1. Introduction
Water and marine resources play a critical role in sustaining life on Earth, providing essential support to ecosystems and human societies. ESRS E3 delves into the complex relationship between companies and water and marine resources, aiming to guide organizations in transparently reporting their impacts and contributions in relation to this topic.
Reporting about water and marine resources 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 water management. Third, it can help to drive innovation and investment in clean technologies and solutions.
The article is structured as follows:
Introduction
What are water and marine resources?
Table of Definitions and Acronyms
Objective of ESRS E3
Governance & Strategy
Impact, Risk, and Opportunity Management
Metrics and Targets
Conclusion
After reading this article you will have a better understanding of ESRS E3 and how it affects companies.
2. What are water and marine resources?
Water and marine resources can be seen as the lifeblood of our planet. They sustain diverse ecosystems and play a vital role in supporting life. Water and marine resources consist of bodies of water such as rivers, lakes, oceans, and seas.
Water and marine resources are very important for several reasons. Beyond serving as a source of drinking water for humans, these resources play a crucial role in supporting diverse flora and fauna. With regard to climate change, oceans act as a large carbon sink by absorbing carbon from the atmosphere. This absorption helps mitigate the impact of greenhouse gas emissions on the climate. Additionally, marine resources contribute significantly to global food security, as fisheries provide food for countless communities worldwide.
However, these invaluable resources face a multitude of challenges. Overfishing, pollution, climate change, and habitat destruction pose threats to the delicate balance of aquatic ecosystems. To keep this balance, it is important to preserve and restore water and marine resources.
Source of image: GRID-Arendal
3. Table of Definitions and Acronyms
When talking about ESRS E3 and water and marine resources you will encounter multiple definitions and acronyms. Below is a table that presents these definitions and acronyms.
4. Objective of ESRS E3
So, what is ESRS E3 all about? Let's dig into its objectives, which revolve around water and marine resources:
Water and Marine Resources Impact: Understand how a company affects marine resources, outlining both positive and negative actual or potential effects.
Water and Marine Resources Actions: Detail actions taken and their outcomes to prevent, mitigate, or remediate significant negative impacts on water and marine resources.
Adapting for a Greener Future (1): Examine the company's contribution to the European Green Deal's goals for clean air, water, soil, biodiversity, and the sustainability of the blue economy and fisheries sectors.
Adapting for a Greener Future (2): Explore the plans and capacity of the company to align its strategy and business model with the preservation of fresh water, protection of aquatic ecosystems, and the sustainable use of marine resources.
Water and Marine Resources Risks and Opportunities: Analyze the material risks and opportunities related to the company's impacts and dependencies on water and marine resources, along with management strategies.
Financial Effects: Assess the financial effects on companies in the short, medium, and long term resulting from risks and opportunities related to water and marine resources.
Based on the materiality of the water and marine resources related topics, these objectives may require companies to disclose information related to governance, strategy, 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 E3, governance and strategy refer to the way companies manage their efforts to address water and marine resources. Although ESRS E3 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 material. This means that even when the standard (ESRS E3) 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 water and marine resources are material in their environmental and sustainability reporting.
Although specific disclosure requirements aren't outlined in ESRS E3, companies may still need to share information if water and marine resources-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 Water and Marine Resources-Related IRO
Companies must outline their process for identifying significant IRO related to water and marine resources. This includes screening site locations and business activities to assess water and marine resources-related impacts, risks, and opportunities. Consultations with affected communities should also be described.
6.2. Policies for Managing Material IRO
Companies are required to disclose their policies adopted to manage material impacts, risks and opportunities related to water and marine resources. This includes addressing areas such as water management including use and sourcing of water and marine resources, water treatment as a step towards more sustainable sourcing of water as well as the prevention and abatement of water pollution resulting from its activities. The policies should also address product and service design in relation to addressing water-related issues and preservation of marine resources. Finally, the policies should include a commitment to reduce material water consumption in areas at water risk in its own operations and along the upstream and downstream value chain.
6.3. Water and Marine Resources-Related Actions and Resource Allocation
Companies should be disclosing actions and resources dedicated to water and marine resource management, providing insights into past and planned initiatives. Moreover, it should be specified whether resources are geared towards avoiding, reducing, reclaiming, reusing, restoring, or regenerating aquatic ecosystems. Lastly, companies should provide insights into actions and resources addressing areas at water risk, especially those facing high-water stress.
This section of ESRS E3 focuses on IRO related to water and marine resources. It includes three key parts: identifying water and marine resources-related IRO, disclosing policies for managing these material IRO, and sharing details about water and marine resources-related actions and resource allocation.
7. Metrics and Targets
ESRS E3 contains less metrics and targets than ESRS E1. The metrics and targets in ESRS E3 focus on water and marine resources-related aspects and are presented in four sections.
7.1. Water and Marine Resources-Related Targets
Companies should disclose specific targets related to water and marine resources, offering insights into their alignment with policies and efforts to address material IRO. Moreover, detailed information should be provided, specifying their connection to managing IRO in areas facing water risk, responsible marine resources management, and the reduction of water consumption, especially in high-water stress areas.
7.2. Water Consumption
As a company you should disclose information on water consumption generated from operations, including total water consumption, water consumption in areas of water risk, total water recycled and reused, total water stored and changes in storage. Provide contextual information on water basins' water quality and quantity, measurement methodologies, assumptions, and the approach to data collection. Finally, disclose water intensity and total water consumption per million EUR net revenue in your own operations.
7.3. Anticipated Financial Effects
Companies need to disclose the anticipated financial effects resulting from material risks and opportunities linked to water and marine resources-related impacts. This includes quantifying anticipated financial effects, providing descriptions of considered effects, related impacts, and likely time horizons. Critical assumptions used in estimates should be clarified and the sources and levels of uncertainty associated with these assumptions should be addressed.
This part of ESRS E3 introduces water and marine resources-related metrics and targets in three sections, emphasizing the disclosure of specific targets, water consumption, and the anticipated financial impacts related to water and marine resources.
8. Conclusion
ESRS E3 is an important framework designed to address water and marine resources and guide companies in reporting their water and marine resources-related activities. Water and marine resources are important to the environment and life in general, making accurate reporting essential. This article has highlighted key aspects, such as the importance of water and marine resources reporting, objectives of ESRS E3, and various components within the framework, including governance and strategy, impact, risk, and opportunity management, metrics and targets.
By understanding ESRS E3, companies can better address and mitigate their water and marine resources-related impacts, risks, and opportunities, contribute to a sustainable future, and meet their reporting obligations. Water and marine resources remain critical to sustain life, and ESRS E3 plays a crucial role in preserving these resources.