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S2-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities

🗂️ ESRS S2 Workers in the value chain, page 8

  1. The undertaking shall disclose the time-bound and outcome-oriented targets it may have set related to:

(a) reducing negative impacts on value chain workers; and/or

(b) advancing positive impacts on value chain workers; and/or

(c) managing material risks and opportunities related to value chain workers.

  1. The objective of this Disclosure Requirement is to enable an understanding of the extent to which the undertaking is using time-bound and outcome-oriented targets to drive and measure its progress in addressing material negative impacts, and/or advancing positive impacts on value chain workers, and/or in managing material risks and opportunities related to value chain workers.

  2. The summarised description of the targets to manage its material impacts, risks and opportunities related to value chain workers shall contain the information requirements defined in ESRS 2 MDR-T.

  3. The undertaking shall disclose the process for setting the targets, including whether and how the undertaking engaged directly with workers in the value chain, their legitimate representatives, or with credible proxies that have insight into their situation in:

(a) setting any such targets;

(b) tracking the undertaking’s performance against them; and

(c) identifying any lessons or improvements as a result of the undertaking’s performance.

Application Requirements

Section titled “Application Requirements”

AR 45. When disclosing information about targets in accordance with paragraph 39, the undertaking may disclose:

(a) the intended outcomes to be achieved in the lives of value chain workers, being as specific as possible;

(b) the stability of the targets over time in terms of definitions and methodologies to enable comparability over time;

(c) the standards or commitments on which the targets are based (for instance codes of conduct, sourcing policies, global frameworks or industry codes).

AR 46. Targets related to material risks and opportunities may be the same as or distinct from targets related to material impacts. For example, a target to reach living wages for supply chain workers could both reduce impacts on those workers and reduce associated risks in terms of the quality and reliability of supply.

AR 47. The undertaking may also distinguish between short-, medium- and long-term targets covering the same policy commitment. For example, the undertaking may have a longterm target to achieve an 80% reduction in health and safety incidents affecting the workers of a given supplier by 2030 and a near-term target to reduce their overtime hours of delivery drivers by x% while maintaining their income by 2024.

AR 48. When modifying or replacing a target in the reporting period, the undertaking may explain the change by cross-referencing it to significant changes in the business model or to broader changes in the accepted standard or legislation from which the target is derived to provide contextual information, as per ESRS 2 BP-2 Disclosures in relation to specific circumstances.