2022 EFRAG_Draft - ESRS E2 - Pollution

Briefing Document: Draft ESRS E2 Pollution

Objective

The draft ESRS E2 Pollution Standard aims to establish disclosure requirements that allow stakeholders to understand an organization's impact on pollution concerning air, water, and soil. The standard emphasizes both the material positive and negative impacts of pollution, actions taken to mitigate risks, and the organization's capacity to adapt its strategies in alignment with sustainable economic practices. The objective includes:

1. Understanding actual and potential pollution impacts.
2. Actions undertaken to mitigate negative impacts.
3. Organizational plans for transitioning to a sustainable economy.
4. Identifying material risks and opportunities related to pollution.
5. Assessing financial effects stemming from pollution-related impacts.

Interaction with Other ESRS

The pollution topic is interconnected with various other environmental topics, including climate change, water resources, biodiversity, and circular economy practices. Other relevant standards include:

• ESRS E1 (Climate Change): Addresses emissions of greenhouse gases linked to air pollution.
• ESRS E3 (Water and Marine Resources): Focuses on water consumption and pollution.
• ESRS E4 (Biodiversity and Ecosystems): Considers pollution's impact on biodiversity loss.
• ESRS E5 (Resource Use and Circular Economy): Discusses practices to minimize waste and pollution.

Disclosure Requirements

The draft outlines several key disclosure requirements, focusing on the identification, management, and reporting of pollution-related activities.

General Disclosures

1. Impact, Risk, and Opportunity Management: Organizations must describe their methodology for identifying pollution-related impacts, risks, and opportunities, including stakeholder consultations.

2. Policy Disclosure (E2-1): Undertakings must disclose their policies addressing pollution management, including actions to mitigate negative impacts, minimize harmful substances, and manage emergencies.

3. Actions and Resources (E2-2): Organizations are required to disclose specific actions taken to address pollution, including resource allocation for these initiatives, such as investments in technology or R&D.

Metrics and Targets

1. Targets Related to Pollution (E2-3): Organizations must disclose pollution targets, outlining their relation to emissions and the steps taken to meet them.

2. Pollution of Air, Water, and Soil (E2-4): Organizations should disclose specific pollutants generated during operations, emphasizing emissions to air, water, and soil.

3. Substances of Concern (E2-5): Detailed information on the use and distribution of harmful substances must be reported, focusing on the impacts on health and the environment.

4. Financial Effects of Pollution (E2-6): Organizations should disclose potential financial impacts arising from pollution-related risks and opportunities, including quantification and contextual information regarding financial performance.

Defined Terms

The standard includes a comprehensive glossary of terms relevant to pollution disclosures, including definitions for pollutants, ecological thresholds, and best available techniques (BAT).

Application Requirements

The standard outlines specific application requirements to guide organizations in the compliance and reporting processes. Key points include:

• Conducting a materiality assessment based on the LEAP approach: locate, evaluate, assess, and report pollution-related impacts.
• Comprehensive policy descriptions that integrate pollution management within broader sustainability strategies.
• Contextual information regarding targets, including ecological thresholds and compliance with local regulations.

Conclusion

The draft ESRS E2 Pollution Standard provides a structured framework for organizations to disclose their pollution-related activities comprehensively. By establishing clear requirements for identifying, managing, and reporting pollution impacts, this standard aims to promote transparency and accountability in environmental sustainability practices. Organizations are encouraged to align their policies and actions with the EU's objectives for a pollution-free environment, thereby contributing to broader efforts for sustainable development and ecological preservation.