ESRS Standard
ESRS Standard
ESRS 2 - General Disclosures
ESRS 2 - General Disclosures
6. the disclosures required by this section should be read in conjunction with the Strategic Business Model (SBM) disclosures required by ESRS 2 and should be provided together with the disclosures required by ESRS 2, with the exception of SBM-3 Material Impacts, Risks and Opportunities and their Interaction with Strategy and Business Model, where the entity has the option to combine the disclosures with the topic-related disclosures.
8. in accordance with paragraph 48 of ESRS 2 SBM-3, the entity shall disclose the following:
(a) whether and to what extent the actual and potential impacts on Affected Communities in accordance with ESRS 2 IRO-1 Description of the Processes for Identifying and Assessing Material Impacts, Risks and Opportunities (i) arise from or are associated with the entity's strategy or business models and (ii) affect and contribute to the alignment of the entity's strategy and business model; and
b) the relationship between the Material risks and Opportunities arising from Impacts and Dependencies associated with Affected Communities and its strategy and Business model.
9. in meeting the requirements of paragraph 48, the company shall disclose whether all Affected Communities that are likely to be affected by the company's material impacts, including impacts related to its own operations and Value chain, including through its products or services, and through its business relationships, are covered by its ESRS 2 disclosures. In addition, the company provides the following information:
(a) a brief description of the types of Affected Communities affected by significant Impacts of its operations or its upstream and downstream Value chain, and whether the following are involved:
i. Communities living or working near the company's operating sites, factories, installations or other physical activities, or communities living further away that are affected by the activities at these sites (e.g. through polluted rivers),
ii. Communities along the company's Value chain (e.g., communities affected by the operation of Supplier facilities or by the activities of logistics or distribution companies),
iii. Communities at one or both ends of the Value chain (e.g. at the site of extraction of metals or minerals or harvesting of Raw materials, or communities near waste management or recycling facilities),
iv. Indigenous peoples' communities,
b) in the case of significant adverse impacts, whether they are i) widespread or systemic in the context of the company's operations or sourcing or other business relationships (for example, marginalized populations may suffer impacts on their health and quality of life in a heavily industrialized area), or ii) related to individual incidents in the context of the company's operations (e.g., a discharge of toxic wastes, a discharge of hazardous substances, a discharge of hazardous substances into the environment, a discharge of hazardous substances into the environment, a discharge of hazardous substances into the environment, or a discharge of hazardous substances into the environment). Discharge of toxic waste affecting a community's access to clean drinking water) or to specific business relationships (e.g. peaceful protest by communities against business activities met with a violent response by the company's security services). This includes consideration of impacts on Affected Communities that may result from the transition to greener and climate-neutral operations. Potential impacts include impacts related to innovation and restructuring, mine closures, increased extraction of minerals needed for the transition to a sustainable economy, and solar panel manufacturing,
(c) in the case of significant positive impacts, a brief description of the activities leading to the positive impacts (e.g., capacity building to support increased and new forms of local livelihoods) and the types of communities that are or may be positively affected; the company may also indicate whether the positive impacts occur in specific countries or regions; and
d) any material risks and opportunities for the company arising from Impacts and Dependencies related to Affected Communities.
10. in describing the main types of communities that are or may be affected by adverse impacts, the company indicates, based on the materiality analysisin ESRS 2 IRO-1, whether and how it has developed an understanding of how affected communities with certain characteristics and communities living in certain environments or engaged in certain activities may be more at risk.
11. the company indicates which of its Material risks and opportunities arising from Impacts and Dependencies related to Affected Communities relate to specific groups of Affected Communities, rather than all Affected Communities.
Application Requirements (AR)
Application Requirements (AR)
AR 5 Impacts on Affected Communities can arise in various ways from the organization's strategy or business model. For example, impacts may be related to the company's value proposition (e.g. building or starting projects with deadlines that do not allow sufficient time for consultation with project-affected groups), its Value chain (e.g. land use in states where ownership is often disputed, where records are unreliable, or where land users such as Indigenous peoples are not recognized), or its cost structure and revenue model (e.g. aggressive tax avoidance strategies, particularly with respect to operations in developing countries).
AR 6. Impacts on Affected Communities that are attributable to the strategy or business model may also pose Material risks to the company. For example, if the company's strategy includes moving into higher-risk geographic areas to explore for certain Raw materials, and if Affected Communities oppose its presence or object to its local practices, this may result in significant and costly delays and affect the company's ability to secure future land concessions or permits. Similarly, if the company's business model relies on intensive Water withdrawal at its Installations, it may lead to boycotts, complaints and lawsuits, compromising access to water for consumption, hygiene and community livelihoods.
AR 7. Examples of specific characteristics of affected communities that the company may consider in its disclosures under paragraph 10 may include affected communities that are physically or economically isolated and particularly vulnerable to introduced diseases or have limited access to social services and are therefore dependent on the infrastructure created by the company. When land farmed by women is acquired by the company and payments are made to male heads of household, women may be further disenfranchised within the community. This may also be due to the community being indigenous and its members seeking to exercise cultural or economic rights over the land owned or used by the company or a company with which it has business relationships, in a context where their rights are not protected by the state. In addition, the company must consider whether different characteristics overlap. For example, characteristics such as ethnicity, socio-economic status, migrant status and gender may pose overlapping risks of harm to certain affected communities or to certain parts of those affected communities, as affected communities are often heterogeneous.
AR 8. With regard to paragraph 11, Material risks could also arise from the company's dependence on affected communities where events with a low probability of occurrence but with significant consequences may have financial effects; this may be the case, for example, if a natural disaster leads to a catastrophic industrial accident involving the company through its operations, causing severe harm to affected communities.
Example (good practice)
Example (good practice)
Examples are provided only as an indication of how a disclosure requirement has been reported by other companies. There is no guarantee of accuracy.
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