Questions & Answers
What is the meaning of ‘may disclose’ in ESRS? How does that relate to ‘shall disclose’?
- Voluntary disclosure requirements (‘may disclose’)
Background
ESRS 1 paragraph 18 states: ‘ESRS uses the following terms to distinguish between different degrees of obligation on the undertaking to disclose information:
(a) “shall disclose” – indicates that the provision is prescribed by a Disclosure Requirement or datapoint; and
(b) “may disclose” – indicates voluntary disclosure to encourage good practice.’
ESRS S1 paragraph 79 of Disclosure Requirement ESRS S1-12 is a ‘shall’ disclosure and states: ‘The undertaking shall disclose the percentage of persons with disabilities amongst its employees subject to legal restrictions on the collection of data.’
ESRS S1 paragraph 80 of Disclosure Requirement ESRS S1-12 is voluntary and states: ‘The undertaking may disclose the percentage of employees with disabilities with a breakdown by gender.’
ESRS 1 paragraph 11 states: ‘In addition to the disclosure requirements laid down in the three categories of ESRS, when an undertaking concludes that an impact, risk or opportunity is not covered or not covered with sufficient granularity by an ESRS but is material due to its specific facts and circumstances, it shall provide additional entity-specific disclosures to enable users to understand the undertaking’s sustainability-related impacts, risks or opportunities.’
In ESRS E1 paragraph AR 32, instead of ‘may disclose’ the expression ‘can disclose’ is used as a synonym; see, e.g. the statement ‘When preparing the information on energy consumption required under paragraph 35 … The undertaking that consumes fuel as feedstocks can disclose information on this consumption separately from the required disclosures’.
Answer
The drafting convention used in the ESRS is defined in ESRS 1 Chapter 1.3. The terms ‘shall disclose’ and ‘may disclose’ are used to distinguish the degree of obligation on the undertaking to disclose information; these are defined in ESRS 1 paragraph 18. The terms ‘shall disclose’ and ‘may disclose’ are to be applied in light of the materiality provisions of ESRS (refer to ESRS 1 Chapter 3.2 to 3.5).
(a) All the ‘shall’ datapoints in ESRS 2 General Disclosures are to be reported as they are outside the materiality assessment. This includes the datapoints in topical standards that relate to ESRS 2 Disclosure Requirement IRO-1 Description of the process to identify and assess material impacts, risks and opportunities (see ESRS 2 Appendix C: Disclosure and Application Requirements in topical ESRS that are applicable jointly with ESRS 2 General Disclosures).
(b) If a topic is not material for the undertaking, the ‘may’ and ‘shall’ datapoints in the corresponding topical standard are not to be reported as the undertaking does not report on non-material topics.
(c) If a topic is material for the undertaking, the ‘shall’ datapoints in the respective topical standard that relate to ESRS 2 (refer to Appendix C of ESRS 2 for the complete list by topical standard) must be reported.
(d) If a topic is material for the undertaking, the undertaking discloses the information corresponding to the ‘shall’ datapoints in the topical standard in relation to policies, actions and targets (PAT) as well as the information corresponding to the datapoints in ESRS 2 MDR-P, MDR-A and MDR-T. If the undertaking cannot disclose the information on PAT required under relevant topical ESRS because such PAT are not in place for the specific material matter, it shall disclose this to be the case and provide reasons for not having PAT. The undertaking may disclose a timeframe in which it aims to adopt them.
(e) If a topic is material for the undertaking, the undertaking discloses the information corresponding to the ‘shall’ datapoints in the topical standard in relation to metrics if that information is assessed to be material (refer to ESRS 1 paragraph 34), i.e. the undertaking is not required to disclose a ‘shall disclose’ datapoint that is not material.
(f) If a topic (or a matter) is material for the undertaking, the undertaking decides whether or not to include the ‘may’ disclosure datapoints related to that matter; however, it is encouraged to disclose it as good practice, but it is not a requirement.
The criteria in paragraph 31 of ESRS 1 (significance of the information and users’ needs) are the point of reference to be used when:
(a) defining the granularity of the content of the information provided under points (a), (c) and (d) above; and
(b) assessing the materiality of the information under point (e) above.
Relations
Paragraph | Content |
|---|---|
ESRS use the following terms to distinguish between different degrees of obligation on the undertaking to disclose information: | |
ESRS use the following terms to distinguish between different degrees of obligation on the undertaking to disclose information: | |
ESRS use the following terms to distinguish between different degrees of obligation on the undertaking to disclose information: |