On Friday, EFRAG updated its compilation of European Sustainability Reporting Standards technical explanations. The current Compilation of Explanations includes 64 new technical explanations, bringing the total to 157.
The current Compilation of Explanations is available here. This is by far the largest single update. The second largest update, in May, included 44 new explanations.
The Compilation of Explanations reflects the technical explanations posted to EFRAG's Q&A Platform. EFRAG began publishing the periodically updated Compilation earlier in the year. The Compilation is non-authoritative guidance on the ESRS. It has been developed for use by large listed and unlisted reporting companies.
For the uninitiated, EFRAG (the European Financial Reporting Advisory Group) is the technical adviser to the European Commission that developed the draft ESRS, and more recently the draft NESRS for non-EU companies (discussed in this post). EFRAG's mission is to serve the European public interest in both financial and sustainability reporting by developing and promoting European views in the field of corporate reporting.
What's new?
Appendix I to the Compilation includes a table indicating when an explanation was released, making it easier to identify new content.
Given how fact-specific and granular the technical explanations are, we do not summarize them in this post. However, we have included at the end of the post the Appendix I description for each new technical explanation.
The next update?
EFRAG expects to release the next major update of the Compilation of Explanations in Spring 2025.
Other resources for CSRD compliance
Ropes & Gray has a leading practice helping U.S.-based multinationals prepare for compliance with the EU's Corporate Sustainability Reporting Directive.
We have included in this recent post links to selected Ropes & Gray CSRD compliance resources.
List of new EFRAG technical explanations
The questions are identified by a sequential identification number that they received when submitted to the Q&A Platform.
ID 177 - Mapping of sustainability matters to topical disclosures
ID 271 – Difference between work-related accident and work-related injury
ID 283 - Is waste incineration a disposal operation?
ID 339 - Use of secondary data, social protection
ID 389 – Annual total remuneration ratio and types of workers
ID 400 – Recycled waste
ID 408 – Categorisation of waste streams
ID 430 - Definition of gender
ID 434 - Difference non-employees, value chain workers
ID 438 - Treatment of non-material datapoints
ID 453 – Social protection; parental leave
ID 455 – Contextual information and consolidated data for water consumption
ID 456 - Policies on water treatment
ID 472 - Major incidents and deposits
ID 473 - Restrictions due to national regulations
ID 526 and ID 1021 – Disclosure of a non-material datapoint (water-consumption in own operations) related to a (a) material and (b) non-material topic
ID 531 - Base year
ID 549 - Gender pay gap; collective wage arrangements
ID 550 - Disclosure of discrimination / harassment cases found inconclusive
ID 619 – Air emissions in ESRS E2 versus ESRS E1
ID 644 - Limits of fossil fuel sector
ID 648 - Substances of (very high) concern - including entity-specific disclosures
ID 653 - Microplastics - tires wear
ID 676 – Water metrics in the value chain
ID 689 – Gender Pay Gap; Gender
ID 690 – Gender Pay Gap; Pay Transparency Directive
ID 713 and ID 928 – Microplastics – definition and REACH update
ID 730 – Type of employee, social protection
ID 734 - Disclosure of progress in meeting climate-related targets
ID 753 - Financial materiality in the value chain and power purchase agreements
ID 776 – Pollutants emissions – granularity
ID 800 - Corruption and Bribery
ID 815 – Substances of concern – in articles
ID 831 - Contractual instruments
ID 832 – Pollutants emissions – changes over time
ID 873 - Transport of removed GHGs
ID 882 – Data availability for biogenic emissions in Scope 3
ID 893 - Conversion factor fossil fuels
ID 905 - Manufacture of chemicals / pesticides and other agrochemical products
ID 923 - Phase-in entity specific disclosure
ID 935 - Financial effects - current vs anticipated
ID 952 – Metrics - rounding and decimals; materiality of information
ID 953 – Mandatory disclosures of material metrics on Biodiversity
ID 968 – Ecolabel
ID 1013 – Potential discrepancy in variable remuneration between ESRS 2 and ESRS E1
ID 1019 – Sustainability matter expected to become material in the future
ID 1025 – Direct drivers of biodiversity loss – definition
ID 1026 – Definition of end-users
ID 1039 – Time horizon - only long-term material
ID 1047 – Conditions for incorporation by reference and content index
ID 1048 – Disclosure of datapoint(s) related to a non-material Disclosure Requirement for a metric
ID 1054 - Short-term, length of the period
ID 1056 – MDR-Actions and resources allocated
ID 1060 – Pollution - affected communities consultations
ID 1072 - DR GOV-1 - ESG expertise of governance bodies
ID 1090 – Length of transitional provisions for early adopters
ID 1115 – Disclosing the number and area of sites near or in biodiversity-sensitive areas
ID 1126 – Heating values and geographical location of undertaking
ID 1136 - Targets without policy
ID 1144 - Phase-in 750 employees: Calculation of average
ID 1172 – Disclosure of the area of sites in or near biodiversity-sensitive area
ID 1297 – Level of disaggregation
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
