ESRS E5 Resource utilization and Circular economy
NEW! We have updated our articles on the scales!
Thanks to feedback from auditors and our customers, we have changed some points and added new examples.
We hope this will provide even more clarity.
In the article on examples of environmental assessment you will find exemplary, well-founded assessments.
Scale
Key questions: How serious is the impact (positive/negative) on the respective topic? How strongly are the affected areas influenced?
Consideration of quantities: If the company wishes to take quantities into account, it is advisable to include these in the extent in the form of the intensity of the respective environmental impact. A possible key question is: How high are the corresponding quantities of the environmental impact in relation to the business activity (e.g. quantities produced or net revenue)?
| Negative Impacts |
5 | Critical damage: Extremely serious impacts on the environment |
4 | High harm: Significant Impacts on the environment |
3 | Medium harm: Moderate Impacts on the environment |
2 | Minor damage: Slight Impacts on the environment |
1 | Minor damage: No to barely perceptible Impacts on the environment |
| Positive Impacts |
5 | Maximum environmental benefit: Business model contributes significantly to improving the environment and creates sustainable environmental benefits. |
4 | High environmental benefit: Significant positive impacts, e.g. by conserving resources, reducing CO₂ or promoting ecological cycles |
3 | Moderate impact: Moderate positive effects on the environment or a largely neutral impact with development potential for greater sustainability |
2 | Low environmental benefit: Slight positive effects, but still potential for optimization for sustainable development. |
1 | Hardly any environmental benefits: No to hardly perceptible positive Impacts on the environment. |
Important note when formulating impacts: The mere reduction or avoidance of negative impacts does not constitute a positive impact. Positive impacts must not be actions that merely serve to compensate for a negative effect.
Example: If a company's core business is Recycling Raw materials, this may constitute a positive environmental impact. On the other hand, the installation of a photovoltaic module on a company building is merely an Actions to reduce negative effects and therefore not a positive Impacts in the sense of the sustainability assessment see gross principle.
Possible "scale" indicators
The example indicators serve as a guide for the company-specific adaptation of the scales.
| Example indicators |
E5 |
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Examples expanded and based on OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct, OECD Publishing, Paris, page 43 ff.
Scope
Key question: What is the percentage of Resource inflows/Resource outflows/Waste compared to the total volume?
Note: E1 to E4 assess the scope based on the geographical distribution of Impacts on the environment. However, E5 focuses on resource use and the Circular economy, making this approach to scope less practicable. Therefore, it may be useful to use the relative quantities in relation to the total quantity generated by the business activity as a reference instead.
| Negative/positive Impacts |
5 | e.g. > 80-60% of Resource inflows/Resource outflows/Wastes |
4 | e.g. > 60-80% of Resource inflows/Resource outflows/Wastes |
3 | e.g. > 40-60% of Resource inflows/Resource outflows/Wastes |
2 | e.g. > 20-40% of Resource inflows/Resource outflows/Wastes |
1 | e.g. > 0-20% of Resource inflows/outflows/wastes |
Irreversibility
Key questions: Are renewable or non-renewable resources used? Can the Raw materials be recycled or are they not recyclable?
| Negative/positive Impacts | Negative/positive Impacts |
| E1-E5 | E5 Waste according to EU Waste hierarchy |
5 | Impossible: There is no possibility to completely eliminate the Impacts | Disposal: Any process that is not a Recovery, even if the process has the secondary consequence of recovering Substances or energy (e.g. Landfill, Incineration). |
4 | Severe: There are considerable hurdles to remedying the Impacts or restoring the original state (very long-term and/or very costly in terms of time and financial resources) | Other Recovery: (e.g. energy recovery) Any process that puts Waste to a useful purpose by replacing other materials or preparing it in such a way that it can fulfill a specific function. |
3 | Moderate: Remediation of Impacts is feasible but requires significant efforts to restore the original state (medium-term and/or significant effort in terms of time and financial resources) | Recycling: Any recovery in which waste materials are reprocessed into products, materials or substances, either for the original or other purposes. This includes the reprocessing of organic substances (e.g. composting), but does not include energy recovery and reprocessing into materials used as fuels or for backfilling. |
2 | Minor: Remediation of the Impacts is feasible and requires manageable efforts to restore the original condition (short-term and/or with manageable effort in terms of time and financial resources) | Preparation and Reuse: Any recovery operation of testing, cleaning or repair in which products or components of products that have become Waste are prepared in such a way that they can be Reused without further pre-treatment. |
1 | Minimal: Impacts can be remedied almost effortlessly to restore the original condition (very short term and/or with little effort in terms of time and financial resources) | Waste prevention: Actions taken before a Substance, Material or Product becomes Waste to reduce the following:
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