1. Introduction
Pollution is a major environmental problem that threatens human health and the planet's ecosystems. ESRS E2 specifically addresses pollution, providing guidance on how companies can report about pollution.
Reporting about pollution is important for a number of reasons. First, it helps to raise awareness of the problem and its impact on society and the environment. Second, it allows stakeholders to assess companies' environmental performance and hold them accountable for their pollution. Third, it can help to drive innovation and investment in clean technologies and solutions.
The article is structured as follows:
Introduction
What is Pollution?
Table of Definitions and Acronyms
Objective of ESRS E2
Governance & Strategy
Impact, Risk, and Opportunity Management
Metrics and Targets
Conclusion
After reading this article you will have a better understanding of ESRS E2 and how it affects companies.
2. What is pollution?
Pollution occurs when substances are introduced into the environment, resulting in harmful alterations to the environment and/or living organisms. Pollution can be subdivided into different types, including air pollution, water pollution, and soil pollution.
Air pollution is the presence of harmful substances in the air that we breathe. It can be caused by a variety of factors, including the burning of fossil fuels, industrial emissions, and vehicle exhaust. Air pollution can have a serious impact on human health, causing respiratory problems, heart disease, and cancer.
Water pollution is the contamination of water bodies with harmful substances. It can be caused by sewage, agricultural runoff, and industrial waste. Water pollution can make water unsafe to drink, swim in, and fish in. It can also harm aquatic ecosystems.
Soil pollution is the contamination of soil with harmful substances. It can be caused by industrial waste, pesticides, and herbicides. Land pollution can make soil infertile and can also contaminate food crops.
Pollution is a major environmental problem that has a significant impact on human health and the environment. Therefore, it is important to take steps to reduce pollution.
Source of image: Freepik
3. Table of Definitions and Acronyms
When talking about ESRS E2 and pollution you will encounter multiple definitions and acronyms. Below is a table that presents these definitions and acronyms.
4. Objective of ESRS E2
So, what is ESRS E2 all about? Let's dig into its objectives, which revolve around pollution:
Pollution Impact: Understand how a company affects air, water, and soil pollution, both positively and negatively.
Pollution Actions: Evaluate actions taken by a company to prevent or reduce pollution impacts and address associated risks and opportunities.
Adapting for a Greener Future: Ensure companies can adjust their strategies and business models to create a pollution-free environment, aligning with the EU's 'Towards a Zero Pollution for Air, Water, and Soil' plan.
Pollution Risks and Opportunities: Understanding the different risks and opportunities that companies face because of their impact on pollution and their dependence on it. This includes how they deal with pollution, whether it's due to regulations or other factors.
Financial Effects: Assess the financial effects on companies in the short, medium, and long term resulting from pollution-related risks and opportunities
Based on the materiality of the pollution related topics (read more about materiality here), these objectives may require companies to disclose information related to governance, strategy, pollution impacts, risks, opportunities, metrics, and targets, as we'll explore in more detail in the following sections.
5. Governance & Strategy
In the context of ESRS E2, governance and strategy refer to the way companies manage their efforts to address pollution. Although ESRS E2 doesn't provide detailed disclosure requirements (DRs) for governance and strategy, ESRS 1 Section 1.4 indicates that companies might need to share information about how they handle these aspects if it's deemed that their impacts, risks, and opportunities (IRO) related to the environment and sustainability are significant. This means that even when the standard (ESRS E2) doesn't specify the need for governance and strategy disclosures, companies could still be required to provide relevant information tailored to their unique circumstances if topics related to pollution are material in their environmental and sustainability reporting.
Although specific disclosure requirements aren't outlined in ESRS E2, companies may still need to share information if pollution-related topics are material
6. Impact, Risk and Opportunity Management
This section is about the impacts, risks, and opportunities (IRO) related to pollution and is subdivided into three sections.
6.1. Identifying Pollution-Related IRO
Companies must outline their process for identifying significant IRO related to pollution. This includes screening site locations and business activities to assess pollution-related physical and transition risks. Consultations with affected communities should also be described.
6.2. Policies for Managing Material IRO
Companies are required to disclose their policies for managing material IRO linked to pollution prevention and control. This includes addressing areas such as mitigating negative pollution impacts on air, water, and soil, minimizing the use of concerning substances, and avoiding and handling incidents and emergencies.
6.3. Pollution-Related Actions and Resource Allocation
Companies should be disclosing pollution-related actions and the allocated resources. This information helps stakeholders understand the steps taken and planned to achieve pollution-related policy objectives and targets. Companies may also specify where these actions fit within the pollution mitigation hierarchy, which includes avoiding pollution at the source, reducing pollution, and restoring ecosystems in areas where pollution has occurred.
This section of ESRS E2 focuses on IRO related to pollution. It includes three key parts: identifying pollution-related IRO, disclosing policies for managing these material IRO, and sharing details about pollution-related actions and resource allocation.
7. Metrics and Targets
ESRS E2 contains less metrics and targets than the previous ESRS E. The metrics and targets in ESRS E2 focus on pollution-related aspects and are presented in four sections.
7.1. Pollution-Related Targets
Companies should disclose specific targets related to pollution to support their pollution-related policies and address material IRO. Companies should also specify whether and how these targets relate to preventing and controlling air pollutants, water emissions, soil pollution, and substances of (very high) concern.
7.2. Pollutants Emitted and Microplastics
Companies should disclose the pollutants emitted through their own operations and their use of microplastics. They should also provide consolidated data on pollutants, emissions, and microplastics, adhering to regulatory thresholds. Additionally, changes over time, measurement methodologies, and data collection processes should be described.
7.3. Substances of Concern and Very High Concern
Companies must provide information about the production, use, distribution, commercialization, and import/export of substances of concern and substances of very high concern. This disclosure should include total amounts of substances of concern generated or used, and it should be presented separately for substances of very high concern.
7.4. Anticipated Financial Effects
Companies need to disclose the anticipated financial effects of material pollution-related risks and opportunities. This disclosure can be quantitative or qualitative, depending on feasibility. It should describe the effects, their associated impacts, the likely time horizons, and the critical assumptions used. It should also address the source and level of uncertainty related to these assumptions.
This part of ESRS E2 introduces pollution-related metrics and targets in four sections, emphasizing the disclosure of specific targets, pollutants emitted, substances of (very high) concern, and the anticipated financial impacts related to pollution.
8. Conclusion
ESRS E2 is an important framework designed to address the complex issue of pollution and guide companies in reporting their pollution-related activities. Pollution poses significant threats to the environment and human health, making accurate reporting essential. This article has highlighted key aspects, such as the importance of pollution reporting, objectives of ESRS E2, and various components within the framework, including governance and strategy, impact, risk, and opportunity management, metrics and targets.
By understanding ESRS E2, companies can better address and mitigate their pollution-related impacts, risks, and opportunities, contribute to a sustainable future, and meet their reporting obligations. Pollution remains a pressing global concern, and ESRS E2 plays a crucial role in tackling this challenge.