does not obscure the specificity and context necessary to interpret the information. The undertaking shall not aggregate material items that differ in nature.’.
ESRS 1 paragraph QC. 1 states: ‘Sustainability information is relevant when it may make a difference in the decisions of users under a double materiality approach (see Chapter 3 of this Standard).’
ESRS 1 pargraph QC. 5 states: ‘To be useful, the information must not only represent relevant phenomena, it must also faithfully represent the substance of the phenomena that it purports to represent. Faithful representation requires information to be (i) complete, (ii) neutral and (iii) accurate.’
ESRS 2 paragraph 77 states: ‘For each metric, the undertaking shall: (a) disclose the methodologies and significant assumptions behind the metric, including the limitations of the methodologies used.’
ESRS E3 paragraph 26 states: ‘The undertaking shall disclose information on its water consumption performance related to its material impacts, risks and opportunities.’
ESRS E3 paragraph 28 states: ‘The disclosure required by paragraph 26 relates to own operations and shall include:
(a) total water consumption in m3;
(b) total water consumption in m3 in areas at water risk, including areas of high-water stress;
(c) total water recycled and reused in m3;
(d) total water stored and changes in storage in m3; and
(e) any contextual information necessary regarding points (a) to (d), including the water basins’ water quality and quantity, how the data have been compiled, such as any standards, methodologies, and assumptions used, including whether the information is calculated, estimated, modelled, or sourced from direct measurements, and the approach taken for this, such as the use of any sector-specific factors.’
ESRS E3 paragraph AR 1 states: ‘When conducting a materiality assessment on environmental subtopics, the undertaking shall assess the materiality of water and marine resources in its own operations and its upstream and downstream value chain, and may consider the four phases below, also known as the LEAP approach: (a) Phase 1: locate where in its own operations and along the value chain the interface with nature takes place …’.
Answer
ESRS E3 paragraph 28 requires the disclosure of water consumption related to own operations and related contextual information. It is expected that all sites and their contextual information are considered in the materiality assessment. The disclosures on water consumption and contextual information shall be reported for the entire group and can be aggregated for all or for multiple sites.
The undertaking can aggregate information, according to ESRS 1 paragraph 56, under the condition that the aggregation does not obscure the specificity and context necessary to interpret the information. The undertaking shall not aggregate material items that differ in nature. It is up to the undertaking to decide the best way to do that aggregation, so as to not to obscure material information and meet the qualitative characteristics of information as per ESRS 1 paragraph 19.
If an aggregated presentation fails to portray, in alignment with the qualitative characteristics of information, the profile of water consumption of the group, the information shall be disaggregated for material sites (or assets) in accordance with ESRS 1, paragraph 54(b). The information to be disaggregated may refer to the water consumption metric, contextual information or both.
As an example, an undertaking with several (e.g. one hundred) facilities in different water basins may provide contextual information (e.g. in percentages) on how many of its facilities are located in areas of high-water stress and how this is the underlying factor driving water consumption as a material matter, as the risk of water droughts becoming more frequent can lead to more frequent production stoppages constraining future production capacity. It may also have to provide the location of facilities in areas of high-water stress or of areas of high-water stress where the relevant facilities are located, if material.
The above answer does not address the omission of immaterial amounts, which is covered in principle in ID 148 Scope of consolidation for non-EU and unconsolidated subsidiaries in relation to immaterial subsidiaries.
Relations
Paragraph | Content |
|---|---|
The disclosure required by paragraph 26 relates to own operations and shall include: | |
The disclosure required by paragraph 26 relates to own operations and shall include: | |
The disclosure required by paragraph 26 relates to own operations and shall include: |