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S3-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities

🗂️ ESRS S3 Affected communities, page 24

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

(a) reducing negative impacts on affected communities; and/or

(b) advancing positive impacts on affected communities; and/or

(c) managing material risks and opportunities related to affected communities.

  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 affected communities, and/or in managing material risks and opportunities related to affected communities.

  2. The summarised description of the targets to manage its material impacts, risks and opportunities related to affected communities 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 affected communities, 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 44. When disclosing information about targets in accordance with paragraph 38, the undertaking may disclose:

(a) the intended outcomes to be achieved in the lives of affected communities, 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 which the targets are based on (for instance codes of conduct, sourcing policies, global frameworks or industry codes).

AR 45. 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 fully restore livelihoods of affected communities following resettlement could both reduce impacts on those communities and reduce associated risks such as community protests.

AR 46. The undertaking may also distinguish between short-, medium- and long-term targets covering the same policy commitment. For example, the undertaking may have as a main objective to employ community members at a local mining site, with the long-term goal of staffing 100% locally by 2025, and with the short-term objective of adding x percent of local employees every year up and until 2025.

AR 47. When modifying or replacing a target in the reporting period, the undertaking may explain the change by linking 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.