ESRS G1 Business conduct
Objective
1. |
The objective of this Standard is to specify disclosure requirements which will enable users of the undertaking’s sustainability statements to understand the undertaking’s strategy and approach, processes and procedures as well as its performance in respect of business conduct. |
2. |
This Standard focusses on the following matters, collectively referred to in this Standard as ‘business conduct or business conduct matters’:
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Interaction with other ESRS
3. |
The content of this Standard on general disclosures as well as impact, risk and opportunity management and metrics and targets shall be read in conjunction respectively with ESRS 1 General principles and ESRS 2 General requirements. |
Disclosure Requirements
ESRS 2 General disclosures
4. |
The requirements of this section should be read in conjunction with and reported alongside the disclosures required by ESRS 2 on Governance (GOV), Strategy (SBM) and Management of impacts, risks and opportunities (IRO). |
Governance
Disclosure Requirement related to ESRS 2 GOV-1 – The role of the administrative, management and supervisory bodies
5. |
When disclosing information about the role of the administrative, management and supervisory bodies , the undertaking shall cover the following aspects:
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Impact, risk and opportunity management
Disclosure Requirement related to ESRS 2 IRO-1 – Description of the processes to identify and assess material impacts, risks and opportunities
6. |
When describing the process to identify material impacts, risks and opportunities in relation to business conduct matters, the undertaking shall disclose all relevant criteria used in the process, including location, activity, sector and the structure of the transaction. |
Disclosure Requirement G1-1– Business conduct policies and corporate culture
7. |
The undertaking shall disclose its policies with respect to business conduct matters and how it fosters its corporate culture. |
8. |
The objective of this Disclosure Requirement is to enable an understanding of the extent to which the undertaking has policies that address the identification, assessment, management and/or remediation of its material impacts, risks and opportunities related to business conduct matters. It also aims to provide an understanding of the undertaking’s approach to corporate culture . |
9. |
The disclosures required under paragraph 7 shall include how the undertaking establishes, develops, promotes and evaluates its corporate culture. |
10. |
The disclosures in paragraph 7 shall cover the following aspects related to the undertaking’s policies on business conduct matters:
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11. |
Undertakings that are subject to legal requirements under national law transposing Directive (EU) 2019/1937, or to equivalent legal requirements with regard to the protection of whistle-blowers, may comply with the disclosure specified in paragraph 10 (d) by stating that they are subject to those legal requirements. |
Disclosure Requirement G1-2 – Management of relationships with suppliers
12. |
The undertaking shall provide information about the management of its relationships with its suppliers and its impacts on its supply chain. |
13. |
The objective of this Disclosure Requirement is to provide an understanding of the undertaking’s management of its procurement process including fair behaviour with suppliers . |
14. |
The undertaking shall provide a description of its policy to prevent late payments, specifically to SMEs. |
15. |
The disclosure required under paragraph 12 shall include the following information:
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Disclosure Requirement G1-3 – Prevention and detection of corruption and bribery
16. |
The undertaking shall provide information about its system to prevent and detect, investigate, and respond to allegations or incidents relating to corruption and bribery including the related training. |
17. |
The objective of this Disclosure Requirement is to provide transparency on the key procedures of the undertaking to prevent, detect, and address allegations about corruption and bribery . This includes the training provided to own workers and/or information provided internally or to suppliers . |
18. |
The disclosure required under paragraph 16 shall include the following information:
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19. |
Where the undertaking has no such procedures in place, it shall disclose this fact and, where applicable, its plans to adopt them. |
20. |
The disclosures required by paragraph 16 shall include information about how the undertaking communicates its policies to those for whom they are relevant to ensure that the policy is accessible and that they understand its implications. |
21. |
The disclosure required by paragraph 16 shall include information about the following with respect to training:
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Metrics and targets
Disclosure Requirement G1-4 – Incidents of corruption or bribery
22. |
The undertaking shall provide information on incidents of corruption or bribery during the reporting period. |
23. |
The objective of this Disclosure Requirement is to provide transparency on the incidents relating to corruption or bribery during the reporting period and the related outcomes. |
24. |
The undertaking shall disclose:
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25. |
The undertaking may disclose:
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26. |
The disclosures required shall include incidents involving actors in its value chain only where the undertaking or its employees are directly involved. |
Disclosure Requirement G1-5 – Political influence and lobbying activities
27. |
The undertaking shall provide information on the activities and commitments related to exerting its political influence, including its lobbying activities related to its material impacts, risks and opportunities. |
28. |
The objective of this Disclosure Requirement is to provide transparency on the undertaking’s activities and commitments related to exerting its political influence with political contributions, including the types and purpose of lobbying activities . |
29. |
The disclosure required by paragraph 27 shall include:
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30. |
The disclosure shall also include information about the appointment of any members of the administrative, management and supervisory bodies who held a comparable position in public administration (including regulators) in the 2 years preceding such appointment in the current reporting period. |
Disclosure Requirement G1-6 – Payment practices
31. |
The undertaking shall provide information on its payment practices, especially with respect to late payments to small and medium enterprises (SMEs). |
32. |
The objective of this Disclosure Requirement is to provide insights on the contractual payment terms and on its performance with regard to payment, especially as to how these impact SMEs and specifically with respect to late payments to SMEs. |
33. |
The disclosure under paragraph 31 shall include:
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Appendix A – Application Requirements
This appendix is an integral part of the ESRS G1 Business conduct. It supports the application of the disclosure requirements set out in this standard and has the same authority as the other parts of the Standard.
Impact, risk and opportunity management
Disclosure Requirement G1-1 – Business conduct policies and corporate culture
AR 1. |
The undertaking may consider the following aspects when determining its disclosure under paragraph 7:
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Disclosure Requirement G1-2 – Management of relationships with suppliers
AR 2. |
For purposes of this standard, management of relationships with the undertaking’s suppliers may include the following:
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AR 3. |
‘Vulnerable suppliers’ includes suppliers that are exposed to significant economic, environmental and/or social risks. |
Disclosure Requirement G1-3 – Prevention and detection of corruption and bribery
AR 4. |
‘Functions-at-risk’ means those functions deemed to be at risk of corruption and bribery as a result of its tasks and responsibilities. |
AR 5. |
Disclosures may include details about the risk assessments and/or mapping, as well as monitoring programmes and/or internal control procedures performed by the undertaking to detect corruption and bribery . |
AR 6. |
The undertaking’s policies on corruption and bribery may be relevant to specific groups of people, either because they are expected to implement them (for example, the undertaking’s employees , contractors and suppliers ), or because they have a direct interest in their implementation (for example, value chain workers, investors). The undertaking may disclose the communication tools and channels (e.g., flyers, newsletters, dedicated websites, social media, face to face interactions, unions and/or workers representatives) to communicate policies to such groups. This may also include the identification and/or removal of potential barriers to dissemination, such as through translation into relevant languages or the use of graphic depictions. |
AR 7. |
The undertaking may disclose an analysis of its training activities by, for example, region of training or category of own workforce where its programmes differ significantly based on such factors and such information would be useful to users. |
AR 8. |
The undertaking may present the required information about training using the following table:
Anti-corruption and bribery training illustrative example During the 20XY financial year ABC provided training to its at-risk own workers in terms of its policy (see note x). For those at-risk functions the training is mandatory, but ABC also made available voluntary training for other own workers. Details of its training during the year is as follows:
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Metrics and targets
Disclosure Requirement G1-5 – Political influence and lobbying activities
AR 9. |
For purposes of this Standard ‘political contribution’ means financial or in-kind support provided directly to political parties, their elected representatives or persons seeking political office. Financial contributions can include donations, loans, sponsorships, advance payments for services, or the purchase of tickets for fundraising events and other similar practices. In-kind contributions can include advertising, use of facilities, design and printing, donation of equipment, provision of board membership, employment or consultancy work for elected politicians or candidates for office. |
AR 10. |
‘Indirect political contribution’ refers to those political contributions made through an intermediary organisation such as a lobbyist or charity, or support given to an organisation such as a think tank or trade association linked to or supporting particular political parties or causes. |
AR 11. |
When determining ‘comparable position’ in this standard, the undertaking shall consider various factors, including level of responsibility and scope of activities undertaken. |
AR 12. |
The undertaking may provide the following information on its financial or in-kind contributions with regard to its lobbying expenses:
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AR 13. |
If the undertaking is legally obliged to be a member of a chamber of commerce or other organisation that represents its interests, it may disclose that this is the case. |
AR 14. |
In meeting the requirement in paragraph 29(c) the undertaking shall consider the alignment between its public statements on its material impacts, risks and opportunities and its lobbying activities. |
AR 15. |
An example of what such disclosures could look like:
Political engagement (including lobbying activities) illustrative example During the 20XY financial year ABC was involved in activities around the proposed regulation XXX which could have significant negative impacts on its business model if implemented in the current format. ABC’s considers that while the proposed regulation will realise some improvements to the regulatory regime such as xxx, in its current format the costs relating to xxx will outweigh the benefits. ABC and its peers continue to work with XXX (the regulator) to improve this balance. ABC also supported the QRP political party in Country X and EFG party in Country Y as both …. ABC is registered in its local transparency register, i.e., XYZ, and its registration number is 987234. Amounts in € thousands.
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Disclosure Requirement G1-6 – Payment practices
AR 16. |
In some cases, the undertaking’s standard contractual payment terms may differ significantly depending on country or type of supplier . In such cases, information about the standard terms per main categories of suppliers or country or geographical region could be examples of additional contextual information to explain the disclosures in paragraph 33(b). |
AR 17. |
An example of what the description of standard contract term disclosures in paragraph 33(b) could look like:
ABC’s standard contract payment terms are payment on receipt of invoice for wholesalers which encompass approximately 80% of its annual invoices by value. It pays for services received within 30 days after receipt of the invoice which are about 5% of its annual invoices. The remainder of its invoices are paid within 60 days of receipt except for those in country X which in accordance with the marketplace standards are paid within 90 days of receipt. |