Assessment of CSRD ESRS E1 requirements
Various criteria must be assessed to verify the compliance of the inventory with the different requirements of ESRS E1. In the table in the appendixeach column represents a method/report and each row represents a criterion to be assessed. Below the criteria are defined by theme and the overall expectations are given, for the ESRS E1 reporting inventory of the CSRD standard (ESRS E1 data points are constantly evolving, for more information we recommend referring to the bibliography).
On the operational boundary
According to ESRS E1-6 the organisation must disclose:
gross GHG emissions from Scope 1
gross GHG emissions from Scope 2
gross GHG emissions from Scope 3
total gross GHG emissions
The organisation must include in its disclosure all GHG emissions (scopes 1 and 2) over which it has operational control. It must also include Scope 3 GHG emissions occurring in its value chain.
Gross Scope 2 GHG emissions must include:
gross GHG emissions on a "location-based" basis (using local energy mix information)
and gross GHG emissions on a "market-based" basis (using market-based information, depending on the electricity the organisation chooses to purchase).
On energy consumption
According to ESRS E1-5 the organisation must present its total energy consumption related to its own activities, from non-renewable and renewable sources, broken down by source. If applicable, the organisation must separately break down and present its non-renewable energy production and renewable energy production.
On avoided emissions and removals
According to ESRS E1-7, the organisation must disclose the GHG removal and sequestration projects it has developed in its value chain, as well as the amount of GHG emission reductions or removals from climate mitigation projects outside its value chain and financed through the purchase of any type of carbon credits.
On risk identification
The organisation must describe the process for identifying and assessing climate-related impacts, the analysis of climate physical risks in its own operations and across its value chain, as well as the transition risks and opportunities in its own operations and across its value chain.
On adaptation and mitigation policies
According to ESRS E1-2, the report must summarise the policies implemented by the organisation (and how they are implemented) to manage its climate-related impacts, risks and opportunities related to:
mitigation and adaptation to climate change
energy efficiency
the deployment of renewable energies
On the transition plan
According to ESRS E1-1 the organisation must disclose a transition plan (with one or more transition pathways, a quantified action plan, the means to implement it, an assessment of locked-in emissions...)
The report must indicate whether the company is excluded or not from the European Paris-aligned benchmarks. It must also provide an explanation of how the transition plan is integrated into the organisation's overall development strategy and financing schedule. Also, this disclosure must state whether this transition plan is approved by the organisation's administrative, management and supervisory bodies; If the organisation does not have a transition plan, this chapter must then detail if and, if so, when it will adopt one.
On the vision and objectives of the transition plan
According to ESRS E1-1 If applicable, an explanation of the objective pursued by the company to align its economic activities (revenues) with Regulation (EU) 2020/852 on taxonomy, including any delegated regulations related to mitigation and adaptation to climate change and its future alignment plans with the taxonomy.
According to ESRS E1-4 the organisation states whether and how it set its emissions reduction targets or any other targets to manage material impacts, risks and opportunities related to climate. GHG emissions reduction targets must be presented for all three scopes in absolute terms and, if relevant, in intensity terms. GHG emissions reduction targets must at least include target values for the year 2030 and, if available, for the year 2050. In addition the organisation indicates whether the GHG emissions reduction targets are science-based and compatible with limiting global warming to +1.5 °C.
On the actions of the transition plan
According to ESRS E1-1 The transition plan must contain an action plan detailing all the actions the organisation will take to achieve its decarbonisation objective and thus comply with the previously defined emissions reduction trajectory. It must also provide details of the investments and financing enabling their implementation.
On the reduction trajectory
According to ESRS E1-1 The transition plan must include one or more emissions reduction pathways consistent with the current carbon budgets
On monitoring
According to ESRS E1-1 The report must present the current status of the organisation's progress and advancement in implementing its transition plan. It must also present an assessment of "locked-in" emissions.
On neutralisation and mitigation projects
According to ESRS E1-7 The organisation must indicate the GHG removal and sequestration projects it may have developed originating from its own operations and in its upstream and downstream value chain, as well as the amount of GHG emission reductions or removals from climate mitigation projects outside its value chain and financed through the purchase of any type of carbon credits.
On the internal carbon price
According to ESRS E1-8 The organisation must disclose whether it applies internal carbon pricing systems, and if so, how these support its decision-making and encourage the implementation of climate-related policies and objectives. The information should specify:
the type of internal carbon pricing system
the specific scope of application of the carbon pricing mechanisms (activities, geographies, entities, etc...)
the carbon prices applied according to the type of mechanism and the critical assumptions used to determine the prices, including the source of the applied carbon prices and why they are considered relevant for the chosen application
for the current year, the approximate gross volumes of GHG emissions for Scopes 1, 2 and 3 in metric tonnes of CO2 equivalent (tCO2e) covered by these mechanisms.
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