Final reporting standards: deep dive social standards

This summer, the European Sustainability Reporting Standards (ESRS) were finalized. Any the more reason to familiarize yourself with the content. In the coming months, Pantarein will guide you through the changes and complexities of the CSRD and the accompanying ESRS with a series of practical articles. Today we focus on the social standards.

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December 10, 2024

Nicolas Crins

Sophie Maeseele

Social aspects

Sustainable business management today means that your policy is based on three pillars: environmental, social and governance themes.This three-way division is reflected in Europe's reporting standards.

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This puts social and governance themes on the same level as environmental ambitions and achievements. Well intentioned, but countless companies are left with questions: what exactly does a good social policy entail? Which target groups should you report on? Which topics are covered? What are possible red flags? We guide you through Europe's four social standards.

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4 stakeholder groups

The social standards consist of four parts,each focused on a specific stakeholder group:

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ESRS S1 ‘Own workforce’ covers your organization’s employees. To that effect, you report on topics such as working conditions, equal treatment for all employees and other work-related rights.‍
ESRS S2 ‘Workers in the value chain’ is about employees that are part of your value chain, for example a downstream company buying your goods or services. Your suppliers’ employees are part of this group as well. It reaches all the way to the beginning of your value chain, sourcing raw materials. ‍
ESRS S3 ‘Affected communities’ covers local communities near your site or throughout your value chain that are affected by your organization. Important topics are the economic, social and cultural rights of the communities. The same goes for civil and political rights. The rights of indigenous peoples are specifically mentioned. ‍
ESRS S4 ‘Consumers and end-users’ explains how to report on consumers and end users of the products or services offered by your company. Personal safety, offered information and social inclusion are among the relevant topics.

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5 topics

Several disclosure requirements determine which information your sustainability report should contain. All four of the social standards require the following subjects:

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‍Policies: What policies exist to manage the impacts, risks and opportunities related to this stakeholder group? How are these policy documents linked to internationally recognized human rights? Think, for example, of policies restricting overtime, provisions to improve inclusiveness in the workplace, or clear rules about privacy for the users of your products.‍
Stakeholder engagement processes: In what way are you in direct or indirect contact with the stakeholder group or its (legal) representatives? Here you discuss, for example, with what frequency consultations are held with which stakeholder, how deep the contacts go or how vulnerable groups such as young people or migrants are involved.‍
Complaint channels and remediating negative impacts: In what way do you remediate your negative impact on the stakeholder group? How do you monitor the effectiveness of your actions? What channels are available to share concerns with you (hotline, works council, third parties such as NGOs or civil society organizations ...)?‍
Actions and their effectiveness: What actions do you undertake to reduce your negative impact and increase your positive impact? What means do you put in place to realize this? Possible actions include: rotation in shifts, accessibility measures for people with disabilities, making binding agreements with suppliers ...‍
Targets: What targets do you set yourself concerning a stakeholder group? Possible targets: increase the number of employees with a permanent contract, reduce absenteeism, employ more disabled people, reduce the number of accidents linked to your products … Express quantitative targets where possible.

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Moreover, for the stakeholder group closest to you – your own employees – there are 12 additional metrics. These include diversity, health, safety and remuneration. Through the materiality analysis, you determine which disclosure requirements your organization should definitely report on.

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Best practices for your sustainability report

To conclude, we share some tips and tricks for your sustainability report:

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In Europe’s view, reporting on social topics can only be done after a thorough due diligence policy has been established. In addition to the CSRD, Europe is also preparing duty-of-care legislation, the CS3D (Corporate Sustainability Due Diligence Directive). The social standards therefore frequently refer to the principles of duty of care forpeople and the environment throughout the value chain. An example: actions within your due diligence policy regarding suppliers are directly linked to ESRS S2 'Workers in the value chain'.
The social pillar also requires thorough knowledge of international agreements on human rights. The following instruments are frequently referred to: the UN Guiding Principles on Business and Human Rights, the OECD Guidelines for Multinational Enterprises and the ILO Declaration on Fundamental Principles and Rights at Work.
Know that the social reporting standards contain numerous cross-references to the other standards. Overarching knowledge of the whole ESRS is therefore indispensable to prepare your report correctly. An example: suppose your company discharges process water, you report on its impact on both the local environment (ESRS E3, pollution) and the local population (ESRS S3, local communities).

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Do you need help taking your first steps? Our consultants love to help you. Contact us at mail@pantarein.be.

Final reporting standards: deep dive social standards

4 stakeholder groups

5 topics

Best practices for your sustainability report

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Final reporting standards: deep dive social standards

4 stakeholder groups

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Best practices for your sustainability report

Share this article

Most recent

Belgian CSRD legislation: the highlights

The Green Directives: no more greenwashing

Tagging according to the ESRS XBRL Taxonomy: the next step in ESG reporting