19 July 2022

Civil society's take on ESRS S1 to S4

The European sustainability reporting standards on social disclosures (ESRS Ss) should have greater emphasis on workforce information in the supply chain, representatives from European trade unions and NGOs stressed during an outreach event organised by EFRAG.

Whilst broadly welcoming of the standards, speakers highlighted supply chain related information and disclosures relating to outsourcing contracts as area where ESRS S1 to S4 could be improved.

Charlotte Rush, senior research manager for the Workforce Disclosure Initiative which analyses workforce data for ShareAction, said: "There isn't as much of a specific focus on things like supply chain transparency and responsible sourcing practices whereas the ways that businesses understand their supply chains and engage with actors in them are key determinants of the quality of conditions for value chain workers."

Mario Enrique Sanchez Richter, from the Spanish Worker's Commission or Comisiones Obreras (CCOO), agreed and added that the issues of subcontracts and outsourcing were not clear enough in the exposure drafts.

Looking at more internal metrics, Stefan Clauwaert, from the European Trade Union Confederation (ETUC), said that greater transparency on absenteeism, turnover and remuneration was required. He added that the European Framework agreement on work-related stress has highlighted these factors as key indicators for overall quality of an organisation.

Cathrine Bloch Veiberg, from the Danish Institute of Human Rights, wanted the Right to Remedy for employees to be better clarified in the draft standards.

"Remedy in itself is a human right and a key principle of the UN guiding principles on business and human rights [but] companies are currently not very good at reporting on remedy and grievance mechanisms," she said.

The outreach held last week is one in a series of 16 organised by the European body ahead of the deadline for comment on its exposure drafts for ESRS on 8 August. EFRAG will then have until mid-November to finalise the standards before submitting them to the European Commission for approval.