ESRS Standard
ESRS Standard
19. The objective of this DR is to enable an understanding of the key elements of the undertaking's general strategy, business model and upstream and downstream value chain that relate to or affect material impacts, risks and opportunities, in order to enable an understanding of its exposure to such material impacts, risks and opportunities and where they originate.
20. The undertaking shall disclose the following information about the key elements of its general strategy and business model that relate to, or affect, the topics associated with its material impacts, risks and opportunities:
(a) a description of its business model, its upstream and downstream value chain and its position in that value chain;
(b) a description of:
i. the significant groups of products and services offered, significant markets or customer groups served, and their relevance in contributing to the undertaking's overall sustainability-related objectives, including significant changes in the reporting period (e.g. new/removed products, services, markets or customer groups);
ii. where applicable and significant, products and services banned in certain markets;
(c) the significant sectors in which it operates, including activities that are internal to the group if those activities are significant or are connected or may be connected to material impacts, risks and opportunities;
(d) where applicable, a statement indicating, together with the related revenues, whether the undertaking is active in:
i. the fossil fuel (coal, oil and gas) sector, including a disaggregation of revenues derived from coal, oil and gas;
ii. chemicals production, i.e. whether its activities fall under Division 20.2 of Annex I to Regulation (EC) No 1893/2006;
iii. the prohibited weapons industry (anti-personnel mines, cluster munitions, chemical weapons or biological weapons);
iv. the cultivation and production of tobacco.
Notes on paragraph 20(d):
On point i. This information supports the information needs of financial market participants subject to Regulation (EU) 2019/2088 because it is derived from an additional indicator related to principal adverse impacts set out by indicator #4 in Table 1 of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosures rules on sustainable investments ('Exposure to companies active in the fossil fuel sector').
On point ii. This information supports the information needs of financial market participants subject to Regulation (EU) 2019/2088 because it is derived from an additional indicator related to principal adverse impacts, as set out by indicator #9 in Table 2 of Annex I of Commission Delegated Regulation (EU) 2022/1288 with regard to disclosures rules on sustainable investments ('Investments in companies producing chemicals').
On point iii. This information supports the information needs of financial market participants subject to Regulation (EU) 2019/2088 because it is derived from an additional indicator related to principal adverse impacts, as set out by indicator #14 in Table 1 of Annex I of Commission Delegated Regulation (EU) 2022/1288, and consistent with Commission Delegated Regulation (EU) 2025/1775 amending Delegated Regulation (EU) 2022/1288 with regard to the definition of prohibited weapons.
On point iv. This information supports the needs of benchmark administrators to disclose ESG factors subject to Regulation (EU) 2020/1818 as set out by paragraph b) of Article 12.1.
Application Requirements (AR)
Application Requirements (AR)
AR 11 for para. 20(c)
Disclosing the significant sectors is relevant for users, as it supports the understanding of material impacts, risks and opportunities to which the undertaking is connected, notably when these are common in a given sector. In addition, this supports the understanding of possible entity-specific information included in the sustainability statement to cover aspects that are either specific to the undertaking or common in a given sector.
AR 12 for para. 20(c)
The sectors in which the undertaking is active are those of its own operations.
AR 13 for para. 20(b)(c)
A sector, a market, and a group of products, services or consumers shall be considered significant if:
(a) it accounts for more than 10 per cent of the undertaking’s revenue; or
(b) it is connected with the undertaking’s actual or potential material impacts.
For significant sectors arising from activities that are internal to the group only the criterion in letter (b) applies.
ESRS 2 General Disclosures does not mandate a specific classification system of business activities. When disclosing its significant sectors, the undertaking may apply one of the following approaches:
(a) the NACE classification system (Nomenclature générale des Activités Economiques dans les Communautés Européennes NACE Rev.2.1);
(b) the reportable segments disclosed in the financial statements in accordance with IFRS 8 Operating segments or local generally accepted accounting principles; or
(c) available classification of best practices or frameworks, such as the IFRS industry-based guidance and GRI Standards defined in ESRS 1 General Requirements, AR 5.
AR 14 for para. 20(d)(i)
The calculation of revenues derived from the fossil fuel sector shall be based on revenues from the exploration, mining, extraction, production, processing, storage, refining or distribution of fossil fuels, including their transportation, storage and trade, as defined in Article 2, point (62), of Regulation (EU) 2018/1999 of the European Parliament and of the Council.
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