Last Friday, EFRAG finalized its first three ESRS Implementation Guidance documents. The guidance addresses the materiality assessment (IG 1), value chain (IG 2) and ESRS datapoints (IG 3).
For the uninitiated, EFRAG (the European Financial Reporting Advisory Group) is the technical adviser to the European Commission that developed the draft European Sustainability Reporting Standards issued under the CSRD. Its 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.
In this post, we discuss IG 2, EFRAG’s value chain implementation guidance. The guidance outlines the reporting requirements for the value chain from materiality assessment to policies and actions to metrics and targets. It illustrates the reporting boundary for sustainability reporting, including operational control for purposes of ESRS environmental standards. The guidance also includes FAQs and a value chain map summarizing value chain implications per disclosure requirement across all ESRS. EFRAG previously had published IG 2 in draft form for public feedback (see our earlier post).
IG 2 covers undertakings’ upstream and downstream value chains. It does not cover their own operations. The guidance is intended to be read with IG 1, the materiality assessment implementation guidance finalized at the same time as the value chain guidance. IG 1 is discussed in yesterday’s post.
The EFRAG guidance is non-authoritative. It is intended to support the implementation activities of preparers and others using or analyzing ESRS reports. The guidance does not amend or modify the ESRS.
Seven key points from the guidance
IG 2 characterizes the following as its key points:
How is the final guidance different?
Since it’s more in the weeds than most readers will want to go, we haven’t summarized the changes from the draft guidance in this post. The changes, which are relatively discrete, are discussed in detail in EFRAGs’ Feedback Statement.
Additional Ropes & Gray posts on the CSRD and ESRS
For numerous additional posts discussing the Corporate Sustainability Reporting Directive and the European Sustainability Reporting Standards – including the topics discussed in this post – see Ropes and Gray’s Insights page.
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