ESRS S4 – Consumers and End-users
The ESRS S4 is the fourth of four social standards of the European Sustainability Reporting Standards (ESRS). The standards were developed by EFRAG and are to be applied in accordance with the CSRD (Corporate Sustainability Reporting Directive). This article is based on the final delegated act of the ESRS, which was published on December 22nd 2023.
ESRS S4 is intended to specify the information to be disclosed regarding the material positive and negative actual or potential impacts, risks and opportunities on consumers and and-users. Undertakings shall explain their approach to identify and manage these impacts on consumers and end-users. Furthermore, companies should explain how such impacts, as well as dependencies on consumers and end-users can result in material risks or opportunities for the undertaking. The standard should also set out the financial effects on the undertaking in the short-, medium- and long-term. In addition, the standard includes characteristics and various indicators relating to consumers and end-users.
What is the definition of consumers?
Individuals who acquire, consume or use goods and services for personal use, either for themselves or for others, and not for resale, commercial or trade, business, craft or profession purposes.
What is the definition of end-users?
Individuals who ultimately use or are intended to ultimately use a particular product or service.
Interactions with other ESRS
ESRS S4 Disclosure requirements
Undertakings must apply the disclosure requirements of this standard if material impacts on, or material risks and opportunities related to consumers and end-users have been identified through the materiality assessment.
The table below provides an overview of the disclosure requirements of this standard:
|
No. |
Disclosure requirement |
Description |
|
1 |
ESRS 2 SBM-2 |
Interests and views of stakeholders |
|
2 |
ESRS 2 SBM-3 |
Material impacts, risks and opportunities and their interaction with strategy and business model |
|
3 |
S4-1 |
Policies related to consumers and end-users |
|
4 |
S4-2 |
Processes for engaging with consumers and end-users about impacts |
|
5 |
S4-3 |
Processes to remediate negative impacts and channels for consumers and end-users to raise concerns |
|
6 |
S4-4 |
Taking action on material impacts on consumers and end-users, and approaches to managing material risks and pursuing material opportunities related to affected communities, and effectiveness of those actions |
|
7 |
S4-5 |
Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities |
1. Interests and views of stakeholders
The undertaking should disclose how the interests, views and rights of its consumers and end-users, including human rights, influence its strategy and business model.
2. Material impacts, risks and opportunities and their interaction with strategy and business model
ESRS 2 SBM-3 requires undertakings to disclose, whether and how actual and potential impacts on consumers and end-users result from the strategy and business model and how these impacts contribute to adapting the strategy and business model. Furthermore, the relationship between strategy and business model and material risks and opportunities resulting from impacts and dependencies on consumers and end-users should be disclosed.
Moreover, undertakings shall disclose whether they have included all consumers and end-users that could be materially impacted by their own operations or a business relationship in the value chain. The undertaking must describe the types of consumers and end-users and, in the case of negative impacts, whether these impacts are widespread or systemic, or whether they relate to individual cases or specific business relationships.
3. Policies related to consumers and end-users
The undertaking should report on its policies to identify, assess, manage and remediate the material impacts on consumers and end-users, as well as on policies regarding associated material risks and opportunities.
4. Process for engaging with consumers and end-users about impacts
In this context, the undertaking should describe how it engages with consumers and end-users and their representatives regarding actual and potential material impacts on consumers and and-users, as part of its due diligence process. It shall also disclose, how the consumers’ and end-users’ perspectives inform the management of these impacts.
5. Process to remediate negative impacts and channels for consumers and end-users to raise concerns
The undertaking shall describe the process for remedying negative impacts on consumers and end-users that are connected to the undertaking. Furthermore, the undertaking must report on the channels available to the consumers and end-users to raise concerns.
6. Taking action on material impacts
S4-4 requires undertakings to disclose their actions to address material negative and positive impacts, mitigate significant risks and pursue significant opportunities related to consumers and end-users. The effectiveness of these measures should also be addressed.
7. Targets related impacts, risks and opportunities
The undertaking shall disclose time-bound and outcome-oriented targets for reducing negative impacts and advancing positive impacts on consumers and end-users as well as for managing risks and opportunities related to consumers and end-users.
