EFRAG SR TEG

8 November 2023
Agenda
Paper 03-02
EFRAG Secretariat

[Draft] Voluntary ESRS

for non-listed Small- and Medium-Sized Enterprises
– Exposure Draft
(VSME ESRS ED)

[DISCLAIMER – SR TEG PUBLIC MEETING]

This paper has been prepared by the EFRAG Secretariat for a public discussion at EFRAG SR TEG. The paper
forms part of an early stage of the development of a potential EFRAG position. Consequently, the paper does
not represent the official views of EFRAG or any individual member of the EFRAG SRB or EFRAG SR TEG.
The paper is made available to enable the public to follow the discussions in the meeting. Tentative decisions
are made in public and reported in the EFRAG Update. EFRAG positions, as approved by the EFRAG SRB,
are published as comment letters, discussion or position papers, or in any other form considered appropriate
in the circumstances.

[DISCLAIMER – STATUS OF THIS DRAFT]

• This draft is subject to editorial review.

• Number of internal cross-references between paragraphs has to be checked.
• Footnotes that relate to the SFDR, Pillar and Benchmark indicators will be deleted from the main body
and included in a separate appendix, as they only are relevant for the users, not for the SME that
prepares the report.
• The second column of the table with the Business Partners metrics will be moved to an appendix
dedicated to users.
• The table in paragraph 69 will also be moved to the appendix dedicated to users.
• Additional guidance will be added as a late paper for this SR TEG meeting.

Page 1 of 45
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Table of Contents
Objective of this Standard and to which companies it applies 3
Modules that constitute this Standard 3
Principles for the preparation of the sustainability report (Basic Module, PAT, Business
Partners) 4
Principles for the preparation of the sustainability report (PAT, Business Partners) 5
Basic Module 6
Disclosure – 1 - Basis for Preparation 6
Disclosure B 2 – Practices for transitioning towards a more sustainable economy 6
Basic Metr–cs - Environment 7
B 3 – Energy and greenhouse gas emissions 7
B 4 – Pollution of air, water and soil 7
B 5 – Biodiversity 7
B 6 – Water 7
B 7 – Resource use, circular economy, and waste management 8
Basic Metrics – Social matters 8
B 8 – Workforce – General characteristics 8
B 9 – Workforce - Health and Safety 8
B 10 – Workforce – Remuneration, collective bargaining, and training 8
Basic Metrics - Business conduct 9
B 11 – Convictions and fines for corruption and bribery 9
Principles of Materiality to be applied for the Narrative-PAT and Business Partners
Modules 10
Impact materiality 10
Financial materiality 11
Stakeholders and their relevance to the materiality assessment process 11
Narrative – Policies, Actions and Targets (PAT) Module 12
Disclosure N 1 – Strategy: business model and sustainability related initiatives 12
Disclosure N 2 – Material sustainability matters 12
Disclosure N 3 – Management of material sustainability matters 12
Disclosure N 4 – Key stakeholders 13
Disclosure N 5 – Governance: responsibilities in relation to sustainability matters13
Business Partners Module 14
Basic Module: Guidance 22
Environmental metrics 22
Social metrics 31
Appendix A: Defined terms 35
Appendix B: List of sustainability matters used for materiality assessment 43

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Objective of this Standard and to which companies it applies

1. The objective of this Standard is to support micro-, small- and medium-sized undertakings in:

a) contributing to a more sustainable and inclusive economy;

b) improving their management of the sustainability issues they face, i.e. environmental and
social challenges, such as pollution, workforce health and safety. This will support their
competitive growth and enhance their resilience in the short- medium- and long-term;
c) providing information that will help satisfy data demand from lenders/credit providers and
investors, therefore helping undertakings in their access to finance;
d) providing information that will help satisfy the data demand needs of large undertakings
requesting sustainability information from their suppliers.

2. This Standard is voluntary and applies to undertakings whose securities are not admitted to
trading on a regulated market in the European Union (not listed). Article 3 of Directive
2013/34/EU, defines and distinguishes three categories of small and medium-sized undertakings
based on their balance sheet total, their net turnover and their average number of employees
during the financial year. An undertaking is micro if it does not exceed two of the following
thresholds: €350,000 in balance sheet total, €700,000 in net turnover and 10 employees. An
undertaking is small if it does not exceed two of the following thresholds: €4 million in balance
sheet total, €8 million in net turnover, or an average of 50 employees. An undertaking is medium
if it does not exceed two of the following thresholds: €20 million in balance sheet total, €40 million
in net turnover and 250 employees.

3. These undertakings are outside the scope of the Corporate Social Reporting Directive (CSRD),
but are encouraged to use this Standard to prepare and share with whoever it may concern
sustainability information. This [draft] Standard covers the same sustainability issues as the
European Sustainability Reporting Standards (ESRS) for large undertakings, but is based upon
the key concept of proportionality and therefore takes into account undertakings’ fundamental
characteristics. Micro-Enterprises are welcome to use only certain parts of this Standard, as
highlighted in par. 6 (a).

4. Unlike the ESRS for large undertakings, with which consistency has been carefully considered
while defining proportionate requirements, this [draft] Standard has no legal authority. It offers
undertakings that are outside the scope of the CSRD (see paragraph 2), a voluntary tool for
sustainability reporting.

5. These undertakings have also the possibility, if they wish, to apply on a voluntary basis the ESRS
for large undertakings.

Modules that constitute this Standard

6. This Standard includes three modules that the undertaking can use as the basis for preparation
of its sustainability report:

a) Basic Module: Disclosures B 1 and B 2 and Basic Metrics (B 3 – B 11) . This module is
the target approach for micro-undertakings and a minimum requirement for other
undertakings. Materiality analysis is not required.

b) Narrative-Policies, Actions and Targets (PAT) Module: This module defines narrative
disclosures (N1 – N5) in relation to Policies, Actions and Targets (PAT), to be reported if
the undertaking has them in place. This module is suggested to undertakings that have
formalised and implemented PAT. Materiality analysis is required in order to disclose which
of the sustainability matters in Appendix B are relevant for the undertaking’s business and
organization.

c) Business Partners (BP) Module: This module sets additional datapoints that are likely to
be included in data requests from lenders, investors and corporate clients of the

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undertaking. Materiality analysis is required in order limit the report only to the datapoints
that are relevant for the undertaking.

Paragraph 24 below illustrates the available options for the preparation of a sustainability report
using this Standard, adopting one or more of these modules. Once chosen, a module shall be
complied with in its entirety, subject to the materiality considerations described above.

7. Applying the Basic Module is a prerequisite for applying the Narrative-PAT and/or the Business
Partners modules.

8. Appendix A Defined Terms includes the definitions of the terms used in this Standard.

Principles for the preparation of the sustainability report (Basic

Module, PAT, Business Partners)
9. This section incudes principles that shall be applied when the undertaking prepares its
sustainability report using any of the three modules described above.

Complying with this Standard

10. This Standard provides requirements to allow the undertaking to provide relevant information on:

a) how its business can have a positive or negative impact on people or on the environment;

b) which and how social and environmental issues can affect its financial position,
performance and cash flows.

11. The sustainability report shall provide information which is relevant, faithful, comparable,
understandable and verifiable.

12. Depending on the type of activities carried out by the undertaking, the inclusion of additional
information (metrics and/or narrative disclosures) not covered in this Standard is appropriate, in
order to disclose about issues that are common in the undertaking’s sector, as this supports the
preparation of relevant, faithful, comparable, understandable and verifiable information.

Timing and location of the sustainability report

13. The sustainability report shall be prepared on an annual basis. It shall be available for
communication at the same time as the financial statements, if they are prepared.

14. The undertaking may present its sustainability report in a separate section of the management
report, if the latter is required by applicable law and regulations. Otherwise, the undertaking may
present its sustainability report in a Different document.

15. To avoid publishing the same information twice, the undertaking may include in its sustainability
report a reference to disclosures published in other documents that are accessible at the same
time as the sustainability report.

Classified and sensitive information, and information on intellectual property, know-how

or results of innovation

16. When the provision of the disclosures in this Standard would require disclosing classified or
sensitive information, the undertaking may omit such information, even if such it is considered
material. The undertaking may omit such classified or sensitive information if:

a) the information has commercial value because it is secret; and

b) its publication will be likely to impair the financial performance or position of the
undertaking.

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If the undertaking decides to omit such information, it shall simply state that it is the case under
Disclosure B 1 (see par. 24).

Principles for the preparation of the sustainability report (PAT,

Business Partners)
17. This section incudes principles that shall be applied when the undertaking prepares its
sustainability report using the Narrative-PAT module and/or the Business Partners module.

Time horizons

18. When preparing its sustainability report, the undertaking shall apply the following time-horizons:

a) for the short-term time horizon: one year;

b) for medium-term horizon: from two to five years; and
c) for the long term horizon: more than five years.
Coherence and linkages with disclosures in financial statements

19. If the undertaking prepares also the financial statements, the information provided in its
sustainability report following this Standard:

a) shall be coherent with what reported in the financial statements for the same period; and
b) may be presented in a way that facilitates the understanding of the linkages that exist with
the information reported in I financial statements, for example using appropriate cross-
references.

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Basic Module
20. The undertaking shall report on its Environmental, Social and Business Conduct issues using
the disclosures B1-B11 below. Comparative information shall also be included, however for
metrics disclosed in the first year of reporting, the undertaking shall disclose comparative
information starting from the second year of reporting.

21. The disclosures B1-B11 are to be reported and no materiality assessment is needed. Certain
disclosures only apply to specific circumstances. In particular, the following instructions specify
that, in these circumstances, the information is to be reported only if conside“ed "applic”ble" by
the undertaking. When one of these disclosures is omitted, it is assumed to be not applicable.

22. The undertaking may complement the Metrics from B 3 to B 11 with additional qualitative and/or
quantitative information, when appropriate, in accordance with par. 12 above. The undertaking
that wants to provide a more comprehensive information, may also integrate the Metrics required
from B 3 to B 11 with disclosures that it decides to provide, selecting them from the Narrative-
PAT Module and from the Business Partners Module.

23. Instructions to support the preparation of Metrics B3-B10 are available in the Basic
Module Guidance on Environment and Social disclosures, on page 21 to 34 of this
Standard.

Disclosure – 1 - Basis for Preparation

24. The undertaking shall disclose:

a) which of the following options it has elected in the preparation of its Sustainability report
using this Standar

c. i. OPTION A: Basic Module (only);

ii. OPTION B: Basic Module and Narrative-PAT Module;

iii. OPTION C: Basic Module and Business Partners Module; or

iv. OPTION D: Basic Module, Narrative-PAT Module and Business Partner Module.

b) whether the Sustainability report has been prepared on a consolidated (i.e. the report
includes information of the undertaking’s and its subsidiaries), or on individual basis (i.e.
the report is limited only to the information of the undertaking);
c) in case of a consolidated sustainability report, the list of the subsidiaries, including their
registered address1, covered in the report.

Disclosure B 2 – Practices for transitioning towards a more sustainable economy

25. The undertaking may briefly describe specific practices for transitioning towards a more
sustainable economy, in case it has them in place. Practices include what the undertakings
does in practice to reduce its negative impacts and to enhance its positive effects on people and
on the environment, in order to contribute to a more sustainable economy. Practices in this
context shall not include philanthropic activities (e.g., donations), but for instance sustainability
training for its workforce, collaboration with universities related to sustainability projects, efforts
to reduce the undertaking’s water and electricity consumption or to prevent pollution, as well as
initiatives to improve product safety.This disclosure is not required when the undertaking
prepares its sustainability report using the Narrative-PAT module.

1 Registered address is the official address of the undertaking. The registered address is a legal requirement and it
is available on public record.

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Basic Metrics - Environment

B 3 – Energy and greenhouse gas emissions

26. The undertaking shall report its impacts on climate, by disclosing its energy usage and
greenhouse gas emissions, as requested in the following paragraphs.

27. The undertaking shall disclose its total energy consumption in MWh, with a breakdown between:

a) fossil fuels; and

b) electricity, as expressed in utility billings (with the breakdown between renewable and non-
renewable sources, if available).

28. The undertaking shall disclose its estimated gross greenhouse gas (GHG) emissions in tons of
CO2 equivalents (tCO2eq), including:

a) The scope 1 GHG emissions in tCO2-eq (from owned or controlled sources); and

b) The scope 2 emissions in tCO2-eq (generation of purchased energy).

B 4 – Pollution of air, water and soil

29. The undertaking shall disclose, if applicable, the pollutants (with respective amounts) it emits in
its own operations to air, water and soil that it is required to report by law to competent authorities
(e.g. under the Industrial Emissions Directive and the European Pollutant Release and Transfer
Register) or that it already reports according to an Environmental Management System such as
EMAS. If this information is already publicly available, the undertaking may alternatively provide
a reference to the document where it is reported, for example, through a hyperlink.

B 5 – Biodiversity

30. The undertaking shall disclose, if applicable, metrics related to its impacts on biodiversity and
ecosystems and land-use change, as requested in the following paragraphs.

31. The undertaking shall disclose the number and area (in hectares) of sites that it owns, that it has
leased or that it manages, that are located in or near biodiversity sensitive areas.

32. The undertaking may disclose metrics related to land-use change such as:

a) total use of land;

b) total sealed area;

c) total nature-oriented area on site; and

d) total nature-oriented area off site.

B 6 – Water

33. The undertaking shall disclose its total water withdrawal, i.e. the amount of water drawn into the
boundaries of the organization (or facility); in addition, the undertaking shall separately present
the amount of water withdrawn at sites located in areas of high water stress.

34. If applicable, the undertaking shall disclose its water consumption, calculated as the difference
between its water withdrawal and water discharge from its production processes.

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B 7 – Resource use, circular economy, and waste management

35. The undertaking shall disclose how it manages resource use and its waste management
practices and whether it applies circular economy principles.

36. The disclosure shall include:

a) if the undertaking operates manufacturing, construction and/or packaging processes, a

description of recycled goods and materials bought and sold (expressed in the metric
system units commonly used by the undertaking for the specific type of
product/good/material);

b) if the undertaking operates manufacturing, construction and/or packaging processes, rates

of recyclable content in the products and their packaging produced by the undertaking;

c) total annual generation of waste, by type and expressed in the metric system units
commonly used by the undertaking for the specific type of product/good/material, as well
as total annual generation of hazardous waste by weight; and

d) a description of the waste diverted to recycle or reuse (expressed in metric system units
commonly used by the undertaking for the specific type of waste).

Basic Metrics – Social matters

B 8 – Workforce – General characteristics

37. The undertaking shall disclose the total number of employees in full-time equivalents2 or head
count broken down:

a) by type of employment contract: temporary and permanent;

b) by gender; and

c) if applicable, by country.

B 9 – Workforce - Health and Safety

38. The undertaking shall disclose the following information regarding its employees:

a) the number and rate of recordable work-related accidents;

b) the number of fatalities as a result of work-related injuries and work-related ill health.

B 10 – Workforce – Remuneration, collective bargaining, and training

39. The undertaking shall disclose:

a) when a significant proportion of employees are compensated based on wages subject to

minimum wage rules, the relevant ratio of the entry level wage to the minimum wage;

b) the percentage gap in pay between its female and male employees. The pay gap is defined
as the difference of average pay levels between female and male employees, expressed

2The calculation of full-time equivalent (FTE) is an employee's scheduled hours divided by the employer's hours for
a full-time workweek.

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as a percentage of the average pay level of male employees. The undertaking may omit
this disclosure when its headcount is below 150 employees.

c) the percentage of employees covered by collective bargaining agreements;

d) the average number of annual training hours per employee and by gender related to the
development of skills and competences, either through formal or informal forms of capacity
building.

Basic Metrics - Business conduct

B 11 – Convictions and fines for corruption and bribery

40. In case of convictions and fines in the reporting period, the undertaking shall disclose the number
of convictions and the amount of fines for violation of anti-corruption and anti-bribery laws.

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Principles of Materiality to be applied for the Narrative-PAT and

Business Partners Modules
41. Issues that cover social, business conduct and/or environmental aspects identified in this context
are named sustainability matters. This section explains how to identify those sustainability
matters that are ‘material’, meaning relevant to be reported on.

42. Materiality refers to the significance to the undertaking of a sustainability matter and of
information about this sustainability matter. Materiality analysis is the process to identify the
sustainability matters that undertakings should report on. The undertaking is encouraged to use
the list in Appendix B List of Sustainability Matters used for Materiality Assessment of this
Standard as guidance for the identification of its material sustainability matters. The materiality
analysis does not apply to an undertaking that decides to only apply the Basic Module.

43. As part of its materiality assessment, the undertaking will assess impacts that it has or is likely
to have on people and the environment, as well as financial risks and opportunities that do or
may derive from sustainability matters. Identifying which sustainability matters are material is
needed particularly to minimize or avoid negative impacts. At the same time, it can help the
undertaking to improve its products or services or to develop new ones that address
environmental or social challenges. Understanding financial risks allows the undertaking to
reduce operational costs, avoid fines, litigations or reputational damages.

44. When assessing whether a sustainability matter is to be reported, because it is material to the
undertaking, two dimensions have to be considered, namely impact materiality and financial
materiality. This is what is generally referred to as double materiality analysis.

Impact materiality

45. From an impact perspective, a sustainability matter is to be reported on when it gives rise to
material impacts. This includes:

a) actual or potential impacts on people or on the environment over the short, medium, and
long-term time horizons. An impact is actual when it is already happening. An impact is
potential when it is likely to happen; and

b) impacts connected with the undertaking’s own business operations, products and services
as well as through its business relationships, such as those that arise from the operations
of suppliers.

46. To determine if an actual negative impact is material, the undertaking has to consider how severe
the impact is on people and the environment. To determine if a potential negative impact is
material, the undertaking has to consider the severity of the impact on people and the
environment as well as the likelihood of that impact happening. Severity is based on:

a) scale, i.e., how grave the harm caused to people or to the environment is (e.g., minor injury
at work without day lost is lower in the scale compared to fatality at work; inadequate
industrial waste disposal leading to soil pollution within a local facility is lower in the scale
compared to a leak of harmful chemicals in a river leading to severe damage of ecosystem
and wildlife);

b) scope: how widespread the harm caused to people or to the environment is (e.g., amount
of affected people, size of contaminated land);

c) the irremediable character of the impact: whether and to what extent it is possible to
remediate the harm caused to people or on the environment (e.g., cleaning up the
contaminated land, compensations and/or indemnities for affected people).

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47. The consideration of scale, scope and irremediability are meant to guide undertakings when
analysing the severity of its impacts. The undertaking is not expected to report on the details
related to each of these three aspects.

48. In the case of a potential negative human rights impact, the severity of the impact takes
precedence over its probability.

49. Quantitative measures of impacts are the most objective evidence to assess their materiality.
However, quantitative information is not always available or may be costly to produce. Qualitative
analysis can be sufficient for the undertaking to reasonably conclude that a matter is material or
not.

Financial materiality

50. From a financial perspective, a sustainability matter is material if pertains to financial risks that
could be reasonably expected to have material financial effects, i.e. to materially influence the
undertaking’s financial position, financial performance, cash flows, access to finance or cost of
capital over the short-, medium- or long-term time horizons. In addition to the undertaking’s
business operations, matters related to the undertaking’s business relationships with other
companies should also be considered.

51. Material impacts generated by the undertaking are generally a source of financial risks.
However, the undertaking shall also consider risks that are not related to its material impacts.

52. Financial opportunities related to a sustainability matter may, like risks, generate financial
effects. Reporting on financial opportunities is optional when preparing a sustainability report
under this Standard.

53. Dependencies from natural and social resources may trigger financial risks in two ways:

a) they may influence the undertaking’s ability to continue to use or obtain the resources
needed in its business processes, as well as the quality and pricing of those resources;
and

b) they may affect the undertaking’s ability to rely on business relationships on acceptable
terms.

54. To determine whether a financial risk is material, the undertaking assesses its probability and
the potential size of the financial effects on the undertaking.

Stakeholders and their relevance to the materiality assessment process

55. Stakeholders are those individuals or groups of people who can exercise influence over the
undertaking and/or be affected by the activities of the undertaking. There are two main groups
of stakeholders:

a) affected stakeholders: individuals or groups of people whose interests are affected or could
be affected – positively or negatively – by the undertaking’s activities and its business
relationships; and

b) users of the sustainability report: including investors, lenders, business partners, social
partners and civil society organizations.

56. Some stakeholders may belong to both groups defined in paragraph 55. An undertaking may
engage with stakeholders in its materiality assessment to find out which sustainability matters
are the most important to them. In many cases, micro enterprises will consider the views only of
their most relevant stakeholders among the ones mentioned in paragraph 55.

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Narrative – Policies, Actions and Targets (PAT) Module

Disclosure N 1 – Strategy: business model and sustainability related initiatives

57. The undertaking shall disclose the key elements of its strategy and its business model, including:

a) a description of significant groups of products and/or services offered;

b) a description of significant market(s) the undertaking operates in (B2B, wholesale, retail,
countries);
c) a description of main business relationships (such as key suppliers, customers distribution
channels and consumers); and
d) if applicable, a description of the key elements of its strategy that relate to or affect
sustainability matters.

Disclosure N 2 – Material sustainability matters

58. The undertaking shall disclose the material sustainability matters resulting from its materiality
assessment (see from paragraph 41 to 56) including a brief description of each sustainability
matter (listed according to par. 41) and:

a) how each matter has an impact on people or the environment;

b) its actual and potential effects on the undertaking’s present or future financial position and
performance; and
c) its actual and potential effects on the undertaking’s activities and strategy.

Disclosure N 3 – Management of material sustainability matters

59. The undertaking shall disclose how it manages its material sustainability matters, including:

a) whether it has adopted policies or actions to (i.) prevent, (ii.) mitigate and (iii.) remediate
actual and potential negative impacts and/or to address financial risks. If applicable, the
undertaking may refer to the sustainability due diligence or risk management processes
implemented;
b) if the undertaking has policies in place, it shall describe:

i. the objective(s) of the policy and which material sustainability matters it

addresses;

ii. the scope of the policy in terms of activities, value chain, countries in which the
undertaking is active in;

iii. if relevant, affected stakeholder groups addressed by the policy;

iv. if applicable, a reference to third-party standards or initiatives the undertaking

commits to respect through the implementation of the policy; and

v. the targets the undertaking uses to monitor the implementation of the policy
and the progress achieved;

c) if the undertaking has actions in place, it shall describe:

i. the list of key actions taken in the reporting year and planned for the future;

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ii. the scope of those actions (i.e., if they also address actors in the value chain,
if they are implemented in different location and geographies or which affected
stakeholder groups they address);

iii. the time horizon under which the undertaking intends to complete each key
action; and

iv. the targets the undertaking uses to monitor the actions implemented and the
progress achieved.

60. If material, the undertaking shall disclose the actions taken in the reporting period to improve its
energy efficiency and to reduce its greenhouse gas emissions and the related possible
implications in terms of risks and opportunities

61. When the undertaking considers that negative impacts are material in relation to (i) workers in
the value chain; and/or (ii) affected communities; and/or (iii) consumers and end users, it shall
disclose:

a) the policies that it has adopted to manage those material impacts, as well as associated
material risks;

b) the actions it has taken on material impacts, and approaches to managing material risks,
and effectiveness of those actions;

c) targets related to managing material negative impacts and managing material risks.

These disclosures are limited to the description of the policies, actions and targets that the
undertaking has put in place.

62. Where material, the undertaking shall disclose whether it has the following in place to support
the prevention of incidents of corruption or bribery:

a) separation of duties; and/or

b) training for its employees; and

c) any actions taken to address breaches in procedures and standards of anti-corruption and
anti-bribery.

Disclosure N 4 – Key stakeholders

63. If the undertaking engages with stakeholders, it may disclose:

a) the categories of key stakeholders considered (the undertaking can use categories such
as investors, lending banks/creditors, business partners, trade unions, NGO); and
b) a brief description of the engagement activities.

Disclosure N 5 – Governance: responsibilities in relation to sustainability matters

64. The undertaking shall describe:

a) the governance and responsibilities in relation to sustainability matters. If applicable, this

disclosure shall cover roles and responsibilities of the highest governance body or of the
individual(s) in charge of managing sustainability matters within the undertaking.

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Business Partners Module

65. This module provides additional datapoints in relation to the information that is generally needed
by business partners, investors, and lenders of the undertaking. They are expected to address
data requests that the undertaking receives or is likely to receive from lenders, investors and
corporate clients that require sustainability data from their suppliers. In relation to the information
needs of financial market participants, these additional datapoints reflect their respective
obligations under relevant laws and regulations. They are also relevant for business partners
when they assess the sustainability profile of the undertaking as supplier or potential supplier.

66. In this module, the materiality analysis described from paragraphs 41 to 56 is required.

67. The table below provides the list of disclosures to be considered and reported upon if material,
following the materiality analysis performed by the undertaking. When not reported upon, a
disclosure shall be assumed to be ‘not material’ for the undertaking.

68. The column ‘DR number and Title’ defines the relevant disclosures to be reported. The column
SFDR Table 1 and/or EBA Pillar 3 and/or Benchmark Regulation is useful for financial market
participants that may require data from SME, as it illustrates how the disclosures in this module
relate to these regulations that are relevant for users of the sustainability report (banks, other
investors).

Topic: DR number and Title [THIS COLUMN WILL BE MOVED TO AN

Environment APPENDIX DEDICATED TO USERS
/ Social / TOGETHER WITH THE FOOTNOTES]
Governance
SFDR Table 1
and/or
EBA Pillar 3
and/or
Benchmark Regulation

Governance Disclosure BP 1 – Revenues SFDR #14

from certain sectors
Benchmark
The SME shall include where
applicable, a statement indicating, EBA Pillar 3: Template 1, banks must report
together with the related revenues, the total amount of their exposures to
that the undertaking is active in: companies excluded from Paris Aligned
Benchmarks (companies with a portion of their
i. controversial weapons such as
turnover in certain high-emitting sectors).
anti-personnel mines, cluster
munitions, chemical weapons and SFDR: PAIs require to identify the exposure of
biological weapons; and / or financial products to 1) fossil fuel companies
and 2) controversial weapons.

ii. the cultivation and production of EBA Pillar 3/ Benchmark: see above
tobacco; and/or

iii. fossil fuel (coal, oil and gas) SFDR # 4

sector (i.e., the undertaking derives
EBA Pillar 3 /Benchmark: see above
revenues from exploration, mining,
extraction, production, processing, SFDR: PAIs require to identify the exposure of
storage, refining or distribution, financial products to 1) fossil fuel companies
including transportation, storage and 2) controversial weapons.
and trade, of fossil fuels as defined
in Article 2, point (62), of

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Topic: DR number and Title [THIS COLUMN WILL BE MOVED TO AN

Environment APPENDIX DEDICATED TO USERS
/ Social / TOGETHER WITH THE FOOTNOTES]
Governance
SFDR Table 1
and/or
EBA Pillar 3
and/or
Benchmark Regulation
Regulation (EU) 2018/1999 of the
European Parliament and the
Council17), including a
disaggregation of revenues derived
from coal, from oil and from gas);
and/or

iv. chemicals production, i.e., its Benchmark

activities fall under Division 20.2 of
Benchmark: EU Paris-aligned Benchmarks
Annex I to Regulation (EC) No
requires to identify exposures to companies
1893/2006;
whose activities are in “Manufacture of
pesticides and other agrochemical products”
listed in Division 20.2 of Annex I Regulation EC
1893/2006w

Governance Disclosure BP 2 – SFDR # 13

Responsibilities in relation to
Benchmark`
sustainability matters
SFDR: PAIs require to identify in financial
The SME shall describe:
products the level of gender diversity in
a) if there is a governance body, governance bodies.
the related gender diversity
ratio.

Environment Disclosure BP 3 – GHG Benchmark

emissions reduction target
Benchmark: requires screening of investee
companies that publish consistently and
If the SME has set GHG emission
accurately GHG reduction targets.
reduction targets, it shall provide its
GHG emission reduction targets for [also coincides with SFDR #4 Table 2 PAIs
(i) scope 1 emissions; (ii) scope 2 requires screening companies that do not have
emissions. GHG emissions reduction targets]

Environment Disclosure BP 4 – Transition Benchmark

plan for climate change
mitigation
Benchmark: requires screening of investee
The SME shall provide information companies that have transition for climate
about its transition plan for climate change mitigation.
mitigation with an explanation of
how GHG emission reduction
targets are compatible with the
limiting of global warming to 1.5°C
in line with the Paris Agreement.

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Topic: DR number and Title [THIS COLUMN WILL BE MOVED TO AN

Environment APPENDIX DEDICATED TO USERS
/ Social / TOGETHER WITH THE FOOTNOTES]
Governance
SFDR Table 1
and/or
EBA Pillar 3
and/or
Benchmark Regulation

Environment Disclosure BP 5 – Sector EU EBA Pillar 3

Paris Aligned Benchmarks Climate Benchmark
EBA Pillar 3: Template 1, banks must report
The SME shall include a disclosure
the total amount of their exposures to
on whether or not the SME is
companies excluded from Paris Aligned
excluded from the EU Paris-aligned
Benchmarks listed in footnote 11.
Benchmarks3.

Environment Disclosure BP 6 – Physical Risks Benchmark

from climate change EBA Pillar 3
EBA Pillar 3: Template 5, banks must indicate
The SME disclose the anticipated
the total amount of their exposures to
financial effects that physical risks
companies that are exposed to physical
from climate change may have on
climate risks.
the company. In particular:
i) the monetary amount and the
percentage of the SME's total
assets that can be subjected to
material physical risks over the
short, the medium and the long-
term, before considering climate
change adaptation actions
disaggregated by acute and
chronic physical risk;
ii) the proportion of assets at
material physical risk addressed by
the climate change adaptation
actions;

iii) the location of the significant

3 Companies excluded from EU Paris-aligned Benchmarks: (a) companies involved in any activities
related to controversial weapons; (b) companies involved in the cultivation and production of tobacco;
(c) companies that benchmark administrators find in violation of the United Nations Global Compact
(UNGC) principles or the Organisation for Economic Cooperation and Development (OECD) Guidelines
for Multinational Enterprises; (d) companies that derive 1 % or more of their revenues from exploration,
mining, extraction, distribution or refining of hard coal and lignite; (e) companies that derive 10 % or more
of their revenues from the exploration, extraction, distribution or refining of oil fuels; (f) companies that
derive 50 % or more of their revenues from the exploration, extraction, manufacturing or distribution of
gaseous fuels; (g) companies that derive 50 % or more of their revenues from electricity generation with
a GHG intensity of more than 100 g CO2 e/kWh. For the purposes of point (a), controversial weapons
shall mean controversial weapons as referred to in international treaties and conventions, United Nations
principles and, where applicable, national legislation.

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Topic: DR number and Title [THIS COLUMN WILL BE MOVED TO AN

Environment APPENDIX DEDICATED TO USERS
/ Social / TOGETHER WITH THE FOOTNOTES]
Governance
SFDR Table 1
and/or
EBA Pillar 3
and/or
Benchmark Regulation
assets affected by material
physical risks;
iv) the monetary amount and
proportion (percentage) of net
revenue from its business activities
at material physical risk over the
short-, medium- and long-term;

v) the breakdown of the SME's

carrying value of its real estate
assets, by energy efficiency
classes.

Environment Disclosure BP 7 – Hazardous SFDR # 9

waste and radioactive waste
SFDR: PAIs require to measure the ratio of
ratio
hazardous or radioactive waste.
The SME shall disclose the total
amount of hazardous waste and
radioactive waste generated
(radioactive waste is defined in
Article 3(7) of Council Directive
2011/70/Euratom).
Disclosure BP 8: Alignment with
Social Benchmark
internationally recognized
instruments Benchmark: Requires that financial market
participants ensure that clients/ value chain put
The undertaking shall disclose in place measures to mitigate and end
whether its policies with regard to negative impacts on human rights.
its own workforce are aligned with
Disclosure also identifed in datasets required
relevant internationally recognized
by financial institutions.
instruments, including the UN
Guiding Principles on Business and
Human Rights.
Disclosure BP 9: Processes to
Social SFDR #11
monitor compliance and
mechanisms to address SFDR : PAI requires financial market
violations participants to ensure that clients implement a
compliance process to ensure adherence to
The undertaking shall disclose the UN Global Compact and the OECD
whether it has processes in place Guidelines for Multinational Enterprises.
to monitor compliance with the
OECD Guidelines for Multinational

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Topic: DR number and Title [THIS COLUMN WILL BE MOVED TO AN

Environment APPENDIX DEDICATED TO USERS
/ Social / TOGETHER WITH THE FOOTNOTES]
Governance
SFDR Table 1
and/or
EBA Pillar 3
and/or
Benchmark Regulation
Enterprises, the UN Guiding Disclosure also identifed in datasets required
Principles on Business and Human by financial institutions.
Rights, including the principles and
rights set out in the International
Bill of Human Rights and the eight
fundamental conventions identified
in the ILO Declaration or
grievance/complaints handling
mechanisms to address violations
of the above standards with regard
to its own workforce.

Social Disclosure BP 10 – Violations of SFDR #10

OECD Guidelines for
Benchmark
Multinational Enterprises or the
UN Guiding Principles (including Benchmark and SFDR PAI require financial
the principles and rights set out market participants to ensure that their clients
in the 8 fundamental have not violated the principles of the United
conventions of the ILO Nations Global Compact and the OECD
Declaration and the International Guidelines for Multinational Enterprises (also
Bill of Human Rights) an SFDR PAI).

The undertaking shall disclose

whether there have been any Disclosure also identified in datasets required
violations of the UN Guiding by financial institutions.
Principles on Business and Human
Rights, the ILO Declaration on
Fundamental Principles and Rights
at Work or the OECD Guidelines
for Multinational Enterprises with
regard to its own workforce during
the reporting year.

Social Disclosure BP 11 – Work-life Financial market participants require clients to

balance disclose measures to promote gender equality
and equal opportunity. To be consistent with
LSME, alignment has been sought with the
The SME shall disclose the
metric.
percentage of employees:
(i) entitled to take family-related
leave, with a breakdown by gender;
and
(ii) that took family-related leave,
with a breakdown by gender.

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Topic: DR number and Title [THIS COLUMN WILL BE MOVED TO AN

Environment APPENDIX DEDICATED TO USERS
/ Social / TOGETHER WITH THE FOOTNOTES]
Governance
SFDR Table 1
and/or
EBA Pillar 3
and/or
Benchmark Regulation
Family-related leave includes
maternity, paternity, parental, and
carers’ leave.

Social Disclosure BP 12 – Number of Apprentices is a matter of particular relevance

apprentices to SMEs in the EU in terms of job creation and
training for young workers and it has been
captured as a metric. To note that the
The SME shall disclose
apprentices’ definition and regulation vary
the number of apprentices in the
among EU Member States and the information
reporting period.
required shall not affect their status pursuant to
applicable law.

[THE TABLE BELOW WILL ALSO BE MOVED TO THE APPENDIX DEDICATED TO

USERS]

69. For clarification, the following datapoints which are related to Sustainable Finance requirements
are already included in other Modules (Basic Module and Narrative-PAT Module).

Topic: Environment / DR number and Title

Social / Governance

Environment Disclosure B 3 – Energy and greenhouse gas emissions

The SME shall disclose its total energy consumption related to own operations
in MWh, with a breakdown between:4
a) fossil fuels; and
b) electricity, as expressed in utility billings (with the breakdown
between renewable and non-renewable sources, if available).
Environment Disclosure B 3 – Energy and greenhouse gas emissions

The SME shall disclose its estimated gross GHG emissions in tons of CO2
equivalents (tCO2eq), including:
a) The scope 1 GHG emissions in tCO2-eq (from owned or controlled
sources); and
b) The scope 2 emissions in tCO2-eq (generation of purchased
energy).5

4Regulation (EU) 2019/2088 (SFDR), mandatory indicator #5 in Table 1 of Annex I (“Share of non-renewable energy
consumption and production”).
5Regulation (EU) 2019/2088 (SFDR) mandatory indicators #1 and #2 in Table 1 of Annex I (“GHG emissions”;
Carbon footprint”); and Regulation (EU) 2020/1816 Benchmark Regulation, Articles 5 (1), 6 and 8 (1).

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Topic: Environment / DR number and Title

Social / Governance

Environment Disclosure B 4 – Pollution of air, water and soil

The undertaking shall disclose, if applicable, the pollutants it emits in its own
operations to air, water and soil that it is required to report by law to
competent authorities (e.g. under the Industrial Emissions Directive and the
European Pollutant Release and Transfer Register) or required to report
under an Environmental Management System such as EMAS. 6

Environment Disclosure B 5 – Biodiversity

The SME shall disclose the number and area (in hectares) of sites that it
owns, that it has leased or that it manages, that are located in or near
biodiversity sensitive areas, if applicable.7

Social Disclosure B 9 – Workforce – Health and safety

The SME shall disclose:

a) the number of fatalities as a result of work-related injuries and work-
related ill health;8
b) the number and rate of recordable work-related accidents.9
Social Disclosure B 10 – Workforce – Remuneration, collective bargaining, and
training

The SME shall disclose:

b) the percentage gap in pay between its female and male employees.
The pay gap is defined as the difference of average pay levels
between female and male employees, expressed as a percentage of
the average pay level of male employees 10. The SME may omit this
disclosure when its headcount is below 150 employees.

6 Regulation (EU) 2019/2088 (SFDR) because it is derived from: (a) an additional indicator related to principal
adverse impacts as set out by indicator #2 in Table II of Annex I of Commission Delegated Regulation (EU)
2022/1288 with regard to disclosure rules on sustainable investments (“Emissions of air pollutants”); (b) indicator #8
in Table I of Annex I (“Emissions to water); (c) indicator #1 in Table II of Annex I ( “Emissions of inorganic pollutants”);
and (d) indicator #3 in Table II of Annex I (“Emissions of ozone- depleting substances”)
7 Regulation (EU) 2019/2088 (SFDR), mandatory indicator #7 in Table 1 of Annex I (“Activities negatively affecting
biodiversity-sensitive areas”)
8 This information supports the information needs of benchmark administrators to disclose ESG factors subject to
Regulation (EU) 2020/1816 as set out by indicator “Weighted average ratio of accidents, injuries, fatalities” in section
1 and 2 of Annex 2.
9 This information supports the information needs of financial market participants subject to Regulation (EU)
2019/2088 as reflecting an additional indicator related to principal adverse impacts as set out by indicator #2 in Table
3 of Annex 1 of the related Delegated Regulation with regard to disclosure rules on sustainable investments (“Rate
of accidents”) and benchmark administrators to disclose ESG factors subject to Regulation (EU) 2020/1816 as set
out by indicator “Weighted average ratio of accidents, injuries, fatalities” in section 1 and 2 of Annex 2.
10 Regulation (EU) 2019/2088 (SFDR) mandatory indicator #12 in Table 1 of Annex I (“Unadjusted gender pay gap”)
and (EU) 2020/1816 Benchmark Regulation (EU), indicator “Weighted average gender pay gap” in section 1 and 2
of Annex II.

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Topic: Environment / DR number and Title

Social / Governance

Governance Disclosure B 11 – Convictions and fines for corruption and bribery

In case of convictions and fines in the reporting period, the SME shall
disclose the number of convictions and the amount of fines for violation of
anti-corruption and anti-bribery laws.11

Governance Disclosure N 3 - Management of material sustainability matters

Where material, the undertaking shall disclose whether it has the following in
place to support the prevention of incidents of corruption or bribery:

c) any actions taken to address breaches in procedures and standards

of anti-corruption and anti-bribery12.

11Benchmark Regulation (EU) 2020/1816, indicator “Numbers of convictions and amount of fines for violations of
anti-corruption and anti-bribery laws” in section 1 and 2 of Annex II.
12 Regulation (EU) 2019/2088 (SFDR) additional indicator #17 in Table 3 of Annex I (“Cases of insufficient action
taken to address breaches of standards of anti-corruption and anti-bribery); and (EU) 2020/1816 Benchmark
Regulation, indicator “Numbers of convictions and amount of fines for violation of anti-corruption and anti-bribery
laws” in section 1 and 2 of Annex II.

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Basic Module: Guidance

This Guidance is intended to support the preparation of the Metrics in the Basic Module.

Environmental metrics
Metric B 3 – Energy and greenhouse gas emissions
Impacts on climate: energy usage and greenhouse gas emissions
Under paragraphs 25 and 26, the undertakings report on its climate impacts, providing information about
its energy use and greenhouse gas emissions. This guidance for disclosure B3 does not constitute an
additional datapoint to the disclosures described in paragraphs 25 (on energy consumption) and 26 (on
GHG emissions), but rather an overarching objective of the Basic disclosure B3.
Climate impacts are significantly driven by energy consumption. Therefore it is relevant to disclose both
the quantity as well as the type (such as coal, oil, gas, nuclear or renewable) and mix of energy
consumed. Examples of energy disclosures are total energy consumption broken down by fossil source,
and consumption of purchased or self-generated electricity from renewable sources. This information
may be provided in the following format.

202(x) Energy consumption (MWh)

Fossil fuels 486

Electricity 10

As for greenhouse gas emissions arising from the undertaking’s activities, this requirement builds on the
definitions and rules of the GHG Protocol, the leading accounting standard for GHG emissions. Under
paragraph 26, undertakings are to report on their Scope 1 and Scope 2 emissions. Scope 1 GHG
emissions cover direct emissions from owned or controlled sources. Scope 2 emissions are indirect GHG
emissions that that are a consequence of the activities of the reporting company (as they derive from the
undertaking’s consumed energy), but occur at sources owned or controlled by another company.. Further
guidance is provided in the sections below on how to calculate Scope 1 and 2 emissions.
Scope 1 and 2 emissions may be reported in the following format.

202(x) GHG emissions (tCO2e)

Scope 1 45

Scope 2 6

Total 51

Scope 1 emissions calculation guidance

Typical Scope 1 emissions include CO2 (and CH4 and N2O) emissions associated with fuel combustion
(for example in boilers, furnaces, vehicles, etc), as well as fugitive emissions from air conditioning and
industrial processes.
Emissions associated with combustion can be calculated by the expression:
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺,𝐹𝑢𝑒𝑙 = 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐷𝑎𝑡𝑎𝐹𝑢𝑒𝑙 ∗ 𝐸𝐹𝐺𝐻𝐺,𝐹𝑢𝑒𝑙 ∗ 𝐺𝑊𝑃𝐺𝐻𝐺

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Where:
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺 are the emissions of CO2, CH4 or N2O resulting from the combustion of the Fuel in
t CO2e;
𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐷𝑎𝑡𝑎𝐹𝑢𝑒𝑙 is the quantity of fuel consumed, typically expressed in energy units, but can
also be in volume (m3 or l) or mass (tonnes or kg);
𝐸𝐹𝐺𝐻𝐺,𝐹𝑢𝑒𝑙 is the specific combustion Emission Factor for the fuel. The units of the EF need to be
consistent with the units of the Activity data;
𝐺𝑊𝑃𝐺𝐻𝐺 is the Global Warming Potential of the GHG (CO 2, CH4 or N2O).The activity data can be
determined using fuel purchase receipts, purchase records, or through direct measurement at the
combustion device. The fuel quantities can be measured in different forms (typically mass or volume)
and care needs to be taken to make sure that the activity data and the EF are expressed using the same
units. It is not uncommon for emission factors of fuels to be expressed in terms of energy (Lower Calorific
Value) in which case, a further step to convert between the volume or mass of the fuel and its energy
content is needed (see example below). So, the expression above can take different forms, namely:

𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺,𝐹𝑢𝑒𝑙 = 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐷𝑎𝑡𝑎𝐹𝑢𝑒𝑙 ∗ 𝐸𝐹𝐺𝐻𝐺,𝐹𝑢𝑒𝑙 ∗ 𝐺𝑊𝑃𝐺𝐻𝐺

𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺,𝐹𝑢𝑒𝑙 = [𝑉𝑜𝑙𝑢𝑚𝑒 ∗ 𝐶𝑎𝑙𝑜𝑟𝑖𝑓𝑖𝑐𝑉𝑎𝑙𝑢𝑒]𝐹𝑢𝑒𝑙 ∗ 𝐸𝐹𝐺𝐻𝐺,𝐹𝑢𝑒𝑙 ∗ 𝐺𝑊𝑃𝐺𝐻𝐺

CO2 emission factors are either derived through analysis of the carbon and heat content of the fuel
(unlikely to be needed for undertakings) or through the use of published emission factors for the most
common fuels. EFs for CH4 and N2O will depend on the type of combustion technology and vary with it.
In most cases, CH4 and N2O emissions are within the measurement error of CO2 and can be neglected.
The Global Warming Potential is derived from the latest list published by the Intergovernmental Panel
on Climate Change (IPCC).
The following table provides a list of non-exhaustive sources of emission factors for fuels. Undertakings
may also reference authoritative national sources which may be more relevant for their particular case.

Documentation Sources:

Data Documentation Source

Activity data fuel purchase receipts, purchase records, or through direct

measurement at the combustion device.

Emissions Factors (EF):

Fuel ADEME – Bilant Carbonne

https://base-empreinte.ademe.fr/
IPCC – Emissions Factor Database
https://www.ipcc-nggip.iges.or.jp/EFDB/find_ef.php?reset=
IPCC – Guidelines for National Greenhouse Gas Inventories
Microsoft Word - V2_Ch2_Stationary_Combustion_Final.doc
(iges.or.jp)

Global Warming Potential IPCC – Global Warming Potential p. 16

(GWP)
https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_W
GI_Chapter07_SM.pdf

You can also find more guidance and tools on how to act and report on climate in the
https://undertakingclimatehub.org/ .

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Example
Company A burns Nr. 4 fuel oil in an industrial boiler. For its financial accounting, it keeps track of its
costs and for GHG accounting purposes it keeps track of volumes (m 3) expressed in the fuel receipts.
From the receipts, it determines the annual volumes of fuel oil bought and keeps track, as well, of the
fuel oil inventory on the 1st day of the year. In 2023 it had purchased 100 m3 of fuel oil. On its registers
on the 1st Jan of 2023 it had 2.5 m3 in its deposit and on 1st Jan 2024 it had 1 m3. Thus, it has determined
(through purchase and measurement of inventory) that during 2023 it consumed 101.5 m 3 of fuel oil.
Using the IPCC list of emissions factors (Table 2.3, page 2.18) it approximates its emission factor as a
50/50 blend of Diesel oil and Residual oil as 75.75 t CO2/TJ and, by contacting its supplier, it has
determined that its net calorific value of the fuel is 0.03921 TJ/m 3. Given that the CO2 GWP equal one,
its CO2 emission for this specific Scope 1 source is:

101.5 m3 * 0.03921 TJ/m3 * 75.75 t CO2/TJ * 1 = 301.5 t CO2

For completeness of this example, the CH4 and N2O emissions are also calculated. Checking the IPCC
list of emission factors, these are respectively 3 kg of CH 4/TJ and 0.6 kg of N2O/TJ, thus the emissions
will be:
CH4 emissions = 101.5 m3 * 0.03921 TJ/m3 * 3 kg CO2/TJ * 29.8 = 0.36 t CO2e
N2O emissions = 101.5 m3 * 0.03921 TJ/m3 * 0.6 kg CO2/TJ * 273 = 0.65 t CO2e

As mentioned, CH4 and N2O emissions add around 1 t CO2e to the CO2 value of 301.5 t CO2, so about
0.3% of the total. This could be considered well within an acceptable reporting error and so, could not
have been calculated and reported.
Global Warming Potentials for CH4 and N2O are derived from IPCC’s 6th Assesundertakingnt Report,
Chapter 7SM13.

Scope 2 emissions calculation guidance

Scope 2 includes emissions from electricity, heat, steam and cooling purchased or acquired and
consumed by the reporting company.
Typical sources of Scope 2 emissions relate to any equipment that consumes electricity (electrical
engines, lights, buildings, etc), heat (heat in industrial processes, buildings, etc.), steam (industrial
processes) and cooling (industrial processes, buildings).
Emissions associated with the purchase and consumption of electricity, heat, steam and cooling can be
calculated by the expression:
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺 = 𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐷𝑎𝑡𝑎 ∗ 𝐸𝐹
Where:
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺
are the emissions of GHG’s resulting from the production of the electricity, heat, steam or cooling
(typically, if from generated through combustion CO2, CH4 and N2O);
𝐴𝑐𝑡𝑖𝑣𝑖𝑡𝑦 𝐷𝑎𝑡𝑎
Is the quantity of fuel consumed, typically expressed in energy units (e.g. MWh);

13Smith, C., Z.R.J. Nicholls, K. Armour, W. Collins, P. Forster, M. Meinshausen, M.D. Palmer, and M.
Watanabe, 2021: The Earth’s Energy Budget, Climate Feedbacks, and Climate Sensitivity
Supplementary Material. In Climate Change 2021: The Physical Science Basis. Contribution of Working
Group I to the Sixth Assesundertakingnt Report of the Intergovernmental Panel on Climate Change
[Masson-Delmotte, V., P. Zhai, A. Pirani, S.L. Connors, C. Péan, S. Berger, N. Caud, Y. Chen, L.
Goldfarb, M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K. Maycock, T. Waterfield,
O. Yelekçi, R. Yu, and B. Zhou (eds.)]. Available from https://www.ipcc.ch/.

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𝐸𝐹𝐺𝐻𝐺,𝐸𝑛𝑒𝑟𝑔𝑦
is the Emission Factor for the production of electricity (heat, steam or colling). The units of the EF need
to be consistent with the units of the Activity data.

Example
Company A occupies an office building of 2000 m2 in Paris, where it pays the electricity consumed for
the central heating and cooling, lighting, computers and other electric appliances. Through its utility bills,
it has estimated that the building consumed 282 MWh of electricity in 2022. By using the emission factor
provided by nowtricity.com for France in 2022, it has estimated its Scope 2 emissions for its building
electricity consumption to be
𝑔 𝐶𝑂2 𝑒𝑞
𝐸𝑚𝑖𝑠𝑠𝑖𝑜𝑛𝑠𝐺𝐻𝐺 = 282 000 [𝑘𝑊ℎ] ∗ 73 [ ] = 20.6 t CO22 𝑒𝑞
𝑘𝑊ℎ
The following table provides a list of non-exhaustive sources of electricity emission factors. Undertakings
may also reference authoritative national or grid sources which may be more relevant for their particular
case.

Documentation Sources:

Data Documentation Source

Activity data Purchase receipts or utility bills, contract purchase or firm purchase
records

Emissions Factors (EF):

Europe Grid electricity Association of Issuing Bodies (AIB) – Residual Mix Grid Emission
Factors
https://www.aib-net.org/facts/european-residual-mix
ADEME – Bilant Carbonne
https://base-empreinte.ademe.fr/
JRC – Historical GHG emissions factor for electricity consumption
https://data.jrc.ec.europa.eu/dataset/919df040-0252-4e4e-ad82-
c054896e1641#dataaccess
Life-cycle electricity production emission factors
https://www.nowtricity.com/

USEPA GHG emission factors Hub

https://www.epa.gov/climateleadership/ghg-emission-factors-hub
North America Grid Government of Canada
electricity
https://publications.gc.ca/collections/collection_2023/eccc/En84-294-
2023-eng.pdf

IEA’s Annual GHG emission factors for World countries from

electricity and heat generation (2022 data set, paid data set)
https://www.iea.org/data-and-statistics/data-product/emissions-
factors-2022#emissions-factors
Other regions/Global

Global Warming Potential IPCC – Global Warming Potential (GWP-100) p. 16

(GWP)

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https://www.ipcc.ch/report/ar6/wg1/downloads/report/IPCC_AR6_W
GI_Chapter07_SM.pdf

More guidance and tools on how to act and report on climate can be found at
https://undertakingclimatehub.org/.

Scope 3 emissions
Depending on the type of activities carried out by the undertaking, a quantification of the undertaking’s
Scope 3 GHG emissions provides relevant information (refer to paragraph 13 of this Standard).
Scope 3 emissions are the indirect GHG emissions that derive from an undertaking’s value chain. They
include the activities that are upstream of the undertaking’s operations (e.g. purchased goods and
services, purchased capital goods, transportation of purchased goods, etc.) and activities that are
downstream of the undertaking’s operations (e.g. transport and distribution of the undertaking’s products,
use of sold products, investments, etc.). If the undertaking decides to provide this metric, it should refer
to the 15 types of Scope 3 GHG emissions identified by the GHG Protocol Corporate Standard and
detailed by the GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard
(adapted from GHG Protocol Corporate Value Chain (Scope 3) Accounting and Reporting Standard,
Glossary (Version 2011).
When it reports on Scope 3 GHG emissions, the undertaking includes significant Scope 3 categories (as
per the Corporate Value Chain (Scope 3) Accounting and Reporting Standard), based on its own
assessment of relevant Scope 3 categories. Undertakings can find further guidance on specific
calculation methods for each category in the GHG Protocol “Technical guidance for Calculating Scope 3
Emissions”.

Conversion between different energy units

Paragraph 27 indicates MWh as the unit of choice for measuring energy consumption. In case of fuel or
biomass, data expressed in other units, such as energy content (e.g., kJ, Btu), volume (e.g., litres, m3),
or mass (e.g., metric tonnes, short tonnes), a conversion to MWh is necessary.
For fuel consumption measured by mass (e.g., wood, coal), the undertakings should:
1. Obtain the Net Calorific Value (e.g., kJ/metric ton, TJ/Gg) of the fuel. It can be a typical value
published by reliable sources (e.g., IPCC), or may be provided by the supplier or attained
internally.
2. Convert the Net Calorific Value to MWh/ton. Example:
1 TJ = 1012 J = 277.778 MWh; 1 Gg = 109 g = 1000 t
11.9 TJ/Gg = 11.9 * 277.778/1000 t = 3.306 MWh/ton
3. Calculate the energy content of the mass. Example:
1245345 t * 3.306 MWh/ton = 4117111 MWh
For liquid fuel, the undertakings should:
1. Convert volume information to mass, multiplying volume by fuel density. Example:
Diesel = 4 456 000 l; Diesel density = 0.84 kg/l
4 456 000 (l) * 0.84 (kg/l) = 3 743 040 kg = 3 743 t
2. Calculate the energy content, multiplying mass by Net Calorific Value. Example:
3 743 [t] * 43 [TJ/Gg] = 3 743 t * 43 TJ/(1000 [t]) = 160.949 [TJ]
3. Convert TJ to MWh. Example:
1 TJ = 1012 J = 277.778 MWh
160.949 [TJ] = 277.778 [MWh/TJ] * 160.949 [TJ] = 44 708 MWh

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Documentation Source:

Data Documentation Source

CDP CDP Technical Note: Conversion of fuel data to MWh

https://cdn.cdp.net/cdp-
production/cms/guidance_docs/pdfs/000/000/477/original/CDP-
Conversion-of-fuel-data-to-MWh.pdf?1479755175

Metric B 4 – Pollution of air, water and soil

Guidance on which undertakings need to report on pollution and what pollutants do undertakings
need to report on.
Paragraph 30 establishes that, if applicable, the undertaking shall disclose the pollutants it emits to air,
water and soil, in its own operations, if such information is already required to be reported by law to
competent authorities or under an Environmental Management System such as EMAS.
The metrics to be disclosed under this paragraph refer to information that the undertaking is already
mandated to provide by law. This requirement was conceived to avoid any additional reporting burden
on undertakings. In general, this requirement is expected to apply to undertakings that are operators of
one industrial installation covered by the Industrial Emissions Directive (IED). The IED applies to some
52,000 installations in Europe covering activities such as burning fuel in boilers with rated power of more
than 50 MW, metal foundries, processing of non-ferrous metals, production of lime, manufacture of
ceramic products by firing, production of plant protection products or biocides, tanning of hides,
slaughterhouses, etc. In these cases, the installation already has to report to the competent authority the
pollutants released to air, water and soil, and the data is publicly available at the European Pollutant
Release and Transfer Register (E-PRTR). Companies that operate more than one facility, do not have
to report on their consolidated company-wide emissions under the EPRTR, as they report only at facility
level. This Standard requires to report the total amount of all the facilities. Similarly, companies owning
but not operating a facility, do not have to report to the EPRTR but are expected to reflect their facility-
owned emissions in their sustainability report.
Likewise, if under an EMAS certification an undertaking has been identified as having to monitor and
report on the pollutants listed in the PRTR, these are, in principle, relevant aspects for the undertaking
to include on in its sustainability report.
If an undertaking has or operates only one facility and its pollution data is already publicly available, the
undertakings may provide a reference to the document where such information is provided, instead of
reporting it again. Likewise, if the undertaking publishes an organisation wide EMAS report including
pollution data, it can include it in the sustainability report by reference.
To report the information on pollutants into the sustainability report, the undertaking should indicate the
type of pollutant material, alongside the amount emitted to air, water and soil in a suitable mass unit (e.g.,
t or kg).

Below is an example of how undertakings may present information on their emissions to air, water, soil
divided by pollutant.

Pollutant Emissions (kg) Medium of release (air, water, soil)

e.g., Cadmium and compounds 10 Water

Type of pollutant 2

Type of pollutant 3

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Metric B 5 – Biodiversity
Guidance on how to identify sites in or near Biodiversity Sensitive Area
Paragraph 31 reports that the undertaking shall disclose sites in or near biodiversity sensitive areas.
Biodiversity sensitive areas are defined as such by special nature protection regulation, at European or
international level. These comprise areas belonging to the Natura 2000 network of protected areas,
UNESCO World Heritage sites and Key Biodiversity Areas (‘KBAs’), as well as other protected areas, as
referred to in Appendix D of Annex II to Commission Delegated Regulation (EU) 2021/21398.
The following table is a suggestion for presenting information on sites in or near Biodiversity sensitive
areas. The undertaking may provide the location (e.g. country and site name) without specifying the
exact address of the plant.

Location Area Biodiversity sensitive Specification

Area
(hectares) (located in;
located partially in;
located near Biodiversity
sensitive areas)

Country –
Site 1

Country –
Site 2

Country –
Site 3

...

For the purpose of this Standard, the term “near” should be interpreted as meaning an area that is inside,
overlapping or adjacent to a Biodiversity Sensitive area.

Documentation Sources:

Data Documentation Source

Natura 2000 Network of protected areas https://natura2000.eea.europa.eu/

Key Biodiversity Areas - IUCN https://www.keybiodiversityareas.org/sites/searc

h

UNESCO – World Heritage Centre https://whc.unesco.org/en/list/

Guidance on how to calculate and report land-use changes

The undertaking may disclose in units of area (e.g., m2 or ha) on land-use using guidance provided by
the Eco-Management and Audit Scheme (EMAS):
(a) total use of land;
(b) total sealed area;
(c) total nature-oriented area on site; and
(d) total nature-oriented area off site.

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The following table is a suggestion for presenting information on land-use change.

Area
Land-use (hectares or m2)
Type
Previous year Reporting year % change

Total sealed
area

Total nature-
oriented area
on site

Total nature-
oriented area
off site

Total use of
land

Documentation Sources:

Data Documentation Source

EMAS Guidance EU Commission Regulation 2018/2026

https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:32018R2026
&rid=2

Metric B 6 – Water
Guidance on how to calculate and report on water withdrawals and water consumption
Water withdrawal relates to the amount of water an undertaking draws into its organizational boundaries
from any source during the reporting period. In practice, for most undertaking, this relates to the amount
of water taken from the public water supply network, as indicated in the utility bills. However, where
applicable, water withdrawal also includes the amounts of water from other sources, such as
groundwater from own wells, water taken from rivers or lakes or water received by other undertakings.
Rainwater collected by the undertaking is not considered as a water withdrawal.
Water consumption is the amount of water drawn into the boundaries of the undertaking that is not
discharged or planned to be discharged back to the water environment or to a third party. This typically
relates to water evaporated – e.g. in thermal energy processes, like drying or power production -, water
embedded into the products – e.g. in food production –, or water for irrigation purposes – e.g. in
agriculture or for watering company premises. Discharge to third parties means the amount of water
transferred, for example, directly to receiving water bodies such as lakes or rivers, the public sewer or to
other companies for cascading water use. Water consumption can therefore be calculated by deducting
the amount of water discharged from the amount of water withdrawals. Collected rainwater can be
considered in the calculation.
For undertakings which solely withdraw water from the public water network and discharge it to the
sewer, water consumption will be close to zero and can therefore be omitted in reporting.
The undertaking may provide additional explanatory information to contextualize its water withdrawals
or consumption. For example, the undertaking may highlight if rainwater is collected and used as a
replacement of tap water or if water is discharged to other parties for cascading use.

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Below is an example of how undertakings may present the quantitative information on their withdrawals,
discharges and consumption of water divided by site location.

Water withdrawal Water consumption

(e.g. m3) (e.g. m3) (if applicable)

All sites

Sites in areas with water stress

Guidance on how to know if operating in an area of high water stress

To know if the undertaking operates in an area of high water stress, you can consult the regional water
authorities of the places you operate on, to understand their assessment of the water resources for that
specific location. Alternatively, you can also consult public available and free tools that map water
scarcity globally. One of such tools is WRI’s Aqueduct Water Risk Atlas. Through this tool you can consult
the Water stress baseline for different river basins globally. As an illustration, the picture below shows a
map of the main Iberian river basins and their water stress classification according to WRI Aqueduct.

You can observe several of the water basins in the Peninsula and their water stress classification. Most
of the southern part of the peninsula is an area of very high water stress - with the exception of the
Guadiana basin (in yellow). So, if you have operations within the Guadalquivir basin (Andalucia region,
very high level water stress) you would have to disaggregate your water consumption for that
region/water basin. But if your operation is located within the southern part of the Guadiana river basin
(low water stress) then that would not be necessary.
Metric B 7- Resource use, circular economy and waste management
Guidance on circular economy principles
When disclosing information on its products, material use, and waste management, the undertaking may
provide information in relation to the circular economy principles. Circular economy principles are
articulated in the paragraphs below. The key principles outlined by Ellen Macarthur Foundation are
shown underlined while the key principles considered by the European Commission are shown in italic.
Eliminate waste and pollution – which can be done through process improvements but also design
considerations at the level of the usability, reusability, repairability, disassembly and remanufacturing;
Circulate products and materials (at their highest value) – reusability and recycling is key for product
circulation, but this is enhanced if special consideration for circularity is given at design phase for issues
such as usability, reusability, repairability, remanufacturing and disassembly. Factors such as the
incorporation of bio-materials and their recirculation by the biological cycle can also be considered – for
example, using biodegradable crop covers instead of plastics in agriculture.

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Regenerate nature – whenever possible, human activities should seek to regenerate nature and improve
or restore key ecological functions (drainage, habitat provision, thermal regulation, etc) that may have
been lost due to previous human activities.

Guidance on the rate of recycled contents in the products and packaging

When compiling the rate of recycled content – that is, inputs into the process that have originated from
recycled materials - the undertaking may use as denominator the total weight of materials that are
recycled used in products and packaging (during the reporting period) divided by the total weight of
materials in products and packaging (during the reporting period).
Guidance on how to identify manufacturing and/or packaging processes
To identify manufacturing and/or packaging processes, the undertaking may refer to those activities that
fall under "Section C - Manufacturing" and Section F “Construction” of Annex I to Regulation (EC) No
1893/200614.
Guidance on total waste generation and waste diverted to recycle or reuse
When disclosing information on waste the undertaking may adopt the following tables.

Waste generated (e.g. tonnes)

Total waste generated, of which:

Waste Waste
diverted to directed
recycle or to
reuse disposal

Non-hazardous waste

Type of waste1

Type of waste2

...

Hazardous waste

Type of waste1

...

The undertaking may consider the list of waste descriptions from the European Waste Catalogue.

Social metrics
Metric B 8 – Workforce – General characteristics
Full-time equivalent (FTE) is an employee's scheduled hours divided by the employer's hours for a full-
time workweek.
Head count is the total number of people employed by the undertaking at a given time.
Guidance on how to present information
The following table is a suggestion for presenting information on employees by type of employment
contract.

Type of contract Number of Employees (full-time equivalents or head count)

14 L_2006393EN.01000101.xml (europa.eu)

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Temporary contract
Permanent contract
Total Employees

The following table is a suggestion for presenting information on employees by gender.

Gender Number of Employees (full-time equivalents or head count)

Male
Female
Other
Not reported
Total Employees

In some European Member States it is possible for persons to legally register themselves as having a
third gender, often neutral, which is categorised as “other” in the table above. If the undertaking is
disclosing data about employees where this is not possible, it may explain this and indicate that the
“other” category is not applicable. “Not reported” category refers to employees who do not disclose
gender identity.
The following table is a suggestion for presenting information on employees by countries.

Country Number of Employees (full-time equivalents or head count)

Country A
Country B
Country C
Country D
Total Employees
The definitions and types of employment contracts may differ between countries. If the undertaking has
employees in more than one country, it shall use the definitions as per the national laws of the countries
where the employees are based to calculate country-level data. The country-level data shall then be
added up to calculate total numbers, disregarding differences in national legal definitions.
Disclosure B 9 – Workforce - Health and Safety
Guidance on the rate of recordable work-related accidents
In order to calculate the rate of recordable work-related accidents, the formula below should be used:

𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑜𝑟𝑘 𝑟𝑒𝑙𝑎𝑡𝑒𝑑 𝑎𝑐𝑐𝑖𝑑𝑒𝑛𝑡𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑟𝑒𝑝𝑜𝑟𝑡𝑖𝑛𝑔 𝑦𝑒𝑎𝑟

𝑥 200,000
𝑇𝑜𝑡𝑎𝑙 𝑛𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 ℎ𝑜𝑢𝑟𝑠 𝑤𝑜𝑟𝑘𝑒𝑑 𝑖𝑛 𝑎 𝑦𝑒𝑎𝑟 𝑏𝑦 𝑎𝑙𝑙 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

The rate indicates the number of work-related accidents per 100 full-time workers over one year
timeframe, based on the assumption that one full-time worker works 2,000 hours per year. If the
undertaking cannot directly calculate the number of hours worked, it may estimate this on the basis of
normal or standard hours of work.
Example:
Company A reported 3 work-related accidents in the reporting year. Company A has 40 employees with
a total number of 80,000 hours (40 x 2,000) worked in a year.
The rate of recordable work-related accidents is: 3 / 80,000 x 200,000 = 7.5
Guidance on number of fatalities as a result of work-related injuries and work-related ill health
Work-related injuries and work-related ill health arise from exposure to dangers at work.
In case of teleworking, injuries and ill health are work-related if the injury or ill health is directly related
to the performance of work rather than the general home environment.

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In case of injuries and ill health that occur while a person is travelling for work purposes, these are work-
related if the employee was performing work activities in the interest of the employer at the time of the
injury or ill health. Incidents which arise during travel, outside of the undertaking’s responsibility (i.e.,
regular commuting to and from work), are subject to the applicable national legislation that regulates their
categorisation as to whether these are work-related or not.
Mental illness is work-related if it has been notified voluntarily by the person concerned and it is supported
by an opinion from a licensed healthcare professional that states that the illness is work-related. Health
problems resulting from smoking, drug and alcohol abuse, physical inactivity, unhealthy diets, and
psychosocial factors unrelated to work are not considered work-related.
The undertaking may present separately the fatalities for work-related injuries and those resulting from
work-related ill health.

Disclosure B 10 – Workforce – Remuneration, collective bargaining, and training

Guidance on remuneration: ratio of the entry level to the minimum wage

Significant proportion of employees refers to the majority of employees in the undertaking, without
considering interns or apprentices.
Entry level wage refers to the full-time wage in the lowest employment category. The wages of interns
and apprentices shall not be considered when identifying the entry level wage of the undertaking.
Minimum wages refer to the minimum compensation for employment per hour, or other unit of time,
allowed under law. Depending on the country, the minimum wage might be set directly by law, or through
collective bargaining agreements. The undertaking shall refer to the applicable one for the country it
reports on (i.e., either set directly by law, or through a collective bargaining agreement).

Entry level wage

𝑅𝑎𝑡𝑖𝑜 =
Minimum wage

Guidance on remuneration: percentage gap between female and male employees

This metric is addressing the principle of gender equality whereby equal pay for equal work is
established.
In order to calculate this metric, all employees shall be included in the calculation. In addition, there
should be two separate average pay calculations for female and male. See the formula below:

(𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 𝑝𝑎𝑦 𝑙𝑒𝑣𝑒𝑙 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 − 𝑎𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 𝑝𝑎𝑦 𝑙𝑒𝑣𝑒𝑙 𝑜𝑓 𝑓𝑒𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠)
𝑥 100
𝐴𝑣𝑒𝑟𝑎𝑔𝑒 𝑔𝑟𝑜𝑠𝑠 ℎ𝑜𝑢𝑟𝑙𝑦 𝑝𝑎𝑦 𝑙𝑒𝑣𝑒𝑙 𝑜𝑓 𝑚𝑎𝑙𝑒 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

Depending on the undertaking’s remuneration policies, the gross pay refers to all of the following:

i. base salary, which is the sum of guaranteed, short-term, and non-variable cash compensation;
ii. benefits in cash, which is the sum of the base salary and cash allowances, bonuses, commissions,
cash profit-sharing, and other forms of variable cash payments;
iii. benefits in kind, such as cars, private health insurance, life insurance, wellness programs; and
iv. direct remuneration, which is the sum of benefits in cash, benefits in kind and total fair value of all
annual long-term incentives.

The gross pay is the sum of all the applicable elements listed above.
The average gross hourly pay is the weekly/annual gross pay divided by the average hours worked per
week/year.
Example:

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Company A has X male employees and Y female employees. Male employees gross hourly pay is Euro
15 and female gross hourly pay is Euro 13.
The average gross hourly pay level of male employees is the sum of all their gross hourly pays divided
by the total number of male employees. The average gross hourly pay level of female employees is the
sum of all their gross hourly pays divided by the total number of female employees.
The percentage pay gap between male and female employees is:
15 − 13
𝑥 100 = 13.3%
15

Guidance on collective bargaining coverage

The employees covered by collective bargaining agreements are those individuals to whom the
undertaking is obliged to apply the agreement. If an employee is covered by more than one collective
bargaining agreement, only needs to be counted once. If none of the employees are covered by a
collective bargaining agreement, the percentage is zero.
The employees covered by collective bargaining agreements are those individuals to whom the
undertaking is obliged to apply an agreement.
The percentage of employees covered by collective bargaining agreements is calculated using the
following formula:
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠 𝑐𝑜𝑣𝑒𝑟𝑒𝑑 𝑏𝑦 𝑐𝑜𝑙𝑙𝑒𝑐𝑡𝑖𝑣𝑒 𝑏𝑎𝑟𝑔𝑎𝑖𝑛𝑖𝑛𝑔 𝑎𝑔𝑟𝑒𝑒𝑚𝑒𝑛𝑡𝑠
𝑥 100
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠
The information required by this Disclosure Requirement may be reported as coverage rates: whether
the collective bargaining coverage is between 0-19%, 20-39%, 40-59%, 60-79% or 80-100%.
This requirement is not aimed at obtaining the percentage of employees represented by a works council
or belonging to trade unions, which can be different. The percentage of employees covered by collective
bargaining agreements can be higher than the percentage of unionised employees when the collective
bargaining agreements apply to both union and non-union members.

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Appendix A: Defined terms

This appendix is integral part of the [draft] Standard.

Aligned with
Set 1 – [THIS
Defined term Definition COLUMN WILL
BE DELETED
IN THE ED]

Actions Actions refer to (i) actions and actions plans Fully aligned
(including transition plans) that are undertaken to
ensure that the undertaking delivers against
targets set and through which the undertaking
seeks to address material impacts, risks and
opportunities; and (ii) decisions to support these
with financial, human or technological resources.

Apprenticeships Apprenticeships are understood as formal Fully aligned

vocational education and training schemes that (a)
combine learning in education or training
institutions with substantial work-based learning in
companies and other workplaces, (b) lead to
nationally recognised qualifications, (c) are based
on an agreement defining the rights and
obligations of the apprentice, the employer and,
where appropriate, the vocational education and
training institution, and (d) with the apprentice
being paid or otherwise compensation for the
work-based component.

Biodiversity The variability among living organisms from all Fully aligned
sources including, inter alia, terrestrial, freshwater,
marine and other aquatic ecosystems and the
ecological complexes of which they are part.

Biodiversity- Biodiversity-sensitive areas include: Natura 2000 Fully aligned

sensitive Area network of protected areas, UNESCO World
Heritage sites and Key Biodiversity Areas
(‘KBAs’), as well as other protected areas, as
referred to in Appendix D of Annex II to
Commission Delegated Regulation (EU)
2021/2139.
All negotiations which take place between an
Collective Fully aligned
employer, a group of employers or one or more
bargaining
employers' organisations, on the one hand, and
one or more trade unions or, in their absence, the
representatives of the workers duly elected and
authorised by them in accordance with national
laws and regulations, on the other, for: i)
determining working conditions and terms of
employment; and/or ii) regulating relations
between employers and workers; and/or
regulating relations between employers or their

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Aligned with
Set 1 – [THIS
Defined term Definition COLUMN WILL
BE DELETED
IN THE ED]
organisations and a workers' organisation or
workers' organisations.
Classified EU classified information as defined in Council Aligned with Set 1,
information Decision of 23 September 2013 on the security but second
rules for protecting EU classified information paragraph added to
(2013/488/EU) or classified by one of the Member further simplify the
States and marked as per Appendix B of that definition
Council decision.
EU classified information means any information
designated by a EU security classification, of
which the unauthorised disclosure could cause
varying degrees of prejudice to the interests of the
European Union or of one or more of the Member
States. Classified information may be classified
according to four levels: top secret, secret,
confidential, restricted (based on the definition
from the Council Decision).

Circular The European circular economy principles are Fully aligned

economy usability; reusability; repairability; disassembly;
principles remanufacturing or refurbishment; recycling;
recirculation by the biological cycle; other potential
optimisation of product and material use.

Climate-change The process of adjustment to actual and expected Fully aligned

adaptation climate change and its impacts.

Climate-related Risks resulting from climate change that can be Fully aligned
physical risks event-driven (acute) or from longer-term shifts
(chronic) in climate patterns. Acute physical risks
arise from particular hazards, especially weather-
related events such as storms, floods, fires or
heatwaves. Chronic physical risks arise from
longer-term changes in the climate, such as
temperature changes, and their effects on rising
sea levels, reduced water availability, biodiversity
loss and changes in land and soil productivity.

Direct GHG Direct GHG emissions from sources that are Fully aligned
emissions owned or controlled by the undertaking.
(Scope 1)

Employee An individual who is in an employment relationship Fully aligned

with the undertaking according to national law or
practice.

Family related Family-related leave include maternity leave, Fully aligned

leave paternity leave, parental leave, and carers’ leave
that is available under national law or collective

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Aligned with
Set 1 – [THIS
Defined term Definition COLUMN WILL
BE DELETED
IN THE ED]
agreements. For the purpose of this Standard,
these concepts are defined as:
(a) maternity leave (also called pregnancy leave):
employment-protected leave of absence for
employed women directly around the time of
childbirth (or, in some countries, adoption);
(b) paternity leave: leave from work for fathers or,
where and in so far as recognised by national law,
for equivalent second parents, on the occasion of
the birth or adoption of a child for the purposes of
providing care;
(c) parental leave: leave from work for parents on
the grounds of the birth or adoption of a child to take
care of that child, as defined by each Member
State;
(d) carers’ leave from work: leave for workers to
provide personal care or support to a relative, or a
person who lives in the same household, in need
of significant care or support for a serious medical
reason, as defined by each Member State.

Grievance Any routinized, state-based or non-state-based, Fully aligned

mechanism judicial or non-judicial processes through which
stakeholders can raise grievances and seek
remedy. Examples of state-based judicial and non-
judicial grievance mechanisms include courts,
labour tribunals, national human rights institutions,
National Contact Points under the OECD
Guidelines for Multinational Enterprises,
ombudsperson offices, consumer protection
agencies, regulatory oversight bodies, and
government-run complaints offices. Non-state-
based grievance mechanisms include those
administered by the undertaking, either alone or
together with stakeholders, such as operational-
level grievance mechanisms and collective
bargaining, including the mechanisms established
by collective bargaining. They also include
mechanisms administered by industry
associations, international organisations, civil
society organisations, or multi-stakeholder groups.
Operational-level grievance mechanisms are
administered by the organisation either alone or in
collaboration with other parties and are directly
accessible by the organisation’s stakeholders.
They allow for grievances to be identified and
addressed early and directly, thereby preventing
both harm and grievances from escalating. They

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also provide important feedback on the
effectiveness of the organisation’s due diligence
from those who are directly affected. According to
UN Guiding Principle 31, effective grievance
mechanisms are legitimate, accessible,
predictable, equitable, transparent, rights-
compatible, and a source of continuous learning. In
addition to these criteria, effective operational-level
grievance mechanisms are also based on
engagement and dialogue. It can be more difficult
for the organisation to assess the effectiveness of
grievance mechanisms that it participates in
compared to those it has established itself.

Greenhouse For the purposes of this Standard, GHGs are the Fully aligned
Gases (GHG) six gases listed in the Kyoto Protocol: carbon
dioxide (CO2); methane (CH4); nitrous oxide
(N2O); Nitrogen trifluoride (NF3);
hydrofluorocarbons (HFCs); perfluorocarbons
(PFCs); and sulphur hexafluoride (SF6).

Governance The governance is the system of rules, practices NEW

and processes by which a company (or aspects of
its activities) are directed and controlled.

Hazardous Waste which displays one or more of the Fully aligned

waste hazardous properties listed in Annex III of
Directive 2008/98/EC of the European Parliament
and of the Council17 on waste.

Incident A legal action or complaint registered with the Fully aligned

undertaking or competent authorities through a
formal process, or an instance of non-compliance
identified by the undertaking through established
procedures. Established procedures to identify
instances of non-compliance can include
management system audits, formal monitoring
programs, or grievance mechanisms

Indirect GHG Indirect emissions are a consequence of the Fully aligned

emissions operations of the undertaking but occur at sources
(Scope 2) owned or controlled by another company. Scope 2
GHG emissions are indirect emissions from the
generation of purchased or acquired electricity,
steam and heat, or cooling consumed by the
undertaking.

Land-use The human use of a specific area for a certain Simplified version
change purpose (such as residential; agriculture; (land cover made
recreation; industrial, etc.). Influenced by land explicit)

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cover (grass, asphalt, trees, bare ground, water,
etc). Land-use change refers to a change in the
use or management of land by humans, which
may lead to a change in land cover.

Nature-oriented A “nature-oriented area” is an area dedicated Not present in Set 1

area primarily to nature preservation or restoration. but requested by an
They can be located on-site and include elements SR TEG member
like roof, façade, water drainages designed, to
promote biodiversity. Nature-oriented areas can
also be located outside the organisation site
provided that the area is owned or (co-)managed
by the organisation and is primarily dedicated to
promoting biodiversity.
(Adapted from: Source: https://eur-
lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:02009R1221-
20230712)

Own Employees who are in an employment relationship Fully aligned

workforce/own with the undertaking (‘employees’) and non-
workers employees who are either individual contractors
supplying labour to the undertaking (‘self-
employed people’) or people provided by
undertakings primarily engaged in ‘employment
activities’ (NACE Code N78).

Pay The ordinary basic or minimum wage or salary Fully aligned

and any other remuneration, whether in cash or in
kind which the worker receives directly or
indirectly (‘complementary or variable
components’), in respect of his/her employment
from his/her employer. ‘Pay level’ means gross
annual pay and the corresponding gross hourly
pay. ‘Median pay level’ means the pay of the
employee that would have half of the employees
earn more and half less than they do

Policy A set or framework of general objectives and Fully aligned

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
implemented through actions or action plans.
For example, undertakings with less resources

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may have few (or no) policies formalised in written
documents, but this does not necessarily mean
they do not have policies.
If the undertaking has not yet formalised a policy
but has implemented actions or defined targets
through which the undertaking seeks to address
material sustainability topics and subtopics, it may
disclose them.

Recordable Work-related injury or ill health that results in any

work-related of the following: death, days away from work,
injury or ill restricted work or transfer to another job, medical
health treatment beyond first aid, or loss of
consciousness; or significant injury or ill health
diagnosed by a physician or other licensed
healthcare professional, even if it does not result
in death, days away from work, restricted work or
job transfer, medical treatment beyond first aid, or
loss of consciousness. Recordable means
diagnosed by a physician or other licensed health
care professionals. Injuries that do not require
medical treatment beyond first aid are generally
not recordable.

Recycling Any recovery operation by which waste materials Fully aligned

are reprocessed into products, materials or
substances whether for the original or other
purposes. It includes the reprocessing of organic
material but does not include energy recovery and
the reprocessing into materials that are to be used
as fuels or for backfilling operations

Renewable Energy from renewable non-fossil sources, Fully aligned

Energy namely wind, solar (solar thermal and solar
photovoltaic) and geothermal energy, ambient
energy, tide, wave and other ocean energy,
hydropower, biomass, landfill gas, sewage
treatment plant gas, and biogas15.

Sealed area A sealed area means any area where the original Not present in Set 1,
soil has been covered (such as roads) making it but requested by an
impermeable. This non-permeability can create SR TEG member
environmental impacts.

15 Article 2(1) Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December
2018 on the promotion of the use of energy from renewable sources Directive (EU) 2018/2001 of the
European Parliament and of the Council of 11 December 2018 on the promotion of the use of energy
from renewable sources (OJ L 328, 21.12.2018, p. 82).

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IN THE ED]
(Source: https://eur-lex.europa.eu/legal-
content/EN/TXT/PDF/?uri=CELEX:02009R1221-
20230712 )

Sensitive Sensitive information as defined in Regulation Aligned with Set 1,

information (EU) 2021/697 of the European Parliament and of but see suggestion
the Council of 29 April 2021 establishing the in order to clarify the
European Defence Fund. definition
SUGGESTION TO ADD the definition provided in
the same Council of 29 April 2021: Sensitive
information means information and data, including
classified information, that is to be protected
from unauthorised access or disclosure because
of obligations laid down in Union or national law or
in order to safeguard the privacy or security of a
natural or legal person.

Targets Measurable, outcome-oriented and time-bound Fully aligned

goals that the SME aims to achieve in relation to
material sustainability topics and subtopics. They
may be set voluntarily by the SME or derive from
legal requirements on the undertaking.

Training Initiatives put in place by the undertaking aimed at Fully aligned

the maintenance and/or improvement of skills and
knowledge of its own workers. It can include
different methodologies, such as on-site training,
and online training.

Value Chain The full range of activities, resources and Aligned – deleted
relationships related to the undertaking’s business ‘ESRS use the term
model and the external environment in which it “value chain” in the
operates. A value chain encompasses the singular, although it
activities, resources and relationships the is recognised that
undertaking uses and relies on to create its undertakings may
products or services from conception to delivery, have multiple value
consumption and end-of- life. Relevant activities, chains’
resources and relationships include: a) those in
the undertaking’s own operations, such as human
resources; b) those along its supply, marketing
and distribution channels, such as materials and
service sourcing and product and service sale and
delivery; and c) the financing, geographical,
geopolitical and regulatory environments in which
the undertaking operates. Value chain includes
actors upstream and downstream from the
undertaking. Actors upstream from the
undertaking (e.g., suppliers) provide products or
services that are used in the development of the
undertaking’s products or services. Entities

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downstream from the undertaking (e.g.,
distributors, customers) receive products or
services from the undertaking.

Wage Gross wage, excluding variable components such Fully aligned

as overtime and incentive pay, and excluding
allowances unless they are guaranteed

Work-life Satisfactory state of equilibrium between an Fully aligned

balance individual’s work and private life. Work-life balance
in a broader sense encompasses not only the
balance between work and private life given family
or care responsibilities, but also time allocation
between time spent at work and in private life
beyond family responsibilities.

Disclaimer: Appendix A – Defined Terms does not include terms or definitions found in the Business
Partners Module.

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Appendix B: List of sustainability matters used for materiality

assessment
This appendix is an integral part of this [draft] Standard. The compilation of sustainability topics and
related sub-topics and sub-sub-topic shall be used as a basis to determine the material matters to be
reported.
Sustainability matters covered in [draft] topical ESRS
Topic Sustainability matter: Sub-topic Sustainability matter: sub-sub topic
Climate − Climate change adaptation
change − Climate change mitigation
− Energy

Pollution − Pollution of air

− Pollution of water
− Pollution of soil
− Pollution of living organisms and
food resources
− Substances of concern
− Substances of very high concern

Water and − Water − Water consumption

marine − Marine resources − Water withdrawals
resources − Water discharges
− Water discharges in the oceans
− Extraction and use of marine resources

Biodiversity − Direct impact drivers of biodiversity − Climate Change

and loss − Land-use change, fresh water-use change
ecosystems and sea-use change
− Direct exploitation
− Invasive alien species
− Pollution
− Others

− Impacts on the state of species − Examples:

− Species population size
− Species global extinction risk
− Impacts on the extent and condition − Examples:
of ecosystems − Land degradation
− Desertification
− Soil sealing
− Impacts and dependencies on
ecosystem services
Circular − Resources inflows, including
economy resource use
− Resource outflows related to
products and services
− Waste

Own − Working conditions − Secure employment

workforce − Working time
− Adequate wages
− Social dialogue
− Freedom of association, the existence of
works councils and the information,

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Sustainability matters covered in [draft] topical ESRS

Topic Sustainability matter: Sub-topic Sustainability matter: sub-sub topic
consultation and participation rights of
workers
− Collective bargaining, including rate of
workers covered by collective agreements
− Work-life balance
− Health and safety

− Equal treatment and opportunities − Gender equality and equal pay for work of
for all equal value
− Training and skills development
− Employment and inclusion of persons with
disabilities
− Measures against violence and harassment
in the workplace
− Diversity

− Other work-related rights − Child labour

− Forced labour
− Adequate housing
− Privacy

Workers in − Working conditions − Secure employment

the value − Working time
chain − Adequate wages
− Social dialogue
− Freedom of association, including the
existence of work councils
− Collective bargaining
− Work-life balance
− Health and safety

− Equal treatment and opportunities − Gender equality and equal pay for work of
for all equal value
− Training and skills development
− The employment and inclusion of persons
with disabilities
− Measures against violence and harassment
in the workplace
− Diversity

− Other work-related rights − Child labour

− Forced labour
− Adequate housing
− Water and sanitation
− Privacy

Affected − Communities’ economic, social and − Adequate housing

communities cultural rights − Adequate food
− Water and sanitation
− Land-related impacts
− Security-related impacts

− Communities’ civil and political rights − Freedom of expression

− Freedom of assembly

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Sustainability matters covered in [draft] topical ESRS

Topic Sustainability matter: Sub-topic Sustainability matter: sub-sub topic
− Impacts on human rights defenders

− Rights of indigenous communities − Free, prior and informed consent

− Self-determination
− Cultural rights

Consumers − Information-related impacts for − Privacy

and end- consumers and/or end-users − Freedom of expression
users − Access to (quality) information

− Personal safety of consumers and/or − Health and safety

end-users − Security of a person
− Protection of children

− Social inclusion of consumers and/or − Non-discrimination

end-users − Access to products and services
− Responsible marketing practices

Business − Corporate culture

conduct − Protection of whistle-blowers
− Animal welfare
− Political engagement
− Management of relationships with
suppliers including payment
practices

− Corruption and bribery − Prevention and detection including training

− Incidents

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