How the VS handles materiality
Under the full ESRS, a company first assesses which topics are material and then reports on them. The VS works the other way round: the standard has already chosen the topics and sets out, disclosure by disclosure, when an item must be reported. The report should still show the company's positive and negative impacts on people and the environment, and how environmental and social issues affect its finances.
Where the company's sector or activities raise issues the standard does not cover, it is appropriate to add that information, for example Scope 3 emissions. Appendix B of the standard lists possible sustainability issues to consider.
Three kinds of datapoints
| Kind | What it means | Example |
|---|---|---|
| Essential ("shall") | Must be reported when the company applies the standard. | Total energy consumption; employees by gender |
| If applicable | Reported only in the circumstances the disclosure names. If left out, it is assumed not to apply. | Employees by country, if the company operates in more than one country |
| Voluntary ("may") | Never required. | Female-to-male ratio at management level (C5); Scope 3 emissions where they are relevant |
Voluntary for companies with 10 employees or less
The VS marks some essential datapoints with the bracket "[Voluntary for undertakings with 10 employees or less]". These companies may leave them out:
- B3 total energy consumption and GHG emissions
- B6 water withdrawal and consumption
- B7 circular economy, waste and material flows
- C1 description of the business model and strategy
- C3 GHG reduction targets
- C4 climate risks
- C5 employee turnover rate
- C6 code of conduct or human rights policy, and the complaints-handling mechanism
- C7 confirmed human rights incidents in own workforce and in the value chain
Everything else applies to them in full, including B1, B2, B4, B5, B8, B9, B10, B11, C2, C8 and C9.
What "if applicable" means in practice
- B4 Pollution: reported only if the company already reports pollutants to authorities or under an environmental management system.
- B6 Water consumption: reported only by companies whose production processes consume water significantly.
- B8 Employees by country: reported only if the company operates in more than one country.
- B10 Gender pay gap: reported only if EU or national law already requires the company to report it.
- C3 Transition plan: a company in a high climate impact sector without a transition plan must say whether, and when, it will adopt one.
- C9 Board gender diversity: reported only if the company has a governance body.
When information can be omitted
A company may omit information in four cases:
- in exceptional cases, information that would seriously harm its commercial position;
- a trade secret, such as know-how or the results of innovation;
- classified information;
- information protected by other EU or national law, or withheld to safeguard the privacy or security of a person or a company.
Two conditions apply. The company lists each omitted datapoint in B1, and it reassesses at every reporting date whether the information can still be omitted. Fatalities in B9 are also reported "subject to legal restrictions".
An item that does not apply to the company is not an omission. It is simply not applicable.
Comparatives and the statement of compliance
From the second year of reporting, each metric is shown with the previous year's figure, except metrics reported for the first time. In B1 the company states which option it applies and that it complies with the VS. A module is complied with in its entirety, apart from if-applicable items that do not apply.