Mapping of value chain requirements in the ESRS

ESRS requires companies to report material information on their value chain when this is necessary for the users' understanding of the company's material impacts, risks and opportunities as well as in the cases when such information is necessary to meet the qualitative characteristics of the reported information (ESRS 1 par. 65).

To support companies in their preparation of the sustainability statements in accordance with ESRS, EFRAG has prepared a very useful mapping of the disclosure requirements relevant to the value chain information as part of its Value Chain Implementation Guidance.

Note: ESRS include transitional provision related to value chain information which can be be used by the companies during the first three years of their sustainability statements (for more details refer to ESRS 1 par. 132-135).

1?? General disclosure requirements related to the value chain (VC)

?? BP-1: Scope to which VC is included (ESRS 1 par. 64: the reported information should cover VC only in relation to the parts of the VC for which the sustainability matter is assessed as material).

?? SBM-1: Description of main features of upstream and downstream VC including the company’s position in its VC, main VC actors (e.g. such as key suppliers or customers) and their relationship to the company.

?? IRO-1: Process to identify material impacts, risks and opportunities (IROs) across the VC.

?? SBM-3: Description of the material IROs including where in the VC they arise.

?? SBM-2: Information on interests and views of stakeholders and how they inform the company's strategy and business model.

?? BP-2: Additional information on the use of estimates to report metrics where VC information has been obtained from indirect sources (e.g. sector-average data or other proxies).

?? GOV-4: Mapping of the information provided in its sustainability statement about the due diligence process.

?? GOV-5: Description of risk management and internal control system in relation to the sustainability reporting process (including VC reporting).

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2?? Information on policies, actions and targets (PAT) to the extent they cover the value chain

?? Individual disclosure requirements related to policies, actions and targets should include value chain information when their scope covers the company's upstream or downstream value chain including cases where the company's material IROs are linked to people in its value chain (e.g. employees of the suppliers or distributors or communities affected by the suppliers’ operations or by the activities of logistics providers).

3?? Metrics related to own operations where some information need to be collected from the value chain actors

?? E2-4: In case microplastics procured are reported (AR 20).

?? E2-5: Relates to the products/materials and/or substances procured which ends up in products / manufacturing.

?? E5-4: Includes information on supplied material (e.g. their recycled content) but does not expand to suppliers.

?? E5-5: Waste treatment may sometimes require information from supplier who treats waste.

?? E1-5: Information on energy mix from purchased or acquired electricity, heat, steam, or cooling (not included by EFRAG but I have included as this may be relevant).

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4?? Specific quantitative information on value chain

?? E1-6: GHG Emissions arising in the VC.

?? E1-7: GHG removals and storage in the company's VC.

?? S1-14: The number of fatalities as a result of work-related injuries and work-related ill health for VC workers if they are working on the company’s sites (not included by EFRAG but I believe it is relevant as well).?

? To report on the metrics, companies may either collect information directly from the relevant value chain actors or use estimates or proxies or combine both approaches.

?? Entity-specific information should be reported by the company if it assesses that its material IROs in the value chain are not sufficiently covered by the requirements in ESRS.

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5?? Specific qualitative information on value chain

?? E1-1: Transition plan for climate change mitigation (e.g. targets and actions relevant to the VC).

?? E4-1: Description of resilience of the company's strategy and business model in relation to biodiversity and ecosystems (if VC has been considered).

?? E4-4 par. 32(c): ?Disclosure of how the targets relate to the biodiversity and ecosystem impacts, dependencies, risks and opportunities identified in relation to VC.

?? E5-4 par. 30: Description of resource inflows where material that are used in the company's upstream VC.