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S3 - Objective

🗂️ ESRS S3 Affected Communities, page 16

  1. The objective of this Standard is to specify disclosure requirements which will enable users of the sustainability statement to understand material impacts on affected communities connected with the undertaking’s own operations and value chain, including through its products or services, as well as through its business relationships, and its related material risks and opportunities, including:

(a) how the undertaking affects communities, in areas where impacts are most likely to be present and severe, in terms of material positive and negative actual or potential impacts;

(b) any actions taken, and the result of such actions, to prevent, mitigate or remediate actual or potential negative impacts, and to address risks and opportunities;

(c) the nature, type and extent of the undertaking’s material risks and opportunities related to its impacts and dependencies on affected communities, and how the undertaking manages them; and

(d) the financial effects on the undertaking over the short-, medium- and long-term of material risks and opportunities arising from the undertaking’s impacts and dependencies on affected communities.

  1. In order to meet the objective, this Standard requires an explanation of the general approach the undertaking takes to identify and manage any material actual and potential impacts on affected communities in relation to:

(a) communities’ economic, social and cultural rights (for example, adequate housing, adequate food, water and sanitation, land-related and security-related impacts);

(b) communities’ civil and political rights (for example, freedom of expression, freedom of assembly, impacts on human rights defenders); and

(c) particular rights of indigenous peoples (for example, free, prior and informed consent, self-determination, cultural rights).

  1. This Standard also requires an explanation of how such impacts, as well as the undertaking’s dependencies on affected communities, can create material risks or opportunities for the undertaking. For example, negative relationships with affected communities may disrupt the undertaking’s own operations or harm its reputation, while constructive relationships can bring business benefits, such as stable and conflict-free operations and a greater ease of recruiting locally.

Application Requirements

Section titled “Application Requirements”

AR1. The overview of social and human rights matters provided in paragraph 2 is not meant to imply that all of these issues should be disclosed in each Disclosure Requirement in this Standard. Rather, it provides a list of matters that the undertaking shall consider in its materiality assessment (ref. to ESRS 1 chapter 3 Double materiality as the basis for sustainability disclosures and ESRS 2 IRO-1) related to affected communities and, as appropriate, disclose as material impacts, risks and opportunities within the scope of this Standard.

AR 2. In addition to the issues listed in paragraph 2, the undertaking may also consider disclosing information about other issues relevant to a material impact for a shorter period of time, for instance initiatives regarding the impacts on communities related to the undertaking’s operations due to extreme and sudden weather conditions.