bmad-plus 0.4.4 → 0.6.0

package/src/bmad-plus/packs/pack-shield/references/csrd/double-materiality.md

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+# Double Materiality Assessment (DMA) — Methodology and Templates
+
+## Overview
+
+The Double Materiality Assessment is the mandatory first step in CSRD compliance (ESRS 1, paras. 19–56). Every in-scope company must complete a DMA before deciding which ESRS topical standards to report on. The DMA determines what is reported; it cannot be completed retrospectively.
+
+---
+
+## Two Perspectives Explained
+
+### 1. Impact Materiality (Inside-Out)
+*Does the company have actual or potential impacts on people or the environment?*
+
+**Scope:** Own operations + upstream and downstream value chain
+
+**Actual impacts:** Currently occurring
+**Potential impacts:** Could occur in the future (assess likelihood)
+
+**Positive impacts:** Benefits to people or environment (e.g., jobs created, carbon sequestration)
+**Negative impacts:** Harm to people or environment (e.g., pollution, unsafe working conditions)
+
+**Significance assessment formula:**
+- *Negative actual impacts:* Scale × Scope × Irremediability
+- *Negative potential impacts:* Scale × Scope × Irremediability × Likelihood
+- *Positive actual impacts:* Scale × Scope
+- *Positive potential impacts:* Scale × Scope × Likelihood
+
+**Definitions:**
+| Criterion | Definition |
+|-----------|-----------|
+| Scale | Severity of the impact on people or environment |
+| Scope | How widespread (number of people affected / geographic area) |
+| Irremediability | Difficulty of restoring pre-impact state |
+| Likelihood | Probability of potential impact occurring |
+
+### 2. Financial Materiality (Outside-In)
+*Does the sustainability matter create risks or opportunities affecting the company's finances?*
+
+**Financial effects include:** Revenue, costs, assets, liabilities, cash flows, access to finance, cost of capital
+
+**Time horizons:** Short-term (<1 year), medium-term (1–5 years), long-term (>5 years)
+
+**Assessment criteria:**
+- Magnitude: How large could the financial effect be? (quantify where possible)
+- Likelihood: How probable is the financial effect?
+
+**Sources of financial risks and opportunities:**
+- Physical risks (acute: extreme weather; chronic: temperature, sea-level)
+- Transition risks (policy/regulation, technology, market, reputational)
+- Opportunities (energy efficiency, new markets, brand value, talent attraction)
+
+### The Materiality Threshold
+A topic is **material** if it meets EITHER the impact materiality threshold OR the financial materiality threshold (or both).
+
+There is no prescribed numerical threshold — companies set their own thresholds, which must be justified and disclosed (ESRS 2 IRO-1).
+
+---
+
+## DMA Process — Step by Step
+
+### Step 1: Understand the Context (ESRS 1, para. 45)
+
+**Activities:**
+1. Map the business model: products/services, markets, geographies
+2. Map the value chain: key suppliers (tier 1 and beyond), distribution, customers, end-users
+3. Identify the company's key activities, assets, and relationships
+4. Identify sector-specific sustainability risks using industry references (ESRS sector standards when published, SASB, GRI sector standards)
+
+**Output:** Business context document / value chain map
+
+---
+
+### Step 2: Identify Actual and Potential Impacts (ESRS 1, paras. 46–48)
+
+**Sources of impact identification:**
+- Internal: operations review, incident data, management interviews
+- External: stakeholder engagement, industry benchmarks, peer analysis, ESG ratings
+
+**Stakeholder engagement (ESRS 1, para. 22):**
+ESRS requires meaningful engagement with affected stakeholders and users of sustainability reporting. Stakeholders to engage:
+- Workers (own and value chain)
+- Local communities
+- Customers / consumers
+- NGOs and civil society
+- Investors and financial institutions
+- Regulators
+
+**Output:** Long list of potential impacts per ESRS topic area
+
+---
+
+### Step 3: Assess Significance of Impacts
+
+Rate each identified impact on each criterion using a 1–5 scale (or equivalent):
+
+**Impact Scoring Matrix:**
+
+| Score | Scale | Scope | Irremediability | Likelihood |
+|-------|-------|-------|----------------|-----------|
+| 1 | Minimal | Very local / few individuals | Easily remediable | Very unlikely (<5%) |
+| 2 | Low | Local / small group | Mostly remediable | Unlikely (5–25%) |
+| 3 | Moderate | Regional / significant group | Partially remediable | Possible (25–50%) |
+| 4 | High | National / large group | Mostly irreversible | Likely (50–75%) |
+| 5 | Severe | International / systemic | Irreversible | Very likely (>75%) |
+
+**Severity score (negative actual):** Scale × Scope × Irremediability (max 125)
+**Severity score (negative potential):** Scale × Scope × Irremediability × Likelihood (max 625)
+
+**Materiality threshold:** Company-defined (example: severity ≥ 27 for actual impacts; ≥ 50 for potential impacts)
+
+---
+
+### Step 4: Identify Financial Risks and Opportunities
+
+For each ESRS topic, assess whether there are associated financial risks or opportunities.
+
+**Financial Risk/Opportunity Identification Template:**
+
+| ESRS Topic | Risk/Opportunity Type | Description | Time Horizon | Potential Financial Effect |
+|-----------|----------------------|-------------|-------------|--------------------------|
+| Climate (E1) | Physical risk (acute) | Flooding of key manufacturing site | Short-term | Asset damage, business interruption |
+| Climate (E1) | Transition risk | Carbon pricing increases operating costs | Medium-term | Higher fuel/energy costs |
+| Water (E3) | Physical risk (chronic) | Water scarcity in production region | Long-term | Supply disruption, increased costs |
+| Workforce (S1) | Opportunity | Employer brand attracts talent | Short-term | Lower recruitment costs, retention |
+
+---
+
+### Step 5: Assess Financial Significance
+
+Rate identified risks/opportunities:
+
+| Rating | Magnitude | Likelihood |
+|--------|-----------|-----------|
+| Low | <1% of EBITDA | <25% |
+| Medium | 1–5% of EBITDA | 25–75% |
+| High | >5% of EBITDA | >75% |
+
+**Financial materiality score:** Magnitude × Likelihood → topic is financially material if score exceeds threshold.
+
+---
+
+### Step 6: Determine Materiality — Topic by Topic
+
+Apply the materiality determination matrix:
+
+| ESRS Topic | Impact Material? | Financially Material? | Overall Materiality | Report? |
+|-----------|-----------------|----------------------|-------------------|---------|
+| E1 Climate | Yes (Scope 3 GHG) | Yes (carbon pricing risk) | **MATERIAL** | Full ESRS E1 |
+| E2 Pollution | No | No | Non-material | Omit (brief statement) |
+| E3 Water | Yes (operations in water-stressed area) | No | **MATERIAL** | Full ESRS E3 |
+| S1 Own Workforce | Yes | No | **MATERIAL** | Full ESRS S1 |
+| G1 Business Conduct | No | Yes (compliance risk) | **MATERIAL** | Full ESRS G1 |
+
+---
+
+### Step 7: Document the DMA (ESRS 2 SBM-3 + IRO-1)
+
+**Mandatory disclosures about the DMA process:**
+
+*ESRS 2 IRO-1 — Description of the process to identify and assess material IROs:*
+- Scope of assessment (own operations / value chain depth)
+- Methodology and criteria used
+- How stakeholders were engaged
+- Timeline and frequency of DMA
+- How the results inform strategy and reporting
+
+*ESRS 2 SBM-3 — Material impacts, risks and opportunities:*
+- Complete list of material topics identified
+- How material IROs interact with business model and strategy
+- Current and anticipated financial effects
+
+**Materiality Statement:** Brief explanation for each ESRS topic found non-material (why it was excluded).
+
+---
+
+### Step 8: Validate and Update
+
+- DMA must be updated at least annually
+- Trigger for mid-period review: significant business change, new regulation, emerging risk, stakeholder concern
+- Changes to materiality conclusions must be disclosed
+
+---
+
+## Sector-Specific Guidance
+
+### High-Likelihood Material Topics by Sector
+
+| Sector | Typically Material |
+|--------|-------------------|
+| Energy / Utilities | E1 (Climate), E2 (Pollution), E3 (Water), G1 (Business Conduct) |
+| Financial Services | E1 (financed emissions), G1 (Business Conduct), S4 (Consumers) |
+| Manufacturing | E1 (GHG), E2 (Pollution), E5 (Circular Economy), S1 (Workforce), S2 (Value Chain) |
+| Retail / Consumer Goods | E1, E5 (packaging/waste), S2 (supply chain labour), S4 (consumers) |
+| Agriculture / Food | E3 (Water), E4 (Biodiversity), E2 (Pollution), S2 (Value Chain) |
+| Construction / Real Estate | E1 (building emissions), E5 (materials), E4 (land use), S3 (communities) |
+| Technology | S1 (Workforce), S4 (data protection/consumers), G1 (Business Conduct) |
+| Mining / Extractives | E1, E2, E3, E4, S3 (communities), G1 |
+| Healthcare / Pharma | S4 (consumers), S1 (workforce), G1 (business conduct), E1 |
+
+---
+
+## DMA Documentation Templates
+
+### Impact Register Template
+
+| ID | ESRS Topic | Impact Description | Direction | Scope | Time Horizon | Scale (1-5) | Scope (1-5) | Irremediability (1-5) | Likelihood (1-5) | Severity Score | Material? |
+|----|-----------|-------------------|-----------|-------|-------------|------------|------------|----------------------|----------------|---------------|-----------|
+| I-001 | E1 | Scope 3 GHG emissions from product use | Negative | Downstream | Long-term | 5 | 5 | 4 | 5 | 500 | YES |
+| I-002 | S1 | Gender pay inequity among employees | Negative | Own ops | Short-term | 3 | 3 | 3 | 4 | 108 | YES |
+| I-003 | E4 | No operations near biodiversity areas | n/a | — | — | 1 | 1 | 1 | 1 | 1 | NO |
+
+### Financial Risk/Opportunity Register Template
+
+| ID | ESRS Topic | Type | Description | Time Horizon | Magnitude | Likelihood | Financial Score | Material? |
+|----|-----------|------|-------------|-------------|-----------|-----------|----------------|-----------|
+| F-001 | E1 | Transition risk | EU ETS carbon costs increase | Short-medium | High | High | HIGH | YES |
+| F-002 | E3 | Physical risk | Water scarcity affects key plant | Long-term | Medium | Medium | MEDIUM | YES |
+| F-003 | S1 | Opportunity | ESG leader attracts talent | Short-term | Low | Medium | LOW | NO |
+
+### DMA Summary Table
+
+| ESRS Standard | Topic | Impact Materiality | Financial Materiality | Overall Material | First Reporting Year |
+|--------------|-------|-------------------|----------------------|-----------------|---------------------|
+| E1 | Climate Change | ✓ | ✓ | ✓ | FY 2025 |
+| E2 | Pollution | ✗ | ✗ | ✗ | — |
+| E3 | Water & Marine | ✓ | ✓ | ✓ | FY 2025 |
+| E4 | Biodiversity | ✗ | ✗ | ✗ | — |
+| E5 | Circular Economy | ✓ | ✗ | ✓ | FY 2025 |
+| S1 | Own Workforce | ✓ | ✗ | ✓ | FY 2025 |
+| S2 | Value Chain Workers | ✓ | ✗ | ✓ | FY 2025 |
+| S3 | Communities | ✗ | ✗ | ✗ | — |
+| S4 | Consumers | ✗ | ✓ | ✓ | FY 2025 |
+| G1 | Business Conduct | ✓ | ✓ | ✓ | FY 2025 |
+
+---
+
+## Common DMA Pitfalls
+
+**1. Scope too narrow:** Limiting the DMA to own operations only; ESRS requires value chain consideration where material.
+
+**2. Stakeholder engagement inadequate:** Consulting only investors; ESRS requires engagement with affected stakeholders (workers, communities).
+
+**3. Financial materiality neglected:** Conducting only impact assessment; financial risks/opportunities must be assessed separately.
+
+**4. Thresholds not justified:** Setting arbitrary thresholds without documenting the rationale; thresholds must be disclosed in IRO-1.
+
+**5. DMA done retrospectively:** Completing the DMA after deciding what to report; the DMA must drive reporting decisions.
+
+**6. Over-exclusion:** Excluding topics from reporting without adequate justification; ESRS requires a brief explanation for excluded topics.
+
+**7. Static DMA:** Treating DMA as a one-time exercise; it must be reviewed at least annually.
+
+**8. Climate auto-excluded:** Climate change (E1) is presumed material for most companies; requires robust justification and strong evidence to exclude.

package/src/bmad-plus/packs/pack-shield/references/csrd/esrs-standards.md

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+# ESRS Standards — Detailed Reference
+
+## Cross-Cutting Standards (Mandatory for All In-Scope Companies)
+
+---
+
+### ESRS 1 — General Requirements
+
+**Purpose:** Sets the foundations for CSRD reporting — principles, structure, and the double materiality concept.
+
+**Key Requirements:**
+
+**Reporting Principles (paras. 1–18)**
+- Relevance, faithful representation, comparability, verifiability, understandability
+- Materiality-based reporting — only report what is material after DMA
+- Connected information — sustainability information must connect to financial statements
+
+**Double Materiality (paras. 19–44)**
+- Two perspectives: impact materiality + financial materiality
+- Both lenses must be applied; a topic is material if it meets EITHER criterion
+- DMA must cover own operations AND value chain
+
+**Value Chain (paras. 62–68)**
+- Must consider upstream (suppliers) and downstream (customers, end-users) value chain
+- Depth of value chain assessment scales with material impacts/risks
+- Where direct data unavailable, use proxy data / sector averages (disclose methodology)
+
+**Time Horizons (para. 72)**
+- Short-term: up to 1 year
+- Medium-term: 1–5 years
+- Long-term: beyond 5 years
+
+**Comparative Information (para. 86)**
+- Prior-year comparative data required for all quantitative disclosures
+
+**Transition Relief (paras. 118–134)**
+- Phase-in for Scope 3, ESRS S1 pay gap, some biodiversity datapoints
+- Listed SMEs may use simplified ESRS (voluntary standard pending)
+
+---
+
+### ESRS 2 — General Disclosures
+
+**Purpose:** Mandatory disclosures on governance, strategy, and risk management applicable to all in-scope companies regardless of DMA outcome.
+
+**Status:** Fully mandatory — cannot be omitted even if all topical standards are found non-material.
+
+#### GOV — Governance
+
+**GOV-1: Role of the administrative, management and supervisory bodies**
+- Composition and diversity of governance bodies related to sustainability
+- Sustainability expertise of governance members
+- How governance bodies oversee sustainability strategy and IROs
+- Integration of sustainability in board agendas and reporting lines
+
+**GOV-2: Information provided to and sustainability matters addressed by the undertaking's administrative, management and supervisory bodies**
+- Frequency and nature of sustainability information provided to governing bodies
+- How governing bodies consider sustainability risks and opportunities in decision-making
+
+**GOV-3: Integration of sustainability-related performance in incentive schemes**
+- Whether and how ESG performance is integrated in executive/management remuneration
+- Proportion of remuneration linked to sustainability targets
+
+**GOV-4: Statement on due diligence**
+- Whether the company has a due diligence process aligned with international standards (UN Guiding Principles, OECD Guidelines)
+- How human rights and environmental due diligence is embedded in operations
+
+**GOV-5: Risk management and internal controls over sustainability reporting**
+- Internal control framework for sustainability reporting
+- How risks of material misstatement in sustainability data are managed
+
+#### SBM — Strategy and Business Model
+
+**SBM-1: Strategy, business model, and value chain**
+- Business model overview and key value drivers
+- How sustainability matters are integrated into strategy
+- Full value chain description (upstream, operations, downstream)
+- Significant products, services, markets, and geographies
+
+**SBM-2: Interests and views of stakeholders**
+- Stakeholder engagement process and which stakeholders were consulted
+- How stakeholder views influenced strategy and reporting
+- Linkage between stakeholder input and material IROs identified
+
+**SBM-3: Material impacts, risks and opportunities and their interaction with strategy and business model**
+- Output of the DMA: list of material topics
+- How material IROs interact with the business model and strategy
+- Financial effects: current financial effects and anticipated financial effects of material IROs
+- Resilience of strategy under different scenarios
+
+#### IRO — Impacts, Risks and Opportunities
+
+**IRO-1: Description of the processes to identify and assess material impacts, risks and opportunities**
+- DMA methodology: scope, process, tools, assessment criteria
+- How impact significance is assessed (scale, scope, irremediability, likelihood)
+- How financial risks/opportunities are identified and assessed
+- Stakeholders consulted and how their input was used
+- Any sector-specific guidance applied
+
+---
+
+## Environmental Standards
+
+### ESRS E1 — Climate Change
+
+**Applicability:** Apply if material after DMA. Climate is presumed material for most large companies — requires compelling justification to omit.
+
+**Mandatory Datapoints Regardless of Materiality:**
+- E1-1: Transition plan for climate change mitigation (Art. 19a(2)(a) — legally required even if topic found non-material)
+- Energy consumption from fossil fuels (ESRS E1-5, para. 40)
+
+**Key Disclosures:**
+
+**E1-1: Transition plan for climate change mitigation**
+- Decarbonisation targets: 2030, 2040, 2050 aligned with 1.5°C
+- Planned actions and enablers
+- Financial resources allocated (capex, opex, R&D)
+- Role of carbon offsets (must distinguish from own-emission reductions)
+- Locked-in GHG assets and stranded asset risk
+- EU Taxonomy alignment targets
+
+**E1-2: Policies related to climate change mitigation and adaptation**
+- Scope of policies (own operations / value chain)
+- Climate risk management policies
+- Net-zero ambition and pathway description
+
+**E1-3: Actions and resources in relation to climate change policies**
+- Decarbonisation action plan with timelines
+- Resources committed (financial, human, technical)
+- Actions relating to key GHG sources in own operations and value chain
+
+**E1-4: Targets related to climate change mitigation and adaptation**
+- GHG reduction targets (scope 1, 2, 3 separately)
+- Alignment with Paris Agreement (1.5°C pathway)
+- Energy efficiency and renewable energy targets
+- Physical and transition risk mitigation targets
+
+**E1-5: Energy consumption and mix**
+- Total energy consumption (MWh)
+- Breakdown: fossil fuels / renewables / nuclear
+- Energy intensity (per net revenue or other denominator)
+- Renewable energy share
+
+**E1-6: Gross Scopes 1, 2, 3 and Total GHG emissions**
+- Scope 1: direct GHG emissions (tCO2e)
+- Scope 2: location-based AND market-based (tCO2e)
+- Scope 3: all 15 GHG Protocol categories (tCO2e)
+- Total GHG emissions (Scope 1 + 2 + 3)
+- GHG intensity (tCO2e per € net revenue)
+- Methodology: GHG Protocol, emission factors, exclusions
+
+**E1-7: GHG removals and climate project finance**
+- GHG removals from own operations
+- Carbon credits purchased (volume, type, standard)
+- Distinction between removals and credits in net-zero claims
+
+**E1-8: Internal carbon pricing**
+- Whether internal carbon price is used in decision-making
+- Price per tCO2e and application scope
+
+**E1-9: Anticipated financial effects from material physical and transition risks and potential climate-related opportunities**
+- Financial effects of physical risks (acute: flood, storm; chronic: temperature rise, sea-level)
+- Financial effects of transition risks (policy, technology, market, reputational)
+- Climate opportunities and anticipated financial benefits
+- Climate scenario analysis (at minimum 1.5°C and >2°C scenarios recommended)
+
+---
+
+### ESRS E2 — Pollution
+
+**Applicability:** Apply if material — manufacturing, chemicals, mining, agriculture sectors most likely.
+
+**Key Disclosures:**
+- **E2-1:** Policies related to pollution
+- **E2-2:** Actions and resources to prevent/control pollution
+- **E2-3:** Targets related to pollution
+- **E2-4:** Pollution of air, water, soil — by pollutant type and medium
+  - Substances of Very High Concern (SVHC) under REACH Regulation
+  - Persistent Organic Pollutants (POPs)
+  - NOx, SOx, PM2.5 emissions
+  - Wastewater discharges by type and receiving body
+- **E2-5:** Substances of concern — use, release, incidents
+- **E2-6:** Anticipated financial effects from pollution-related risks and opportunities
+
+---
+
+### ESRS E3 — Water and Marine Resources
+
+**Applicability:** Apply if material — agriculture, food & beverage, mining, textiles, electronics most likely.
+
+**Key Disclosures:**
+- **E3-1:** Policies related to water and marine resources
+- **E3-2:** Actions and resources to manage water and marine resources
+- **E3-3:** Targets for water and marine resources
+- **E3-4:** Water consumption and withdrawal
+  - Total water withdrawal (megalitres) by source (surface, groundwater, third-party)
+  - Total water consumption (megalitres)
+  - Water intensity
+  - Withdrawal in water-stressed areas (WRI Aqueduct or equivalent)
+- **E3-5:** Anticipated financial effects from water and marine resource risks
+
+---
+
+### ESRS E4 — Biodiversity and Ecosystems
+
+**Applicability:** Apply if material — sites in or adjacent to biodiversity-sensitive areas, land use change, supply chains impacting biodiversity.
+
+**Key Disclosures:**
+- **E4-1:** Transition plan and consideration of biodiversity and ecosystems in strategy and business model
+- **E4-2:** Policies related to biodiversity and ecosystems
+- **E4-3:** Actions and resources related to biodiversity and ecosystems
+- **E4-4:** Targets related to biodiversity and ecosystems
+- **E4-5:** Impact metrics related to biodiversity and ecosystems change — land use, ecosystem fragmentation, invasive species
+- **E4-6:** Anticipated financial effects from biodiversity and ecosystem-related risks
+
+**Key metric:** Sites owned, leased, or managed in or near protected areas / key biodiversity areas.
+
+---
+
+### ESRS E5 — Resource Use and Circular Economy
+
+**Applicability:** Apply if material — manufacturing, retail, packaging, construction, electronics most likely.
+
+**Key Disclosures:**
+- **E5-1:** Policies related to resource use and circular economy
+- **E5-2:** Actions and resources related to resource use and circular economy
+- **E5-3:** Targets related to resource use and circular economy
+- **E5-4:** Resource inflows — material consumption, virgin materials, renewable vs. non-renewable
+- **E5-5:** Resource outflows — waste by type (hazardous/non-hazardous) and disposal method (recycling, landfill, incineration); by-products and secondary raw materials
+- **E5-6:** Anticipated financial effects from resource use and circular economy transition risks/opportunities
+
+---
+
+## Social Standards
+
+### ESRS S1 — Own Workforce
+
+**Applicability:** Apply if material — workforce impacts are typically material for most large companies.
+
+**Phase-in:** Gender pay gap and some workforce metrics have phase-in provisions for first-year reporters.
+
+**Key Disclosures:**
+
+**S1-1:** Policies related to own workforce (working conditions, equal treatment, health & safety)
+**S1-2:** Processes for engaging with own workers and workers' representatives
+**S1-3:** Processes to remediate negative impacts and channels for own workers to raise concerns
+
+**S1-4:** Taking action on material impacts on own workers, and approaches to managing material risks and pursuing material opportunities related to own workforce, and effectiveness of those actions
+
+**S1-5:** Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities
+
+**S1-6:** Characteristics of the undertaking's employees
+- Total number of employees
+- Breakdown: by gender, by country (for companies ≥1,000 employees in a country — if applicable), by employment type (permanent/temporary), by employment regime (full-time/part-time)
+- Number of non-employee workers (contractors, agency staff)
+
+**S1-7:** Characteristics of non-employees in the undertaking's own workforce
+
+**S1-8:** Collective bargaining coverage and social dialogue
+- % of own employees covered by collective bargaining agreements
+- Countries where collective bargaining coverage applies
+
+**S1-9:** Diversity metrics
+- % female employees (total workforce + management levels)
+- % employees by age group (<30, 30-50, >50)
+
+**S1-10:** Adequate wages — alignment with living wage benchmarks
+
+**S1-11:** Social protection coverage
+
+**S1-12:** Persons with disabilities in the workforce
+
+**S1-13:** Training and skills development
+- Average training hours per employee per year
+- % employees receiving regular performance reviews
+- Transition assistance programs
+
+**S1-14:** Health and safety
+- % employees covered by health & safety management system (ISO 45001 or equivalent)
+- Number of work-related fatalities (employees and non-employees)
+- Lost Time Injury Frequency Rate (LTIFR) — per 1 million hours worked
+- Number of recordable work-related accidents
+- Work-related ill health cases
+
+**S1-15:** Work-life balance — parental leave uptake rates by gender
+
+**S1-16:** Compensation metrics
+- CEO pay ratio (CEO total remuneration / median employee total remuneration)
+- Gender pay gap (median remuneration women vs. men, %)
+
+---
+
+### ESRS S2 — Workers in the Value Chain
+
+**Applicability:** Apply if material — companies with complex supply chains in high-risk sectors (garments, electronics, agriculture) most likely material.
+
+**Key Disclosures:**
+- **S2-1:** Policies related to workers in the value chain
+- **S2-2:** Processes for engaging with workers in the value chain about impacts
+- **S2-3:** Processes to remediate negative impacts on value chain workers
+- **S2-4:** Actions taken, and approaches to managing risks related to value chain workers
+- **S2-5:** Targets related to managing material impacts on workers in the value chain
+
+**Key metrics:** Number of value chain workers potentially affected by adverse impacts; coverage of due diligence by supply chain tier.
+
+---
+
+### ESRS S3 — Affected Communities
+
+**Applicability:** Apply if material — extractives, infrastructure, large land users, operations in indigenous territories.
+
+**Key Disclosures:**
+- **S3-1:** Policies related to affected communities
+- **S3-2:** Processes for engaging with affected communities about impacts
+- **S3-3:** Processes to remediate negative impacts on affected communities
+- **S3-4:** Actions and approaches to managing community-related risks
+- **S3-5:** Targets related to managing impacts on affected communities
+
+**Topics covered:** Access to land/water/food, community health, indigenous peoples' rights (FPIC), economic displacement, cultural heritage.
+
+---
+
+### ESRS S4 — Consumers and End-Users
+
+**Applicability:** Apply if material — B2C companies, healthcare, financial services, digital platforms, food/beverage most likely.
+
+**Key Disclosures:**
+- **S4-1:** Policies related to consumers and end-users
+- **S4-2:** Processes for engaging with consumers and end-users about impacts
+- **S4-3:** Processes to remediate negative impacts on consumers and end-users
+- **S4-4:** Actions and approaches to managing consumer-related risks and opportunities
+- **S4-5:** Targets related to managing material impacts on consumers and end-users
+
+**Topics covered:** Product safety, data protection, accessibility, responsible marketing, non-discrimination, right to privacy, financial inclusion.
+
+---
+
+## Governance Standards
+
+### ESRS G1 — Business Conduct
+
+**Applicability:** Apply if material — typically material for most large companies given breadth of topics.
+
+**Key Disclosures:**
+
+**G1-1:** Corporate culture and business conduct policies
+- Code of conduct / code of ethics
+- Anti-corruption and anti-bribery policies
+- Lobbying and political engagement policies
+- Payment practices policies (prompt payment)
+
+**G1-2:** Management of relationships with suppliers
+- Responsible procurement policies
+- Fair dealing with suppliers (payment terms, supplier codes)
+- Tier-1 supplier coverage of due diligence
+
+**G1-3:** Prevention and detection of corruption and bribery
+- Risk assessment methodology
+- Training coverage for anti-corruption
+- Incidents of corruption confirmed during the reporting period
+
+**G1-4:** Incidents of corruption or bribery
+- Number of convictions for corruption
+- Total monetary value of fines for corruption
+- Actions taken in response to confirmed incidents
+
+**G1-5:** Political influence and lobbying activities
+- Total financial or in-kind contributions to political parties
+- List of significant lobbying activities and positions taken
+
+**G1-6:** Payment practices
+- Average payment period (days) to suppliers
+- % of payments made beyond contractual terms
+- Complaints from suppliers about payment practices
+
+---
+
+## Interoperability Notes
+
+### GRI Alignment (ESRS 1, Appendix C)
+EFRAG published an interoperability mapping between ESRS and GRI Standards. Key mappings:
+- ESRS E1 ↔ GRI 305 (Emissions), GRI 302 (Energy)
+- ESRS S1 ↔ GRI 401 (Employment), GRI 403 (OHS), GRI 405 (Diversity)
+- ESRS G1 ↔ GRI 205 (Anti-corruption), GRI 206 (Anti-competitive behaviour)
+
+Companies with GRI reports should conduct gap analysis against ESRS rather than starting fresh.
+
+### TCFD Alignment
+ESRS E1 incorporates TCFD framework recommendations:
+- Governance → ESRS 2 GOV disclosures
+- Strategy → ESRS 2 SBM disclosures + E1-9 financial effects
+- Risk management → ESRS 2 IRO-1
+- Metrics & targets → ESRS E1-4, E1-6
+
+TCFD reporters have a strong foundation but must add: Scope 3 (all 15 categories), transition plan (E1-1), and EU Taxonomy alignment.
+
+### SASB Alignment
+EFRAG published ESRS-SASB interoperability guidance. Sector-specific SASB metrics may provide useful proxies for ESRS datapoints in the same domain.
+
+### CDP Alignment
+CDP questionnaire responses (Climate, Water, Forests) provide significant data that maps to ESRS E1, E3, E4. CDP reporters can reuse much of their data collection infrastructure.