Reasons for omissions in ESRS

Companies that prepare their sustainability statement in accordance with ESRS need to report information on all their material sustainability matters as required by the relevant ESRS disclosure requirements or if applicable, provide entity-specific disclosures.

There are however situations when required information doesn’t need to be reported, i.e. it can be omitted. Such situations are also known as “reasons for omissions”.

What are the reasons for omissions in ESRS?

Omissions due to confidentiality constraints

? Disclosure of classified or sensitive information and information on intellectual property, know-how or results of innovation (additional rules apply - see ESRS 1 par. 105 - 108)

Use of this omission needs to be reported as part of the disclosure requirement BP-1 par. 5 d).

The company should make every reasonable effort to ensure that beyond the omission of a specific piece of information due to its secret nature, the overall relevance of the disclosure in question is not impaired (ESRS 1 par. 108).

? Disclosure of information related to impending developments or matters in the course of negotiation may be omitted in exceptional cases (additional rules apply - see par. 19a(3) or 29a(3) of CSRD).?

?This option only exists if the Member State included it in the local legislation when transposing CSRD.

Use of this omission needs to be reported as part of the disclosure requirement BP-1 par. 5 e).

Information is not available?

? Disclosure of information related to policies, actions and targets.?

Where policies, actions and targets do not exist because they have not been adopted, implemented or set, the company must provide the reason for why this is the case and it may provide a time horizon in which it plans to adopt them.

? Disclosure of information on processes for engaging affected stakeholders about impacts and on processes to remediate negative impacts and channels for affected stakeholders to raise concern.

This applies to disclosure requirements of the topical standards related to the own workforce (S1-2, S1-3), workers in the value chain (S2-2, S2-3), affected communities (S3-2, S3-3) and consumers and end-users (S4-2, S4-3).

Where these processes do not exist because the company has not adopted them, the company needs to disclose that this is the case and it may provide a time horizon in which it plans to adopt them. The company is not required to provide reason for not having adopting the processes.

? Disclosure of information on transition plan for climate change mitigation (E1-1).

If the company has not adopted a transition plan for climate change mitigation, it should nevertheless disclose whether it will adopt it in the future and if yes, provide a time horizon.

Information is not material

? Disclosure of information required by the disclosure requirement related to metrics (including its individual data points) does not need to reported if the information is not material (ESRS 1 par. 34).

?If omitted information relates to an EU law data point, the company will indicate that such data point is “Not material” as part of its table of all EU law data points required by IRO-2 par. 56 instead of providing a reference to its sustainability statement.?

For a list of data points derived from other EU legislation refer to ESRS 2 Appendix B.

There is no requirement to provide a list of other metrics (or individual data points) which are not reported because they have been assessed as not-material.

The company does not need to provide any rationale why not reported metrics (or data points) are not material but it must provide an explanation of how material information has been determined including the use of thresholds (see IRO-2 par. 59).

What if information to be reported is not complete or is inaccurate?

?As opposed to GRI Standards, ESRS do not allow omissions of information which is incomplete or inaccurate.

For example, the company might not be able to collect all the necessary information about its upstream and downstream value chain even after making reasonable effort. In that case, the company should estimate all the required information, for example with the use of sector-average data and other proxies (ESRS 1 par. 69).

It is however important to note that all reported information (including estimations) must meet the qualitative characteristics of information (see ESRS 1 Appendix B).

For example, disclosure of financial effects from material opportunities (disclosure requirements E1-9, E2-6, E3-5, E4-5, E5-6) are not required if the disclosure does not meet the qualitative characteristics of information.