What is CSRD ESRS E3?
ESRS E3 is a CSRD standard that focuses on how companies impact and manage risks related to water and marine resources. It guides businesses in reporting their policies, actions, and the effects of their operations on water use and marine ecosystems.
The goal of ESRS E3 is to ensure companies are transparent about how they manage water resources, reduce pollution, and protect aquatic ecosystems. It also aims to help businesses understand and share how their activities contribute to global efforts like reducing water consumption, safeguarding marine life, and supporting sustainable development goals.
The standard asks companies to disclose their policies for managing water and marine resources. They must explain the steps taken to reduce negative impacts. Companies should also provide data on water use, especially in areas at risk of water stress. Additionally, they need to share information on how they address risks and opportunities related to water and marine resources.
ESRS E3 contains 51 datapoints, divided into five main disclosure requirements. In comparison to ESRS E1, which has 271 datapoints, ESRS E3 is relatively small. The ESRS E3 is the smallest standard within the environmental pillar of the ESRS framework. Despite its size, it still plays a crucial role in managing water and marine resources.
Summary of the ESRS E3 standard
The standard is focused on how companies manage their impact on water and marine resources. The standard outlines the need for businesses to report on their policies, actions, and targets regarding the sustainable use of these resources. Below is a breakdown of the five key areas covered by ESRS E3:
- Impacts on water and marine resources: Companies must disclose how their operations affect water and marine ecosystems.
- Policies for water and marine management: Businesses are required to report on the specific policies they have in place to manage their water usage, protect marine ecosystems, and reduce pollution.
- Actions and resources allocated: Organizations must outline the actions they are taking and the resources they are dedicating to protect water and marine resources.
- Targets for water and marine conservation: ESRS E3 requires companies to set clear targets related to water and marine resource management.
- Anticipated financial effects: Companies must disclose the financial implications of their water and marine-related risks and opportunities.
These five key points of ESRS E3 are essential because they directly address the critical elements of managing water and marine resources sustainably. Each point serves a specific purpose in guiding companies to adopt responsible practices.
Breakdown of the CSRD ESRS E3
E3-1: Policies related to water and marine resources
Organizations should share the core of their sustainability strategy. They need to detail how they manage their impact on water and marine resources. This isn’t just about stating policies. It’s about offering a clear vision of how water is sourced, utilized, and protected throughout operations and the supply chain.
Companies should dive into their approach to water management. They should emphasize sustainable practices, from minimizing water use to preventing pollution. The preservation of marine ecosystems and commitments to responsible water consumption should be highlighted.
A compelling report goes beyond policy descriptions. It should showcase success stories. Illustrate how these policies have been put into action. Whether through innovative conservation programs or community collaborations, these examples show how theory becomes tangible results.
E3-2: Actions and resources on water and marine recourses
Actions bring policies to life. Companies should narrate the scope and scale of their initiatives related to water and marine resources. This includes reducing water consumption, improving efficiency, and investing in recycling and reuse technologies.
The focus is on minimizing damage and enhancing the resilience of water systems and ecosystems. Companies should illustrate their role in safeguarding natural assets.
E3-3: Targets related to water and marine resources
Setting ambitious and measurable targets drives sustainability forward. Companies should explain the vision guiding their efforts. Articulate how targets for reducing water withdrawals or mitigating marine resource impacts tie into broader sustainability objectives. Highlight specific measures in high water stress regions.
Targets should feel dynamic. They are evolving benchmarks reflecting the company’s responsiveness. Explain whether goals are self-imposed or part of regulatory frameworks. Clarify how progress is monitored and actions are adjusted.
E3-4: Water consumption
This section focuses on the company’s performance in managing water consumption across its operations. Companies are required to report comprehensive data on their total water usage, including withdrawals, consumption, recycling, and reuse. .
In addition to reporting water usage figures, organizations should provide data on the percentage of water that is recycled or reused, as well as any initiatives to increase water efficiency in their operations. They should also include water consumption intensity ratios, such as water usage per unit of revenue or product output.
They should also include water consumption intensity ratios, such as water usage per unit of revenue or product output, to provide context and allow stakeholders to evaluate the company’s water management efforts in relation to its business scale.
E3-5: Anticipated financial effects
The link between water management and financial performance is clear. Outline risks and opportunities. Explain how these factors intertwine with the overall strategy. Risks like water scarcity or pollution disrupt operations. Opportunities like water-saving innovations offer cost benefits.
In addition to this, companies should also evaluate opportunities arising from sustainable water management practices. For example, transitioning to more efficient water usage or adopting innovative marine resource management solutions can provide competitive advantages, cost savings, or new market opportunities.
Tips for environmental sustainability reporting
1. Make sure to know the terminology
Understanding the key terms in environmental sustainability reporting is essential to creating a meaningful and accurate report, also when reporting under ESRS E3. Terms like GHG emissions (Greenhouse Gas emissions) are common.
It’s important to understand their categories, such as direct emissions from owned sources and indirect emissions from the supply chain. For example, you’ll often encounter phrases like carbon footprint or net-zero, so having a firm grasp of these concepts will ensure that your report is both compliant and easy to follow.
2. Have a clear overview of your supply chain
An important aspect of sustainability reporting is providing an in-depth look at your supply chain, especially when reporting on emissions. Companies are required to report on CSRD Scope 1, 2, and 3 emissions.
In more depth, companies are required to report on Scope 1 (direct emissions from owned or controlled sources), Scope 2 (indirect emissions from purchased electricity), and Scope 3 (all other indirect emissions, such as those from suppliers).
To properly account for Scope 3 emissions, you must gather reliable data from the companies involved in your supply chain. This may require building relationships to ensure transparency and collaboration.
3. Use the right tooling
Sustainability reporting under the CSRD can be a complex task. The right CSRD tooling can make it more manageable. Specialized software for tracking environmental data, collecting information, and generating reports can automate many processes. This helps ensure compliance with CSRD requirements.
Tools that integrate data from different departments and offer real-time tracking of sustainability metrics can streamline your reporting efforts. They also make it easier to meet the specific standards set by the CSRD. Additionally, these tools help identify areas for improvement and enable more informed decision-making throughout the organization.
4. Involve different departments
Sustainability reporting should not be the sole responsibility of the environmental team. Involving departments like procurement, HR, and operations can provide a more comprehensive view of your company’s environmental impact.
Each department contributes to the overall sustainability of the organization. This can be through sourcing sustainable materials, improving energy efficiency, or managing corporate social responsibility initiatives. Bringing together diverse perspectives ensures that your report covers all aspects of your environmental impact. It also makes the report more accurate and holistic.