ESRS S1 Own Workforce Summary

How to know what to disclose for your company in S1 Own Workforce, what are the disclosure requirements, and an educational video is included in this article.

What is S1 Own Workforce and its main objective?

The objective of the ESRS S1 Standard on “Own Workforce” is to provide guidelines for disclosing how a company impacts its own workforce, addressing both positive and negative impacts, and detailing related material risks and opportunities. This includes:

1. Impact Assessment: Detailing how the company’s actions affect its workforce, highlighting both beneficial and adverse impacts.
2. Action and Outcome Reporting: Documenting the actions taken to mitigate negative impacts or capitalize on opportunities related to workforce management, and reporting on the outcomes of these actions.
3. Risk and Opportunity Management: Explaining how the company identifies and manages material risks and opportunities concerning its workforce, including the strategies it employs.
4. Financial Implications: Describing the financial effects on the company over short, medium, and long terms, which arise from its workforce-related practices.

Additionally, the standard necessitates a comprehensive approach to managing impacts related to various aspects of working conditions, such as secure employment, working time, wages, and health and safety, among others. It also covers equal treatment, opportunities, and other workers’ rights, which impact how the company manages its workforce and the potential risks and benefits that arise from these practices.

The standard aims to enable stakeholders to understand how well the company aligns with international and European human rights frameworks and the extent to which it adheres to relevant social and labor standards. This alignment helps in assessing the company’s commitment to maintaining an ethical and supportive working environment that fosters productivity and retention while managing potential liabilities and enhancing its reputation

 

How to know what to disclose for your company in ESRS S1 Own Workforce?

ESRS S1 is one the standard with the most Data points in ESRS (198) of which the most of them are narrative disclosures. For one unique company thought, it is not likely that many of them need to be reported in the sustainability statement:

• All the 19 sections of disclosures below most probably do not have to be disclosed depending on what’s material for the company concerning S1 Own Workforce.
• 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.

Make the ESRS-reporting smarter and faster: Contact us at Mentcon

ESRS S1 Own Workforce disclosure requirements summarized

These are divided into seven sections of disclosure requirements:

• ESRS 2 S1 SBM-2 – Interests and views of stakeholders
• ESRS 2 S1 SBM-3 – Material impacts, risks and opportunities and their interaction with strategy and business model
• S1-1 – Policies related to own workforce
• S1-2 – Processes for engaging with own workforce and workers’ representatives about impacts
• S1-3 – Processes to remediate negative impacts and channels for own workforce to raise concerns
• S1-4 – Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions
• S1-5 – Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities
• S1-6 – Characteristics of the undertaking’s employees
• S1-7 – Characteristics of non-employees in the undertaking’s own workforce
• S1-8 – Collective bargaining coverage and social dialogue
• S1-9 – Diversity metrics
• S1-10 – Adequate wages
• S1-11 – Social protection
• S1-12– Persons with disabilities
• S1-13 – Training and skills development metrics
• S1-14 – Health and safety metrics
• S1-15 – Work-life balance metrics
• S1-16 – Remuneration metrics (pay gap and total remuneration)
• S1-17 – Incidents, complaints and severe human rights impacts

 

ESRS 2 General disclosures for S1 Own workforce

The requirements of this section should be read in conjunction with the disclosures required by ESRS 2 on Strategy (SBM). The resulting disclosures shall be presented alongside the disclosures required by ESRS 2, except for ESRS 2 SBM-3, for which the undertaking has an option to present the disclosures alongside this topical disclosure, S1 Own workforce.

 

ESRS 2 S1 SBM-2 – Interests and views of stakeholders

When responding to ESRS 2 SBM-2, the undertaking shall disclose how the interests, views, and rights of people in its own workforce, including respect for their human rights, inform its strategy and business model. The undertaking’s own workforce is a key group of affected stakeholders.

 

ESRS 2 S1 SBM-3 – Material Impacts, Risks, and Opportunities and Their Interaction with Strategy and Business Model

The company must disclose whether and how actual and potential impacts on its workforce, identified in ESRS 2 IRO-1, are connected to or originate from the company’s strategy and business models. It should also explain how these impacts contribute to adapting the strategy and business model. Additionally, the company needs to outline the relationship between material risks and opportunities arising from impacts and dependencies on its workforce and its strategy.

Key Elements to Disclose in ESRS 2 (S1) SBM-3:

1. Scope of Disclosure: Whether all individuals in the workforce who could be materially impacted are included in the disclosure. This includes impacts connected to the company’s operations, products, services, and business relationships.
2. Description of Impacted Workforce: A brief description of the types of employees and non-employees subject to material impacts, specifying if they are employees, self-employed, or provided by third-party undertakings.
3. Negative and Positive Impacts: A distinction between widespread or systemic negative impacts (e.g., child labor in specific regions) versus individual incidents (e.g., an industrial accident). For positive impacts, a description of activities leading to these impacts and the types of employees affected.
4. Risks and Opportunities: Any material risks and opportunities for the company arising from workforce impacts and dependencies.
5. Transition Plans Impact: Potential impacts on the workforce due to transition plans for reducing negative environmental impacts and achieving greener operations, including job creation, restructuring, or employment loss.
6. Risk of Forced or Child Labor: Disclosure of operations at significant risk of forced labor, compulsory labor, or child labor incidents, either by type of operation or geographical risk areas.

S1-1 – Policies Related to Own Workforce

The company must describe the policies adopted to manage material impacts on its workforce and associated material risks and opportunities. This includes detailing the policies that address the identification, assessment, management, and remediation of material impacts, as well as policies that cover material workforce-related risks and opportunities.

Key Elements to Disclose in ESRS S1-1:

1. Policy Scope and Coverage: Whether these policies cover specific groups within the workforce or the entire workforce.
2. Human Rights Commitments: Disclosure of human rights policy commitments relevant to the workforce, focusing on respect for human rights, labor rights, workforce engagement, and mechanisms for monitoring compliance with international guidelines (e.g., UN Guiding Principles on Business and Human Rights).
3. Alignment with International Standards: Whether the company’s workforce policies are aligned with internationally recognized instruments such as the UN Guiding Principles.
4. Addressing Specific Issues: Policies addressing trafficking in human beings, forced labor, child labor, accident prevention, discrimination elimination, promoting diversity and inclusion, and workplace safety.
5. Policy Implementation: Procedures to prevent, mitigate, and address detected discrimination, as well as actions to promote diversity and inclusion.

S1-2 – Processes for Engaging with Own Workforce and Workers’ Representatives About Impacts

The company should disclose its general processes for engaging with its workforce and workers’ representatives about actual and potential impacts on the workforce. This is part of the company’s ongoing due diligence to manage material positive and negative impacts.

Key Elements to Disclose in ESRS S1-2:

1. Engagement Process: How the company engages with its workforce and workers’ representatives, including whether engagement is direct or through representatives.
2. Decision-making Influence: Whether and how the perspectives of the workforce inform decisions or activities aimed at managing impacts on the workforce.
3. Engagement Stages and Frequency: The stages at which engagement occurs, the type and frequency of engagement, and the responsible function and senior role within the company.
4. Global Agreements: Existence of any Global Framework Agreement or other agreements with workers’ representatives related to human rights.
5. Effectiveness Assessment: How the company assesses the effectiveness of its engagement with the workforce, including any agreements or outcomes resulting from this engagement.
6. Vulnerable Groups: Steps taken to gain insight into the perspectives of people who may be particularly vulnerable to impacts.
7. Non-adoption Disclosure: If the company has not adopted a general process to engage with the workforce, it must disclose this and may include a timeline to implement such a process.

 

S1-3 – Processes to Remediate Negative Impacts and Channels for Own Workforce to Raise Concerns

The company must describe the processes in place to remediate negative impacts on its workforce and the channels available for workers to raise concerns. This includes providing formal mechanisms for the workforce to voice their concerns and needs directly to the company and understanding how these issues are addressed.

Key Elements to Disclose in ESRS S1-3:

1. Remediation Approach: The company’s general approach and processes for providing or contributing to remedies when it has caused or contributed to a material negative impact. This includes assessing the effectiveness of the remedy provided.
2. Channels for Raising Concerns: Details on any specific channels available for the workforce to raise concerns, including whether these channels are established by the company itself or through third-party mechanisms.
3. Grievance Mechanisms: Whether the company has a grievance or complaints handling mechanism related to employee matters.
4. Workplace Support: Processes through which the company supports the availability of channels in the workplace and how it ensures their effectiveness.
5. Tracking and Monitoring: How the company tracks and monitors issues raised and addressed, and how it involves stakeholders who are intended users.
6. Awareness and Trust: Whether and how the company assesses that the workforce is aware of and trusts these structures or processes to raise concerns. This includes policies in place to protect individuals, including workers’ representatives, against retaliation.
7. Non-availability Disclosure: If no channels for raising concerns exist, the company must disclose this and may include a timeframe to establish such channels.

S1-4 – Taking Action on Material Impacts on Own Workforce, and Approaches to Managing Material Risks and Pursuing Material Opportunities Related to Own Workforce, and Effectiveness of Those Actions

The company must disclose how it takes action to address material negative and positive impacts, manage material risks, and pursue opportunities related to its workforce. This includes evaluating the effectiveness of these actions.

Key Elements to Disclose in ESRS S1-4:

1. Action Plans and Resources: A summarized description of the action plans and resources allocated to managing material impacts, risks, and opportunities related to the workforce, in accordance with ESRS 2 MDR-A.
2. Prevention and Mitigation Actions: Actions taken or planned to prevent or mitigate material negative impacts on the workforce.
3. Remediation Actions: How the company has taken action to provide or enable a remedy in relation to an actual material impact.
4. Positive Impact Initiatives: Any additional actions or initiatives in place primarily to deliver positive impacts for the workforce.
5. Effectiveness Tracking: How the company tracks and assesses the effectiveness of these actions and initiatives in delivering outcomes for its workforce.
6. Identification of Needed Actions: Processes through which the company identifies the necessary actions in response to a particular actual or potential negative impact on the workforce.
7. Risk and Opportunity Management: Description of actions planned or underway to mitigate material risks and pursue material opportunities related to the workforce, including tracking effectiveness.
8. Internal Practices Review: Disclosure of whether and how the company ensures that its practices do not cause or contribute to material negative impacts on the workforce.
9. Resources Allocation: What resources are allocated to the management of material impacts and how they are managed.

S1-5 – Targets Related to Managing Material Negative Impacts, Advancing Positive Impacts, and Managing Material Risks and Opportunities

The company should disclose any time-bound and outcome-oriented targets set for reducing negative impacts on the workforce, advancing positive impacts, and managing material risks and opportunities.

Key Elements to Disclose in ESRS S1-5:

1. Outcome-Oriented Targets: Whether the company has set any outcome-oriented targets to address its material negative impacts, advance positive impacts, and manage material risks and opportunities related to its workforce.
2. Target Description: A summarized description of the targets set, including information requirements defined in ESRS 2 MDR-T.
3. Process for Setting Targets: The process for setting these targets, including whether and how the company engaged directly with its workforce or workers’ representatives in setting the targets, tracking performance, and identifying improvements.
4. Performance Tracking: How the company tracks its performance against the set targets and any lessons learned or improvements identified as a result of this performance.

 

S1-6 – Characteristics of the Undertaking’s Employees

The company must describe key characteristics of its employees to provide insight into its approach to employment, including the scope and nature of impacts arising from its employment practices. This information serves as contextual data for understanding other disclosures and forms the basis for calculating quantitative metrics.

Key Elements to Disclose in ESRS S1-6:

1. Total Number of Employees: The total number of employees by head count, including a breakdown by gender and by country for those countries where the company has 50 or more employees representing at least 10% of its total workforce.
2. Employment Type Breakdown: The total number of employees by head count or full-time equivalent (FTE) for:
• Permanent employees, with a gender breakdown.
• Temporary employees, with a gender breakdown.
• Non-guaranteed hours employees, with a gender breakdown.
3. Turnover Rate: The total number of employees who have left the company during the reporting period and the rate of employee turnover.
4. Data Compilation Methodology: A description of the methodologies and assumptions used to compile the data, including whether the numbers are reported in head count or FTE, and the time frame used (e.g., end of reporting period, average across the period).
5. Contextual Information: Provision of contextual information necessary to understand the data, such as fluctuations in the number of employees during the reporting period.
6. Financial Cross-reference: Cross-referencing the information reported to the most representative number in the financial statements.
7. Optional Breakdown: The company may additionally disclose breakdowns by region and further details for full-time and part-time employees, including gender and regional breakdowns.

S1-7 – Characteristics of Non-Employees in the Undertaking’s Own Workforce

The company must describe key characteristics of non-employees in its workforce to provide insight into its approach to employment. This disclosure aims to clarify the scope and nature of impacts arising from employment practices and the reliance on non-employees.

Key Elements to Disclose in ESRS S1-7:

1. Total Number of Non-Employees: Disclosure of the total number of non-employees in the workforce, including people with contracts to supply labor (‘self-employed’) or people provided by undertakings primarily engaged in employment activities (NACE Code N78).
2. Data Compilation Methodology: Explanation of the methodologies and assumptions used to compile the data, including whether the number is reported in head count or FTE and the time frame used (e.g., end of reporting period, average across the period).
3. Contextual Information: Provision of contextual information necessary to understand the data, such as significant fluctuations in the number of non-employees during the reporting period.
4. Types of Non-Employees: The company may disclose the most common types of non-employees, their relationship with the company, and the type of work they perform.
5. Data Estimation: If data is not available, the company must estimate the number and state that it has done so, describing the basis of the estimation.

S1-8 – Collective Bargaining Coverage and Social Dialogue

The company must disclose information on the extent to which the working conditions and terms of employment of its employees are determined or influenced by collective bargaining agreements and on the extent of employee representation in social dialogue in the European Economic Area (EEA).

Key Elements to Disclose in ESRS S1-8:

1. Collective Bargaining Coverage:
• The percentage of the total employees covered by collective bargaining agreements.
• In the EEA, whether the company has collective bargaining agreements and the overall percentage of employees covered by such agreements for each country with significant employment (defined as at least 50 employees representing at least 10% of the total workforce).
• Outside the EEA, the percentage of employees covered by collective bargaining agreements by region.
2. Non-Collective Bargaining Employees: For employees not covered by collective bargaining agreements, the company may disclose whether their working conditions and terms of employment are based on agreements that cover other employees or are based on agreements from other undertakings.
3. Non-Employees Coverage: The company may disclose the extent to which the working conditions and terms of non-employees in its workforce are determined or influenced by collective bargaining agreements, including an estimated coverage rate.
4. Social Dialogue Representation:
• The global percentage of employees covered by workers’ representatives, reported at the country level for each EEA country with significant employment.
• The existence of any agreement with employees for representation by a European Works Council (EWC), Societas Europaea (SE) Works Council, or Societas Cooperativa Europaea (SCE) Works Council.

 

S1-9 – Diversity Metrics

The company must disclose metrics on diversity, specifically focusing on gender distribution at the top management level and the age distribution among its employees. This provides insight into the company’s efforts to promote diversity and inclusion within its workforce.

Key Elements to Disclose in ESRS S1-9:

1. Gender Distribution at Top Management: The number and percentage of individuals at the top management level broken down by gender. This helps stakeholders understand the level of gender diversity within the company’s leadership.
2. Age Distribution Among Employees: The distribution of employees by age group:
• Under 30 years old
• 30-50 years old
• Over 50 years old
3. Optional Information: The company may provide additional information or further breakdowns if it offers more context or depth regarding diversity within the workforce.

S1-10 – Adequate Wages

The company must disclose whether its employees are paid an adequate wage and, if not, identify the countries and the percentage of employees concerned. This disclosure helps to understand the company’s approach to fair compensation in line with applicable benchmarks.

Key Elements to Disclose in ESRS S1-10:

1. Adequate Wage Statement: A clear statement on whether all employees are paid an adequate wage in line with applicable benchmarks. If so, this statement suffices to fulfill the disclosure requirement.
2. Countries with Inadequate Wages: If not all employees are paid an adequate wage, the company should identify the countries where employees earn below the adequate wage benchmark.
3. Percentage of Affected Employees: For each identified country, disclose the percentage of employees earning below the adequate wage benchmark.
4. Non-Employees Wages (Optional): The company may also provide information regarding the adequacy of wages for non-employees in its workforce.

S1-11 – Social Protection

The company must disclose whether its employees are covered by social protection against the loss of income due to major life events. If not all employees are covered, the company should specify the countries where this is not the case. This disclosure assesses the company’s commitment to providing social security for its workforce.

Key Elements to Disclose in ESRS S1-11:

1. Social Protection Coverage: A statement on whether all employees are covered by social protection, either through public programs or company-provided benefits, against loss of income due to major life events such as:
• Sickness
• Unemployment (from when the employee starts working for the company)
• Employment injury and acquired disability
• Parental leave
• Retirement
2. Countries Without Coverage: If not all employees are covered, identify the countries where employees do not have social protection for each type of major life event.
3. Employee Types: For each identified country, specify the types of employees who do not have social protection regarding each applicable major life event.
4. Non-Employees Social Protection (Optional): The company may also disclose information regarding social protection coverage for non-employees in its workforce.

 

S1-12 – Persons with Disabilities

The company must disclose the percentage of its employees with disabilities. This disclosure provides insight into the company’s inclusivity practices and the extent to which persons with disabilities are included in the workforce.

Key Elements to Disclose in ESRS S1-13:

1. Percentage of Employees with Disabilities: The percentage of employees identified as having disabilities, subject to legal restrictions on data collection. This information helps stakeholders understand the company’s efforts to promote diversity and inclusion.
2. Optional Breakdown by Gender: The company may provide a further breakdown of the percentage of employees with disabilities by gender, offering additional context on inclusivity practices.
3. Legal Considerations: The disclosure must respect any legal restrictions on the collection and reporting of data regarding disabilities.

S1-13 – Training and Skills Development Metrics

The company should disclose the extent of training and skills development provided to its employees. This metric aims to show the company’s commitment to continuous professional growth and the enhancement of employees’ skills.

Key Elements to Disclose in ESRS S1-13:

1. Performance and Career Development Reviews: The percentage of employees who participated in regular performance and career development reviews, broken down by gender. This indicates how the company supports employee growth and development.
2. Average Training Hours: The average number of training hours per employee, with a gender breakdown. This reflects the company’s investment in employee skill development.
3. Optional Breakdown by Employee Category: The company may disclose additional breakdowns by employee category for participation in performance and career development and average training hours per employee.
4. Non-Employees Training (Optional): The company may also disclose similar training and skills development metrics for non-employees in its workforce.

S1-14 – Health and Safety Metrics

The company must disclose information on health and safety management systems and incidents related to work-related injuries, ill health, and fatalities within its own workforce. This provides insight into the effectiveness of the company’s health and safety practices.

Key Elements to Disclose in ESRS S1-14:

1. Health and Safety Management System Coverage: The percentage of the workforce covered by the company’s health and safety management system, based on legal requirements or recognized standards or guidelines.
2. Fatalities and Work-Related Incidents:
• The number of fatalities resulting from work-related injuries and ill health, including incidents involving other workers on company sites.
• The number and rate of recordable work-related accidents.
3. Work-Related Ill Health: The number of cases of recordable work-related ill health for the company’s employees, subject to legal restrictions on data collection.
4. Lost Days: The number of days lost due to work-related injuries and fatalities, including ill health and accidents.
5. Additional Metrics (Optional): The company may include additional information on the health and safety coverage, such as:
• The percentage of workers covered by a health and safety management system audited internally or by an external party.
• Health and safety metrics for non-employees in the workforce.

 

S1-15 – Work-Life Balance Metrics

The company should disclose the extent to which employees are entitled to and make use of family-related leave. This metric provides insight into the company’s support for work-life balance, especially regarding the employees’ ability to manage family-related responsibilities alongside their work commitments.

Key Elements to Disclose in ESRS S1-15:

1. Entitlement to Family-Related Leave: The percentage of employees entitled to take family-related leave. This shows the company’s policy regarding work-life balance and family support.
2. Utilization of Family-Related Leave: The percentage of entitled employees who took family-related leave during the reporting period, including a breakdown by gender. This helps understand the actual use of such leave and the company’s support for employees’ family needs.
3. Optional Statement for Full Coverage: If all employees are entitled to family-related leave through social policy or collective bargaining agreements, the company can simply state this fact to fulfill part of the disclosure requirement.

S1-16 – Remuneration Metrics (Pay Gap and Total Remuneration)

The company must disclose remuneration metrics, specifically focusing on the gender pay gap and the ratio of the highest paid individual to the median annual total remuneration. This provides insight into pay equity and income disparity within the company.

Key Elements to Disclose in ESRS S1-16:

1. Gender Pay Gap: The percentage gap in pay between female and male employees, defined as the difference in average pay levels, expressed as a percentage of the average pay level of male employees. This metric highlights gender pay equity within the organization.
2. Remuneration Ratio: The ratio of the annual total remuneration of the highest paid individual to the median annual total remuneration for all employees (excluding the highest-paid individual). This ratio offers insight into income inequality within the company.
3. Contextual Information: Any necessary contextual information to understand the data, including how the data was compiled and any significant changes that might affect the interpretation.
4. Optional Breakdown: The company may provide a breakdown of the gender pay gap by employee category and/or by country or segment. It can also include a breakdown of ordinary basic salary and complementary or variable components.
5. Purchasing Power Adjustment (Optional): The company may disclose the remuneration ratio adjusted for purchasing power differences between countries, explaining the methodology used.

S1-17 – Incidents, Complaints, and Severe Human Rights Impacts

The company should disclose the number of work-related incidents, complaints, and severe human rights impacts within its workforce, including any related fines, sanctions, or compensation for the reporting period. This disclosure provides insight into the company’s commitment to upholding human rights and addressing workplace issues.

Key Elements to Disclose in ESRS S1-17:

1. Incidents of Discrimination: The total number of incidents of discrimination reported during the reporting period, including those related to gender, racial or ethnic origin, nationality, religion or belief, disability, age, sexual orientation, or other forms of discrimination, including harassment.
2. Complaints and Grievances: The number of complaints filed through channels available to the workforce to raise concerns (including grievance mechanisms), excluding those already reported as incidents of discrimination.
3. Fines, Penalties, and Compensation: The total amount of fines, penalties, and compensation for damages resulting from the incidents and complaints disclosed, with a reconciliation to the most relevant amount presented in the financial statements.
4. Severe Human Rights Incidents: Information on identified cases of severe human rights incidents (e.g., forced labor, human trafficking, or child labor), including the number of such incidents and an indication of how many are cases of non-compliance with international guidelines.
5. Monetary Fines for Severe Incidents: The total amount of fines, penalties, and compensation for damages related to severe human rights incidents.
6. Contextual Information: Where applicable, provide contextual information necessary to understand the data and how it has been compiled, including changes in the underlying data.

 

Full list of disclosure requirements in ESRS S1 Own Workforce

Direct link to the topic ESRS S1 Own workforce in ESRS: Consolidated TEXT: 32023R2772 — EN — 22.12.2023 (europa.eu)

Video of ESRS S1 Own Workforce (Educational)

The educational video on S1 Own workforce made for the draft of ESRS by the EU financed organization EFRAG who was responsible of creating the ESRS has been removed from here.

The large changes made in the final version of ESRS S1 Own workforce has outdated the video and has been removed.

We have not found any other video with qualitative information in English for ESRS S1 Own workforce. Therefore, Mentcon will produce a new video for educational purposes, that will be inserted here.

 

Read more in our FAQ section about ESRS S1 Own Workforce.