How to know what to disclose for your company in ESRS E2 Water and marine resources, what are the disclosure requirements, and an educational video is included in this article.
What is ESRS E3 Water and Marine Resources and its main objective?
The objective of ESRS E3 Water and Marine Resources is to establish comprehensive disclosure requirements that enable stakeholders to understand the impact of an organization’s activities on water and marine ecosystems. These disclosures focus on both the positive and negative impacts that businesses have on these critical resources, and how these impacts are managed.
How does ESRS E3 Water and Marine Resources interact with other standards within ESRS?
ESRS E3 Water and Marine Resources interacts comprehensively with other standards within the ESRS framework to provide a holistic view of a company’s environmental impact, particularly concerning water-related issues. This interconnectedness ensures that the environmental disclosures are robust, covering various aspects of sustainability that affect or are affected by water and marine resources.
Description of how ESRS E3 interacts with other ESRS standards:
Interaction with Environmental ESRS Standards
- ESRS E1 Climate Change
Water and marine resources are directly impacted by climate change, which affects water temperatures, precipitation patterns, ocean acidification, sea level rise, and other hydrological events. ESRS E3 and ESRS E1 are integrated to ensure that companies disclose how climate-related risks and changes affect their water management strategies and marine resource conservation efforts.
- ESRS E2 Pollution
Pollution directly affects water quality and marine life. ESRS E3 works in conjunction with ESRS E2 to ensure comprehensive reporting on emissions to water bodies, including the management of pollutants like microplastics. This helps stakeholders understand the extent of water pollution and the measures taken to mitigate these impacts.
- ESRS E4 Biodiversity and Ecosystems
The conservation and sustainable use of freshwater and marine ecosystems are vital components of ESRS E3. This standard complements ESRS E4 by addressing how activities impact biodiversity within aquatic ecosystems and detailing efforts to protect and restore these environments.
- ESRS E5 Resource Use and Circular Economy
Water resource management is closely linked to practices in the circular economy, particularly in terms of waste management and recycling of water and materials like plastics that often end up in waterways. ESRS E3 and ESRS E5 ensure that companies report on their efforts to reduce water use, enhance recycling rates, and minimize waste, all of which contribute to better water and marine resource management.
Interaction with Social and Governance Standards
- ESRS S3 Affected Communities
The impact of water and marine resource management extends to local communities, particularly those that rely on these resources for their livelihoods or are affected by pollution and environmental degradation. ESRS E3 integrates with ESRS S3 to ensure that companies disclose how they address and mitigate negative impacts on these communities, fostering greater accountability and community engagement.
General Disclosure Integration
- ESRS 1 General Requirements and ESRS 2 General Disclosures
To ensure comprehensive and consistent reporting, ESRS E3 should be read and implemented in conjunction with the general principles outlined in ESRS 1 and the detailed disclosure requirements provided in ESRS 2. This includes integrating water and marine resource management into the broader context of impact, risk, and opportunity management as specified in ESRS 2.
How to know what to disclose for your company in ESRS E3
Note! All the 6 sections of disclosures below might not have to be disclosed depending on what’s material for the company concerning E2 Water and marine resources.
The logic of what to disclose is included in the Mentcon model for the ESRS web-app to make it easy for companies to know what to disclose. This is made based on the draft of ID 177 – Links between AR16 and Disclosure requirements, and will be updated in the Mentcon model if any changes are made in the final version.
What are the disclosure requirements under ESRS E3 Water and Marine Resources summarized?
These are divided into six sections of disclosure requirements:
- ESRS E3 IRO-1 – Description of the processes to identify and assess material water and marine resources-related impacts, risks and opportunities
- E3-1 – Policies related to water and marine resources
- E3-2 – Actions and resources related to water and marine resources
- E3-4 – Water consumption
- E2-4 – Pollution of air, water and soil
- E3-5 – Anticipated financial effects from water and marine resources-related impacts, risks and opportunities
The ESRS E3 Water and Marine Resources standard specifies disclosure requirements aimed at providing stakeholders with a clear understanding of an organization’s impacts, risks, and opportunities related to water and marine resources. These disclosures are designed to ensure that companies provide detailed information about how they manage these vital resources, the effectiveness of their actions, and the broader implications of their water-related activities.
Summary of the key disclosure requirements under ESRS E3:
Impact, Risk, and Opportunity Management
Identification Process: Companies must describe their processes for identifying material impacts, risks, and opportunities related to water and marine resources in their operations and along the value chain. This includes the methodologies, tools, and assumptions used for assessing impacts.
Stakeholder Engagement: Disclosure on how the company has consulted with affected communities to understand and address the impacts of their water and marine resource utilization.
Policies on Water and Marine Resources
Policy Disclosure: Companies are required to describe their policies for managing the impacts, risks, and opportunities related to water and marine resources.
Policy Details: This includes information on water management practices (use, sourcing, treatment), product and service design considerations for water conservation, and commitments to reducing water consumption, especially in water-stressed areas.
Compliance and Policy Gaps: If there are sites in high-water stress areas without adequate policies, companies must disclose this and provide reasons or planned actions to address the gap.
Actions and Resources
Implementation of Policies: Details of actions taken and resources allocated to manage water and marine resources effectively, adhering to a mitigation hierarchy that includes avoiding, reducing, reclaiming, and restoring water resources.
Specific Actions: Disclosure of specific measures in areas at water risk, including high-water stress areas, to mitigate impacts.
Targets and Metrics
Setting Targets: Companies must disclose specific targets set for managing water and marine resources, linking these targets to the management of material impacts and opportunities.
Ecological Considerations: Information on whether ecological thresholds and entity-specific allocations were considered when setting these targets.
Water Consumption Reporting
Consumption Metrics: Detailed reporting on water consumption, including total consumption, consumption in water risk areas, and details on water recycling and reuse.
Water Intensity: Disclosure of water intensity metrics, such as water consumption per unit of revenue, providing insights into the efficiency of water use in operations.
Financial Impacts
Anticipated Financial Effects: Companies are required to report on the anticipated financial effects of risks and opportunities related to water and marine resources on their financial position and performance over short, medium, and long terms.
Quantitative and Qualitative Information: This includes both quantitative financial impacts and qualitative information if quantitative is not feasible, along with the assumptions and uncertainties involved in these estimations.
Full list of disclosure requirements in ESRS E3 Water and Marine Resources
Direct link to the topic ESRS E3 water and marine resources in ESRS: Consolidated TEXT: 32023R2772 — EN — 22.12.2023 (europa.eu)
Video of ESRS E2 Water and Marine Resources (Educational)
This educational video was made for the draft of ESRS from the EU financed organization EFRAG who was responsible of creating the ESRS. We have not found any other video with qualitative information in English for ESRS E# Water and marine resources. The minor changes made in the final version of ESRS E3 Water and marine resources has not impacted this video’s relevance.
Read more in our FAQ section about ESRS E3 WATER AND MARINE RESOURCES
