Definition of "short, medium and long term" for the purposes of reporting
Definition of time horizons
When preparing its Sustainability statement, the company defines the following time horizons at the end of the reporting period:
(a) Short-term time horizon: the period that the company has used as the reporting period in its financial statements.
b) Medium-term time horizon: The period from the end of the short-term reporting period in accordance with letter a) up to five years.
c) Long-term time horizon: A period of more than five years.
Additional breakdown of the long-term time horizon
The company uses an additional breakdown for the long-term time horizon when Impacts or Actions are expected to occur over a period of more than five years, where this is necessary to provide relevant information to Users of Sustainability statements.
Precedence of other definitions in ESRS
If different definitions are required for medium or long-term time horizons in relation to certain elements of the disclosure in other ESRSs, the definitions in those ESRSs take precedence.
Different definitions due to industry-specific characteristics
There may be circumstances in which the medium or long-term time horizons defined in paragraph 77 do not result in relevant information. This may be the case if the entity uses different definitions for its processes for identifying and managing Material Impacts, Risks and Opportunities or for setting its Actions and Targets. Such circumstances may be due to industry-specific characteristics, such as
Cash flows and business cycles,
The expected duration of capital investments,
The time horizons in which Users of Sustainability statements carry out their assessments,
Or the planning horizons commonly used for decision-making in the company's industry.
In these circumstances, the entity may use a different definition for medium and/or long-term time horizons (see ESRS 2 BP-2 paragraph 9).
Application of the terms "short term", "medium term" and "long term"
The terms 'short-term', 'medium-term' and 'long-term' in ESRS refer to the time horizon that the entity determines in accordance with the provisions of paragraphs 77 to 80.
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