Commission Delegated Regulation (EU) 2023/2772 of 31 July 2023 supplementing Directive 2013/34/EU of the European Parliament and of the Council as regards sustainability reporting standards

39.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 progress in addressing material negative impacts, and/or advancing positive impacts on consumers and/or end-users, and/or in managing material risks and opportunities related to consumers and/or end-users .

40.The summarised description of the targets to manage its material impacts, risks and opportunities related to consumers and/or end-users shall contain the information requirements defined in ESRS 2 MDR-T.

41.The undertaking shall disclose the process for setting the targets, including whether and how the undertaking engaged directly with consumers and/or end-users, 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, if any, lessons or improvements as a result of the undertaking’s performance.

Appendix A

This appendix is an integral part of the ESRS S4 Consumers and end-users. It supports the application of the requirements set out in this standard and has the same authority as the other parts of the standard.

Objective

AR 1.The undertaking may highlight special issues relevant to a material impact for a shorter period of time, for instance initiatives regarding the health and safety of consumers and/or end-users in relation to contamination of a product or severe breach of privacy due to a massive data leak.

AR 2.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 consumers and/or end-users and, subsequently, disclose as material impacts, risks and opportunities within the scope of this Standard.

ESRS 2 General disclosures

Strategy

AR 3.ESRS 2 SBM-2 requires the undertaking to provide an understanding of if and how it considers whether its strategy and business model play a role in creating, exacerbating or (conversely) mitigating significant material impacts on consumers and/or end-users, and whether and how the business model and strategy are adapted to address such material impacts.

AR 4.While consumers and/or end-users may not be engaging with the undertaking at the level of its strategy or business model, their views can inform the undertaking’s assessment of its strategy and business model. The undertaking may disclose the views of the (actual or potential) materially affected consumers and/or end-users’ legitimate representatives or those of credible proxies that have insight into their situation.

AR 5.Impacts on consumers and/or end-users can originate in the undertaking’s business model or strategy in a number of different ways. For example, impacts may relate to the undertaking’s value proposition (for example, providing online platforms with potential for online and offline harm), its value chain (for example, speed in developing products or services, or delivering projects, with risks to health and safety), or its cost structure and the revenue model (for example, sales-maximising incentives that put consumers at risk).

AR 6.Impacts on consumers and/or end-users that originate in the strategy or business model can also bring material risks to the undertaking. For example, if the undertaking’s business model is premised on incentivising its sales force to sell high volumes of a product or service (for example, credit cards or pain medicine) at speed, and this results in large- scale harm to consumers, the undertaking may face lawsuits and reputational damage affecting its future business and credibility.

AR 7.Examples of particular characteristics of consumers and/or end-users that may be considered by the undertaking when responding to paragraph 11 include young consumers and/or end-users who may be more susceptible to impacts on their physical and mental development, or who lack financial literacy and may be more susceptible to exploitative sales or marketing practices. They may also include women in a context where women are routinely discriminated against in their access to particular services or in the marketing of particular products.

AR 8.With regard to paragraph 12, the risks could arise because of the undertaking’s dependency on consumers and/or end-users where low likelihood but high impact events may trigger financial effects, for example, where a global pandemic leads to severe impacts on certain consumers’ livelihoods resulting in major changes in patterns of consumption.

Impact, risk and opportunity management

AR 9.The description shall include the key information necessary to ensure a faithful representation of the policies in relation to consumers and end-users, and therefore, the undertaking shall consider explanations of significant changes to the policies adopted during the reporting year (for example, new expectations for business customers, new or additional approaches to due diligence and remedy).

AR 10.The policy may take the form of a stand-alone policy regarding consumers and/or end-users or be included in a broader document such as a code of ethics or a general sustainability policy that has already been disclosed by the undertaking as part of another ESRS. In those cases, the undertaking shall provide an accurate cross-reference to identify the aspects of the policy that satisfy the requirements of this Disclosure Requirement.

AR 11.In disclosing its alignment of its policies with the UN Guiding Principles on Business and Human Rights, the undertaking shall consider that the Guiding Principles refer to the International Bill of Human Rights, which consists of the Universal Declaration of Human Rights and the two Covenants that implement it, and may disclose its alignment with these instruments.

AR 12.When disclosing how external facing policies are embedded, the undertaking may, for example, consider internal-facing sales and distribution policies and alignment with other policies relevant to consumers and/or end-users. The undertaking shall also consider its policies for safeguarding the veracity and usefulness of information provided to potential and actual consumers and/or end-users, both before and after sale.

AR 13.The undertaking may provide an illustration of the types of communication of its policies to those individuals, group of individuals or entities for whom they are relevant, either because they are expected to implement them (for example, the undertaking’s employees, contractors and suppliers), or because they have a direct interest in their implementation (for example, own workers, investors). It may disclose communication tools and channels (for example, flyers, newsletters, dedicated websites, social media, face to face interactions, workers’ representatives), aimed at ensuring that the policy is accessible and that different audiences understand its implications. The undertaking may also explain how it identifies and removes potential barriers for dissemination, such as through translation into relevant languages or the use of graphic depictions.

AR 14. Credible proxies who have knowledge of the interests, experiences or perspectives of consumers and end-users could include national consumer protection bodies for some consumers.

AR 15.When describing which function or role has operational responsibility for such engagement and/or ultimate accountability, the undertaking may disclose whether this is a dedicated role or function or part of a broader role or function, and whether any capacity building activities have been offered to support the staff to undertake engagement. If it cannot identify such a position or function, it may state that this is the case. This disclosure could also be fulfilled by making reference to information disclosed according to ESRS 2 GOV-1 The role of the administrative, management and supervisory bodies.

AR 16.When preparing the disclosures described in paragraph 20 b) and c), the following illustrations may be considered:

(a) for stage(s) at which engagement occurs, examples could be in determining mitigation approaches or in evaluating their effectiveness;

(b) for type of engagement, these could be participation, consultation and/or information;

(c) for the frequency of the engagement, information may be provided on whether engagement occurs on a regular basis, at certain points in a project or business process, as well as whether it occurs in response to legal requirements and/or in response to stakeholder requests and whether the result of the engagement is being integrated into the undertaking's decision-making processes; and

(d) for the role with operational responsibility, whether the undertaking requires relevant staff to have certain skills, or whether it provides training or capacity building to relevant staff to undertake engagement.

AR 17.To illustrate how the perspectives of consumers and/or end-users have informed specific decisions or activities of the undertaking, the undertaking may provide examples from the current reporting period.

AR 18.In fulfilling the requirements set out by the disclosure criteria of ESRS S4-3, the undertaking may be guided by the content of the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises focused on remediation and grievance mechanisms.

AR 19.Channels for raising concerns or needs, include grievance mechanisms, hotlines, dialogue processes or other means through which consumers and/or end-users or their legitimate representatives can raise concerns about impacts or explain needs that they would like the undertaking to address. This could include channels provided by the undertaking directly and is to be disclosed in addition to any other mechanisms the undertaking may use to gain insight into the management of impacts on consumers and/or end-users, such as compliance audits. Where the undertaking is relying solely on information about the existence of such channels provided by its business relationships to answer this requirement, it may state that.

AR 20.To provide greater insight into the information covered in ESRS S4-3, the undertaking may provide insight into whether and how consumers and/or end-users that may be affected are able to access channels at the level of the undertaking they are affected by, in relation to each material impact.

AR 21.Third party mechanisms could include those operated by the government, NGOs, industry associations and other collaborative initiatives. With regard to the scope of these mechanisms, the undertaking may disclose whether these are accessible to all consumers and/or end-users who may be potentially or actually materially impacted by the undertaking, or individuals or organisations acting on their behalf or who are otherwise in a position to be aware of negative impacts, and through which consumers and/or end-users (or individuals or organisations acting on their behalf or who are otherwise in a position to be aware of negative impacts), can raise complaints or concerns related to the undertaking’s own activities.

AR 22.In relation to the protection of individuals that use the mechanisms against the retaliation, the undertaking may describe whether it treats grievances confidentially and with respect to the rights of privacy and data protection; and whether they allow for consumer and/or end-users to use them anonymously (for example, through representation by a third party).

AR 23.In disclosing whether and how the undertaking knows that consumers and/or end-users are aware of and trust any of these channels, the undertaking may provide relevant and reliable data about the effectiveness of these channels from the perspective of consumers and/or end-users themselves. Examples of sources of information are surveys of consumers and/or end-users that have used such channels and their levels of satisfaction with the process and outcomes. To illustrate the usage level of such channels, the undertaking may disclose the number of complaints received from consumers and/or end-users during the reporting period.

AR 24.In describing the effectiveness of channels for consumers and/or end-users to raise concerns, the undertaking may be guided by the following questions, based on the ‘effectiveness criteria for nonjudicial grievance mechanisms’, as laid out in the UN Guiding Principles on Business and Human Rights. The below considerations may be applied on an individual channel basis or for the collective system of channels:

(a) do the channels hold legitimacy by providing appropriate accountability for their fair conduct and building stakeholder trust?

(b) are the channels known and accessible to stakeholders?

(c) do the channels have known procedures, set timeframes and clarity on the processes?

(d) do the channels ensure reasonable access to sources of information, advice and expertise?

(e) do the channels offer transparency by providing sufficient information both to complainants and where applicable, to meet any public interest at stake?

(f) do the outcomes achieved from the channels accord with internationally recognised human rights?

(g) does the undertaking identify insights from the channels that support continuous learning in both improving the channels and preventing future impacts?

(h) does the undertaking focus on dialogue with complainants as the means to reach agreed solutions, rather than seeking to unilaterally determine the outcome?

For more information, see Principle 31 of the UN Guiding Principles on Business and Human Rights.

AR 25.It may take time to understand negative impacts and how the undertaking may be involved with them through its downstream value chain, as well as to identify appropriate responses and put them into practice). Therefore, the undertaking shall consider:

(a) Its general and specific approaches to addressing material negative impacts;

(b) its initiatives aimed at contributing to additional material positive impacts;

(c) how far it has progressed in its efforts during the reporting period; and

(d) its aims for continued improvement.

AR 26.Appropriate action can vary according to whether the undertaking causes or contributes to a material impact, or whether the material impact is directly linked to its own operations, products or services through a business relationship.

AR 27.Given that material negative impacts affecting consumers and/or end-users that have occurred during the reporting period may also be linked to entities or operations outside its direct control, the undertaking may disclose whether and how it seeks to use leverage with relevant business relationships to manage those impacts. This may include using commercial leverage (for example, enforcing contractual requirements with business relationships or implementing incentives), other forms of leverage within the relationship (such as providing training or capacity-building on proper product use or sale practices to business relationships) or collaborative leverage with peers or other actors (such as initiatives aimed at responsible marketing or product safety).

AR 28.When the undertaking discloses its participation in an industry or multi-stakeholder initiative as part of its actions to address material negative impacts, the undertaking may disclose how the initiative, and its own involvement, is aiming to address the material impact concerned. It may disclose under ESRS S4-5 the relevant targets set by the initiative and progress towards them.

AR 29.When disclosing whether and how it considers actual and potential impacts on consumers and/or end-users in decisions to terminate business relationships and whether and how it seeks to address any negative impacts that may result from termination, the undertaking may include examples.

AR 30.In disclosing how it tracks the effectiveness of actions to manage material impacts during the reporting period, the undertaking may disclose any lessons learned from the previous and current reporting periods.

AR 31.Processes used to track the effectiveness of actions can include internal or external auditing or verification, court proceedings and/or related court decisions, impact assessments, measurement systems, stakeholder feedback, grievance mechanisms, external performance ratings, and benchmarking.

AR 32.Reporting on effectiveness is aimed at enabling the understanding of the links between actions taken by the undertaking and the effective management of impacts.

AR 33.With regard to initiatives or processes the undertaking has in place that are based on affected consumers and/or end-users’ needs and their level of implementation, the undertaking may disclose:

(a) information about whether and how consumers and/or end-users and legitimate representatives or their credible proxies play a role in decisions regarding the design and implementation of these programmes or processes; and

(b) information about the intended or achieved positive outcomes for consumers and/or end- users of these programmes or processes.

AR 34.The undertaking may disclose whether any initiatives or processes whose primary aim is to deliver positive impacts for consumers and/or end-users are designed to also support the achievement of one or more of the UN Sustainable Development Goals (SDGs). For example, through a commitment to advance UN SDG 3 to ‘ensure healthy lives and promote well-being for all at all ages’ the undertaking may be actively working to make its products less addictive and harmful to physical and psychological health.

AR 35. When disclosing the intended positive outcomes of the undertaking's actions for consumers and/or end-users, a distinction is to be made between evidence of certain activities having occurred (for example, that x number of consumers have received information about healthy eating habits) from evidence of actual outcomes for consumers and/or end-users (for example, that x number of consumers have adopted healthier eating habits).

AR 36.When disclosing whether initiatives or processes also play a role in mitigating material negative impacts, the undertaking may, for example, consider programmes that aim to support heightened awareness of the risk of online scams, leading to a reduction in the number of cases of end-users experiencing breaches of data privacy.

AR 37.When disclosing the material risks and opportunities related to the undertaking’s impacts or dependencies on consumers and/or end-users, the undertaking may consider the following:

(a) risks related to the undertaking’s impacts on consumers and/or end-users may include reputational or legal exposure where poorly designed or defective products result in injuries or deaths;

(b) risks related to the undertaking’s dependencies on consumers and/or end-users may include the loss of business continuity where an economic crisis makes consumers unable to afford certain products or services;

(c) opportunities related to the undertaking’s impacts on consumers and/or end- users may include market differentiation and greater customer appeal from offering safe products or privacy-respecting services; and

(d) opportunities related to the undertaking’s dependencies on consumers and/or end-users may include the achievement of a loyal future consumer base by ensuring, for example, that LGBTQI people are respected and that the undertaking’s selling practices do not exclude such people from the products or services it offers.

AR 38.When disclosing whether dependencies turn into risks, the undertaking shall consider external developments.

AR 39.When disclosing policies, action and resources and targets related to the management of material risks and opportunities, in cases where risks and opportunities arise from a material impact, the undertaking may cross-reference its disclosures on policies, action and resources and targets in relation to that impact.

AR 40.The undertaking shall consider the extent to which its processes to manage material risks related to consumers and/or end-users are integrated into its existing risk management processes and how.

AR 41.When disclosing the resources allocated to the management of material impacts, the undertaking may disclose which internal functions are involved in managing the impacts and what types of action they take to address negative and advance positive impacts.

Metrics and targets

AR 42.When disclosing targets in relation to consumers and/or end-users, the undertaking may disclose:

(a) the intended outcomes to be achieved in the lives of consumers and/or end-users, being as specific as possible;

(b) their stability over time in terms of definitions and methodologies to enable comparability; and/or

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

AR 43. Targets related to material risks and opportunities may be the same as or distinct from targets tied to material impacts. For example, a target to ensure equal access to finance for underserved consumers could both reduce discrimination impacts on those consumers and enlarge the undertaking’s pool of customers.

AR 44.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 make its online services accessible to people with disabilities, with the long-term goal of having adapted 100% of its online services by 2025, and with the short-term objective of adding x number of accessible features every year up and until 2025.

AR 45.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.

ESRS G1

BUSINESS CONDUCT

Objective

1.The objective of this Standard is to specify disclosure requirements which will enable users of the undertaking’s sustainability statements to understand the undertaking’s strategy and approach, processes and procedures as well as its performance in respect of business conduct.

2.This Standard focusses on the following matters, collectively referred to in this Standard as ‘business conduct or business conduct matters’:

(a) business ethics and corporate culture, including anti-corruption and anti-bribery, the protection of whistleblowers, and animal welfare;

(b) the management of relationships with suppliers, including payment practices, especially with regard to late payment to small and medium-sized undertakings.

(c) activities and commitments of the undertaking related to exerting its political influence, including its lobbying activities;

Interaction with other ESRS

3.The content of this Standard on general disclosures as well as impact, risk and opportunity management and metrics and targets shall be read in conjunction respectively with ESRS 1 General principles and ESRS 2 General requirements.

Disclosure Requirements

4.The requirements of this section should be read in conjunction with and reported alongside the disclosures required by ESRS 2 on Governance (GOV), Strategy (SBM) and Management of impacts, risks and opportunities (IRO).

5.When disclosing information about the role of the administrative, management and supervisory bodies, the undertaking shall cover the following aspects:

(a) the role of the administrative, management and supervisory bodies related to business conduct; and

(b) the expertise of the administrative, management and supervisory bodies on business conduct matters.

6.When describing the process to identify material impacts, risks and opportunities in relation to business conduct matters, the undertaking shall disclose all relevant criteria used in the process, including location, activity, sector and the structure of the transaction.

7.The undertaking shall disclose its policies with respect to business conduct matters and how it fosters its corporate culture.

8.The objective of this Disclosure Requirement is to enable an understanding of the extent to which the undertaking has policies that address the identification, assessment, management and/or remediation of its material impacts, risks and opportunities related to business conduct matters. It also aims to provide an understanding of the undertaking’s approach to corporate culture.

9.The disclosures required under paragraph 7 shall include how the undertaking establishes, develops, promotes and evaluates its corporate culture.

10.The disclosures in paragraph 7 shall cover the following aspects related to the undertaking’s policies on business conduct matters:

(a) a description of the mechanisms for identifying, reporting and investigating concerns about unlawful behaviour or behaviour in contradiction of its code of conduct or similar internal rules; and whether it accommodates reporting from internal and/or external stakeholders;

(b) where the undertaking has no policies on anti-corruption or anti-bribery consistent with the United Nations Convention against Corruption (¹²⁰), it shall state this and whether it has plans to implement them and the timetable for implementation;

(c) how the undertaking protects whistleblowers, including: i. details on the establishment of internal whistleblower reporting channels, including whether the undertaking provides for information and training to its own workers and information about the designation and training of staff receiving reports; and ii. measures to protect against retaliation its own workers who are whistleblowers in accordance with the applicable law transposing Directive (EU) 2019/1937 of the European Parliament and of the Council (¹²¹);

(d) where the undertaking has no policies on the protection of whistle-blowers (¹²²), it shall state this and whether it has plans to implement them and the timetable for implementation;

(e) beyond the procedures to follow-up on reports by whistleblowers in accordance with the applicable law transposing Directive (EU) 2019/1937, whether the undertaking has procedures to investigate business conduct incidents, including incidents of corruption and bribery, promptly, independently and objectively;

(f) where applicable, whether the undertaking has in place policies with respect to animal welfare;

(g) the undertaking’s policy for training within the organisation on business conduct, including target audience, frequency and depth of coverage; and

(h) the functions within the undertaking that are most at risk in respect of corruption and bribery.

11.Undertakings that are subject to legal requirements under national law transposing Directive (EU) 2019/1937, or to equivalent legal requirements with regard to the protection of whistle-blowers, may comply with the disclosure specified in paragraph 10 (d) by stating that they are subject to those legal requirements.

12.The undertaking shall provide information about the management of its relationships with its suppliers and its impacts on its supply chain.

13.The objective of this Disclosure Requirement is to provide an understanding of the undertaking’s management of its procurement process including fair behaviour with suppliers.

14.The undertaking shall provide a description of its policy to prevent late payments, specifically to SMEs.

15.The disclosure required under paragraph 12 shall include the following information:

(a) the undertaking’s approach to its relationships with its suppliers, taking account of risks to the undertaking related to its supply chain and of impacts on sustainability matters; and

(b) whether and how it takes into account social and environmental criteria for the selection of its suppliers.

16.The undertaking shall provide information about its system to prevent and detect, investigate, and respond to allegations or incidents relating to corruption and bribery including the related training.

17.The objective of this Disclosure Requirement is to provide transparency on the key procedures of the undertaking to prevent, detect, and address allegations about corruption and bribery. This includes the training provided to own workers and/or information provided internally or to suppliers.

18.The disclosure required under paragraph 16 shall include the following information:

(a) a description of the procedures in place to prevent, detect, and address allegations or incidents of corruption and bribery;

(b) whether the investigators or investigating committee are separate from the chain of management involved in the matter; and

(c) the process, if any, to report outcomes to the administrative, management and supervisory bodies.

19.Where the undertaking has no such procedures in place, it shall disclose this fact and, where applicable, its plans to adopt them.

20.The disclosures required by paragraph 16 shall include information about how the undertaking communicates its policies to those for whom they are relevant to ensure that the policy is accessible and that they understand its implications.

21.The disclosure required by paragraph 16 shall include information about the following with respect to training:

(a) the nature, scope and depth of anti-corruption and anti-bribery training programmes offered or required by the undertaking;

(b) the percentage of functions-at-risk covered by training programmes; and

(c) the extent to which training is given to members of the administrative, management and supervisory bodies.

22.The undertaking shall provide information on incidents of corruption or bribery during the reporting period.

23.The objective of this Disclosure Requirement is to provide transparency on the incidents relating to corruption or bribery during the reporting period and the related outcomes.

24.The undertaking shall disclose:

(a) the number of convictions and the amount of fines for violation of anti-corruption and anti- bribery laws (¹²³); and

(b) any actions taken to address breaches in procedures and standards of anti-corruption and anti-bribery (¹²⁴).

25.The undertaking may disclose:

(a) the total number and nature of confirmed incidents of corruption or bribery;

(b) the number of confirmed incidents in which own workers were dismissed or disciplined for corruption or bribery-related incidents;

(c) the number of confirmed incidents relating to contracts with business partners that were terminated or not renewed due to violations related to corruption or bribery; and

(d) details of public legal cases regarding corruption or bribery brought against the undertaking and its own workers during the reporting period and the outcomes of such cases. This includes cases that were initiated in previous years where the outcome was only established in the current reporting period.

26.The disclosures required shall include incidents involving actors in its value chain only where the undertaking or its employees are directly involved.

27.The undertaking shall provide information on the activities and commitments related to exerting its political influence, including its lobbying activities related to its material impacts, risks and opportunities.

28.The objective of this Disclosure Requirement is to provide transparency on the undertaking’s activities and commitments related to exerting its political influence with political contributions, including the types and purpose of lobbying activities.

29.The disclosure required by paragraph 27 shall include:

(a) if applicable, the representative(s) responsible in the administrative, management and supervisory bodies for the oversight of these activities;

(b) for financial or in-kind political contributions: i. the total monetary value of financial and in-kind political contributions made directly and indirectly by the undertaking aggregated by country or geographical area where relevant, as well as type of recipient/beneficiary; and ii. where appropriate, how the monetary value of in-kind contributions is estimated.

(c) the main topics covered by its lobbying activities and the undertaking’s main positions on these in brief. This shall include explanations on how this interacts with its material impacts, risks and opportunities identified in its materiality assessment per ESRS 2; and

(d) if the undertaking is registered in the EU Transparency Register or in an equivalent transparency register in a Member State, the name of any such register and its identification number in the register.

30.The disclosure shall also include information about the appointment of any members of the administrative, management and supervisory bodies who held a comparable position in public administration (including regulators) in the 2 years preceding such appointment in the current reporting period.

31.The undertaking shall provide information on its payment practices, especially with respect to late payments to small and medium enterprises (SMEs).

32.The objective of this Disclosure Requirement is to provide insights on the contractual payment terms and on its performance with regard to payment, especially as to how these impact SMEs and specifically with respect to late payments to SMEs.

33.The disclosure under paragraph 31 shall include:

(a) the average time the undertaking takes to pay an invoice from the date when the contractual or statutory term of payment starts to be calculated, in number of days;

(b) a description of the undertaking’s standard payment terms in number of days by main category of suppliers and the percentage of its payments aligned with these standard terms;

(c) the number of legal proceedings currently outstanding for late payments; and

(d) complementary information necessary to provide sufficient context. If the undertaking has used representative sampling to calculate the information required under point (a), it shall state that fact and briefly describe the methodology used.

Appendix A

This appendix is an integral part of the ESRS G1 Business conduct. It supports the application of the disclosure requirements set out in this standard and has the same authority as the other parts of the Standard.

Impact, risk and opportunity management

Disclosure Requirement G1-1 – Business conduct policies and corporate culture

AR 1.The undertaking may consider the following aspects when determining its disclosure under paragraph 7:

(a) the aspects of corporate culture that are taken into consideration and discussed by the administrative, management and supervisory bodies and with which frequency;

(b) the principal themes that are promoted and communicated as part of the corporate culture;

(c) how the members of the undertaking’s administrative, management and supervisory bodies provide direction to promote a corporate culture; and

(d) specific incentives or tools for its own workers to foster and encourage its corporate culture.

Disclosure Requirement G1-2 – Management of relationships with suppliers

AR 2.For purposes of this standard, management of relationships with the undertaking’s suppliers may include the following:

(a) how the undertaking’s practices, including activities to avoid or minimise the impacts of disruptions to its supply chain, support its strategy and risk management;

(b) training of the undertaking’s procurement/supply chain workforce on engagement and dialogue with suppliers as well as incentives of its procurement workforce including whether such incentives refer to price, quality or sustainability factors;

(c) the screening and evaluation of social and environmental performance of suppliers;

(d) the inclusion of locally based suppliers in its supply chain and/or suppliers with certification;

(e) how the undertaking’s practices deal with vulnerable suppliers;

(f) the undertaking’s targets and actions with regard to communication and management of relationships with suppliers; and

(g) how the outcomes of these practices are evaluated, including supplier visits, audits or surveys.

AR 3.'Vulnerable suppliers’ includes suppliers that are exposed to significant economic, environmental and/or social risks.

Disclosure Requirement G1-3 – Prevention and detection of corruption and bribery

AR 4.‘Functions-at-risk’ means those functions deemed to be at risk of corruption and bribery as a result of its tasks and responsibilities.

AR 5.Disclosures may include details about the risk assessments and/or mapping, as well as monitoring programmes and/or internal control procedures performed by the undertaking to detect corruption and bribery.

AR 6.The undertaking’s policies on corruption and bribery may be relevant to specific groups of people, either because they are expected to implement them (for example, the undertaking’s employees, contractors and suppliers), or because they have a direct interest in their implementation (for example, value chain workers, investors). The undertaking may disclose the communication tools and channels (e.g., flyers, newsletters, dedicated websites, social media, face to face interactions, unions and/or workers representatives) to communicate policies to such groups. This may also include the identification and/or removal of potential barriers to dissemination, such as through translation into relevant languages or the use of graphic depictions.

AR 7.The undertaking may disclose an analysis of its training activities by, for example, region of training or category of own workforce where its programmes differ significantly based on such factors and such information would be useful to users.

AR 8.The undertaking may present the required information about training using the following table:

Anti-corruption and bribery training illustrative example

During the 20XY financial year ABC provided training to its at-risk own workers in terms of its policy (see note x). For those at-risk functions the training is mandatory, but ABC also made available voluntary training for other own workers. Details of its training during the year is as follows:

	At-risk functions	Managers	AMSB (1)	Other own workers
Training coverage
Total	20 000	200	16	70 000
Total receiving training	19 500	150	8	5 000
Delivery method and duration
Classroom training	5 hours
Computer-based training	1 hour	2 hours	1 hour
Voluntary computer-based training				1 hour
Frequency
How often training is required	Annually	Annually	Bi-annually	-
Topics covered
Definition of corruption	X	X	X	X
Policy	X	X	X	X
Procedures on suspicion/detection	X	X
Etc.	X
(1) Administrative, management and supervisory bodies.

Metrics and targets

Disclosure Requirement G1-5 – Political influence and lobbying activities

AR 9.For purposes of this Standard ‘political contribution’ means financial or in-kind support provided directly to political parties, their elected representatives or persons seeking political office. Financial contributions can include donations, loans, sponsorships, advance payments for services, or the purchase of tickets for fundraising events and other similar practices. In-kind contributions can include advertising, use of facilities, design and printing, donation of equipment, provision of board membership, employment or consultancy work for elected politicians or candidates for office.

AR 10.‘Indirect political contribution’ refers to those political contributions made through an intermediary organisation such as a lobbyist or charity, or support given to an organisation such as a think tank or trade association linked to or supporting particular political parties or causes.

AR 11.When determining ‘comparable position’ in this standard, the undertaking shall consider various factors, including level of responsibility and scope of activities undertaken.

AR 12.The undertaking may provide the following information on its financial or in-kind contributions with regard to its lobbying expenses:

(a) the total monetary amount of such internal and external expenses; and

(b) the total amount paid for membership to lobbying associations.

AR 13.If the undertaking is legally obliged to be a member of a chamber of commerce or other organisation that represents its interests, it may disclose that this is the case.

AR 14.In meeting the requirement in paragraph 29(c) the undertaking shall consider the alignment between its public statements on its material impacts, risks and opportunities and its lobbying activities.

AR 15.An example of what such disclosures could look like:

Political engagement (including lobbying activities) illustrative example

During the 20XY financial year ABC was involved in activities around the proposed regulation XXX which could have significant negative impacts on its business model if implemented in the current format. ABC’s considers that while the proposed regulation will realise some improvements to the regulatory regime such as xxx, in its current format the costs relating to xxx will outweigh the benefits. ABC and its peers continue to work with XXX (the regulator) to improve this balance.

ABC also supported the QRP political party in Country X and EFG party in Country Y as both …. ABC is registered in its local transparency register, i.e., XYZ, and its registration number is 987234.

Amounts in € thousands.

	2023	2022 [TBC]
Political funding provided	100
Funding to QRP	75
Funding to EFG	25
	100

Disclosure Requirement G1-6 – Payment practices

AR 16.In some cases, the undertaking’s standard contractual payment terms may differ significantly depending on country or type of supplier. In such cases, information about the standard terms per main categories of suppliers or country or geographical region could be examples of additional contextual information to explain the disclosures in paragraph 33(b).

AR 17.An example of what the description of standard contract term disclosures in paragraph 33(b) could look like:

ABC’s standard contract payment terms are payment on receipt of invoice for wholesalers which encompass approximately 80% of its annual invoices by value. It pays for services received within 30 days after receipt of the invoice which are about 5% of its annual invoices. The remainder of its invoices are paid within 60 days of receipt except for those in country X which in accordance with the marketplace standards are paid within 90 days of receipt.

ANNEX II

This Annex presents all the acronyms found in the ESRS (Table 1) as well as all terms defined in the ESRS (Table 2).

AMS	Automated Measuring Systems
AQI	Air Quality Indices
AR	Application Requirements
AWS	Alliance for Water Stewardship
BAT	Best Available Technique
BAT-AEL	Best Available Technique-Associated Emission Level
BAT-AEPL	Best Available Technique-Associated Environmental Performance Level
BREFs	Best Available Techniques Reference Documents
Btu	British Thermal Units
CapEx	Capital Expenditure
CBD	Convention for Biological Diversity
CDDA	Common Database on Designated Areas
CEN	European Committee for Standardization
CENELEC	European Committee for Electrotechnical Standardization
CH4	Methane
CICES	Common International Classification of Ecosystem Services
C02	Carbon Dioxide
CRR	Regulation (EU) No 575/2013 of the European Parliament and of the Council (1) (Capital Requirements Regulation)
DEGURBA	Degree of Urbanisation
DR BP-1	Disclosure Requirement - General basis for preparation of the sustainability statements
DR BP-2	Disclosure Requirement - Disclosures in relation to specific circumstances
DR GOV-1	Disclosure Requirement - The role of the administrative, management and supervisory bodies
DR GOV-2	Disclosure Requirement - Information provided to and sustainability matters addressed by the undertaking’s administrative, management and supervisory bodies
DR GOV-3	Disclosure Requirement - Integration of sustainability- related performance in incentive schemes
DR GOV-4	Disclosure Requirement - Statement on sustainability due diligence
DR GOV-5	Disclosure Requirement - Risk management and internal controls over sustainability reporting
DR SBM-1	Disclosure Requirement - Market position, strategy, business model(s) and value chain
DR SBM-2	Disclosure Requirement - Interests and views of stakeholders
DR SBM-3	Disclosure Requirement - Material impacts, risks and opportunities and their interaction with strategy and business model(s)
DR IRO-1	Disclosure Requirement - Description of the processes to identify and assess material impacts, risks and opportunities
DR IRO-2	Disclosure Requirements in ESRS covered by the undertaking’s sustainability statements
DNSH	Do No Significant Harm
DR	Disclosure Requirements
EBA	European Banking Authority
EC	European Commission
EEA	European Economic Area
EFRAG	European Financial Reporting Advisory Group
EFRAG SRB	European Financial Reporting Advisory Group Sustainability Reporting Board
EIA	Environmental Impact Assessment
EMAS	Eco-Management and Audit Scheme
EPC	Energy Performance Certificate
E-PRTR	European Pollutant Release and Transfer Register
ESA	European Supervisory Authorities
ESMA	European Securities and Markets Authority
ESRS	European Sustainability Reporting Standards
ESRS 1	European Sustainability Reporting Standard 1 General requirements
ESRS 2	European Sustainability Reporting Standard 2 General disclosures
ESRS E1	European Sustainability Reporting Standard E1 Climate change
ESRS E2	European Sustainability Reporting Standard E2 Pollution
ESRS E3	European Sustainability Reporting Standard E3 Water and marine resources
ESRS E4	European Sustainability Reporting Standard E4 Biodiversity and ecosystems
ESRS E5	European Sustainability Reporting Standard E5 Resource use and circular economy
ESRS G1	European Sustainability Reporting Standard G1 Business conduct
ESRS S1	European Sustainability Reporting Standard S1 Own workforce
ESRS S2	European Sustainability Reporting Standard S2 Workers in the value chain
ESRS S3	European Sustainability Reporting Standard S3 Affected communities
ESRS S4	European Sustainability Reporting Standard S4 Consumers & end-users
EU	European Union
EU ETS	European Union Emissions Trading System
EWC	European Works Council
FPIC	Free, Prior and Informed Consent
FTE	Full-time equivalent
GAAP	Generally Accepted Accounting Principles
GHG	Greenhouse Gas
GJ	Giga-Joules
GRI	Global Reporting Initiative
GWP	Global Warming Potential
HFCs	Hydrofluorocarbons
IED	Directive 2010/75/EU of the European Parliament and of the Council (2) (Industrial Emissions Directive)
IFC	International Finance Corporation
IFRS	International Financial Reporting Standards
ILO	International Labour Organisation
IPBES	Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services
IPCC	Intergovernmental Panel on Climate Change
ISEAL	International Social and Environmental Accreditation and Labelling Alliance
ISO	International Organization for Standardization
ISSB	International Sustainability Standards Board
ITS	Implementing Technical Standards
IUCN	International Union for Conservation of Nature
KBA	Key Biodiversity Areas
Kg	Kilogram
lb	Pounds
LEAP	Locate Evaluate Assess Prepare
LGBTQI	Lesbian, Gay, Bisexual, Transgender, Queer, Intersex
MDR	Minimum Disclosure Requirement
MWh	Mega-Watt-hours
N2O	Nitrous Oxide
NACE	Statistical Classification of Economic Activities in the European Community
NF3	Nitrogen trifluoride
NGOs	Non-Governmental Organisations
NH3	Ammonia
NOX	Nitrogen oxides
NUTS	Nomenclature of Territorial Units of Statistics
O3	Ozone
ODS	Ozone-depleting substance
OECD	Organisation for Economic Co-operation and Development
OECM	One Earth Climate Model
OpEX	Operating Expenditure
PBTS	Persistent, bioaccumulative and toxic substances
PCAF	Partnership for Carbon Accounting Financial
PCFs	Perfluorocarbons
PM	Particulate Matter
PMTs	Persistent, Mobile and Toxic Substances
POPs	Persistent organic pollutants
REACH	Registration, Evaluation, Authorisation and Restriction of Chemicals
SBTi	Science Based Targets Initiative
SBTN	Science Based Targets Network
SCE	Societas Cooperativa Europaea
SDA	Sectoral Decarbonisation Approach
SDGs	Sustainable Development Goals
SDPI	Sustainable Development Performance Indicator
SE	Societas Europaea
SEEA	System of Environmental-Economic Accounting
SEEA EA	System of Environmental-Economic Accounting Ecosystem Accounting
SFDR	Regulation (EU) 2019/2088 of the European Parliament and of the Council (3) (Sustainable Finance Disclosures Regulation)
SOX	Sulphur oxides
SVHC	Substances of Very High Concern
TCFD	Task Force on Climate-Related Financial Disclosures
TNFD	Taskforce on Nature-related Financial Disclosures
UN	United Nations
UNEP	United Nations Environment Programme
UNESCO	United Nations Educational, Scientific and Cultural Organization
vPvBs	Very persistent and very bioaccumulative substances
vPvMs	Very persistent and very mobile substances
WDPA	World Database of Protected Areas
WRI	World Resources Institute
WWF	World-Wide Fund for Nature
(1) Regulation (EU) No 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and amending Regulation (EU) No 648/2012 (OJ L 176, 27.6.2013, p. 1). (2) Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17). (3) Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability-related disclosures in the financial services sector (OJ L 317, 9.12.2019, p. 1).

This table defines the terms to be used as reference for the preparation of the sustainability statements in accordance with the ESRS.