Written Comments NL

General remarks
Overall, the Netherlands welcomes the final set of European Sustainability Reporting Standards
(ESRS). The Netherlands is in favor of ambitious sustainability reporting standards and underlines
the importance of publishing these standards as soon as possible. With regard to reporting
obligations, the Netherlands also attaches great importance to its effectiveness and limiting the
administrative burden for companies where possible, within what is necessary to achieve the
ambitions set out in our sustainability goals.
The Netherlands supports broadening the materiality assessment to all E, S and G topics.
The materiality assessment ensures that companies only report information on sustainability topics
that are relevant to their operations, that either have a potential impact on the company and its
stakeholders, or on which the company itself has a potential impact. This contributes to the clarity
and quality of reporting, and a better understanding of the company's impact, risks and
opportunities.
In our view the standards would improve their usability and transparency when a
reporting obligation for companies that do not consider climate, their own workforce
and workers in the value chain, biodiversity and circular economy material, to provide
an explanation per theme as to why that is the case.
The Netherlands furthermore welcomes additional guidance for corporations on their
materiality assessments, similarly to financial reporting. Additional guidance is essential to
ensure that the materiality assessment is performed in a rigorous manner. The Netherlands does
question the quality of the materiality assessment regarding circular economy, which should only
be based on circular economy aspects.
The Netherlands would like to underline that the disclosure requirements and general
disclosures under the cross-cutting standards remain obligatory for all companies under
the scope of the Corporate Sustainability Reporting Directive (CSRD). However, we remain
convinced that the topical standards only need to be disclosed based on a materiality assessment.
The Netherlands furthermore supports following the EFRAG advice regarding mandatory
disclosure of transition plans for biodiversity in case biodiversity is deemed material, in line
with the reporting obligation for transition plans for climate. This would not only ensure better
availability and comparability of data, but also stimulate companies to address climate change and
biodiversity loss in an integral manner. Furthermore, the Netherlands regrets that its earlier
suggestions on circular economy have not been sufficiently included in the ESRS proposal by the
Commission.
The Netherlands is of the opinion that the reporting standards should apply to all
employees, regardless of their employment status. In the current proposal, the ESRS S1
standards only apply to workers that are in direct employment (‘own workforce’) and not to
‘people provided by undertakings primarily engaged in ‘employment activities’’. The Netherlands
notes that especially workers that are recruited through these undertakings and are hired on a
flexible basis, are vulnerable for fraudulent activities falling under disclosure requirements S1-10
(Adequate wages) and S1-11(Social Protection). Therefore, there should be no distinction between
the responsibility of a company for its own employees or employees hired through another
undertaking.
In our view there could be inconsistencies between the ESRS and SFDR, which should be
addressed in the ESRS standards or in the upcoming review of the SFDR. The materiality
assessment could, lead to inconsistencies for financial advisors and institutions which have to
disclosure sustainability related information according to the Sustainability Financial Disclosure
Regulation (SFDR).

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Lastly, the Netherlands is strongly in favor of maintaining the proposed phase-in periods
as agreed under the CSRD and in the EFRAG advice. Maintaining the phase-in included in the
CSRD ensures harmonization with the NFRD, CSRD and SFDR, improving clarity of definition.

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Written Comments NL
Remarks per topic
Circular economy
Annex 1, ESRS E5 (Resource use and circular economy), ESRS 2 General disclosures (Impact, risk
and opportunity management), IRO-1 (Description of the process to identify and assess material
resource use and circular economy-related impacts, risks and opportunities)
AR 2 (p154): “With regard to ESRS E5, phases 1 and 2 rely mainly on the materiality assessments
conducted under ESRS E1 (including energy consumption), ESRS E2 (pollution), ESRS E3 (marine
resources, water consumption) and ESRS E4 (biodiversity, ecosystems, raw materials). Indeed,
circular economy eventually aims at reducing the environmental impact of the use of products,
materials and other resources, minimizing waste and the release of hazardous substances and
hence at reducing impacts on nature. This application requirement focuses mainly on the third
phases of this LEAP approach, while the fourth phase addresses the outcome of the process.”
When conducting a materiality assessment on Circular economy, we believe all four fases of the
LEAP approach (a, b, c, and d, mentioned under AR 1) should focus on Circular Economy, not only
phases (c) and (d). This is needed to ensure the quality of the materiality assessment for this
particular topic, Circular Economy.
Hence we propose the following text revision: “With regard to ESRS E5, phases 1 and 2 rely
mainly on the materiality assessments conducted under ESRS E1 (including energy consumption),
ESRS E2 (pollution), ESRS E3 (marine resources, water consumption) and ESRS E4 (biodiversity,
ecosystems, raw materials). Indeed, circular economy eventually aims at reducing the
environmental impact of the use of products, materials and other resources, minimizing waste and
the release of hazardous substances and hence at reducing impacts on nature. This application
requirement focuses mainly on the third on all four phases of this LEAP approach (mentioned
under AR 1), while the fourth phase addresses the outcome of the process. This may be informed
by, but cannot be replaced with the materiality assessments conducted under ESRS E1 (including
energy consumption), ESRS E2 (pollution), ESRS E3 (marine resources, water consumption) and
ESRS E4 (biodiversity, ecosystems, raw materials).
General comments on ESRS E5 (Resource use and circular economy).
To our regret, our earlier comments (via EFRAG) on the draft standards were not taken on board.
This includes attention for microplastics (absent from the text), attention to more ambitious
circular strategies in the so-called “R-ladder” in the priority order of the waste hierarchy, and
attention to resources use optimization.

Biodiversity
General requirements (ESRS 1) – general comments and biodiversity-relevant specific comments
33 (and IRO-2, 57):


Since an undertaking may report but is not required to report on a timeframe explaining
when the information still missing will be provided, it will remain unclear to users of the
disclosure whether the situation is likely to change. It is unclear how this relates to article
34b addressing “the capacity of the information to meet the users' decision making
needs”. It is recommended to make reporting on a timeframe mandatory.

AR7:


“Nature may be considered as a silent stakeholder. In this case, ecological data and data
on the conservation of species may support the undertaking’s materiality assessment.”
Good that this is included in the ESRS. However, note that nature will always have a link
to the ability of an ecosystem to provide ecosystem services (more biodiverse ecosystems
are more resilient ecosystems), thereby creating a link to impacts and dependencies.

AR16:
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

It should be made clear what ‘Direct exploitation’ refers to in the table with sustainability
matters covered. Direct exploitation of species, or also of, for example, water? Note that
this is defined in different ways by different stakeholders.

AR17:


AR17 also refers to “information that is available to the undertaking at the reporting date
without undue cost or effort”. What is meant by “undue cost or effort”?

Appendix C: Disclosure and Application Requirements in Topical ESRS that are applicable in
conjunction with ESRS 2 General disclosures


It is sometimes not fully clear how voluntary disclosures in the topical disclosure ESRS E4
relates to the required disclosures in ESRS 2.

4. ESRS E4 Biodiversity and Ecosystems
4.1 ESRS E4 Biodiversity and Ecosystems – Introduction - general feedback


Key point. The disclosure on impacts and dependencies, risks and opportunities regarding
Biodiversity and Ecosystems is an important step towards getting more and better data
available from undertakings, including companies and financial institutions. Getting more
and better data is key from the viewpoint of managing direct and indirect (through the
value chain) impacts and dependencies and related risks and opportunities. To accomplish
this improved data flow, data need to be made available in the whole value chain.
Downstream companies and financial institutions depend on the data disclosed by
upstream suppliers. The need to use modelled or secondary data instead of
primary/company data will depend on the ‘weakest link’ in the value chain. More modelled
or secondary data means a reduction in the level of data accuracy and less detailed action
perspectives to manage the risks and opportunities. This also means that phasing-in of
disclosures should be as limited as possible (see earlier comments) and the information
requested should be clearly defined to allow comparison and aggregation. The feedback
below shows that the clarity of what is requested in the various paragraphs can still be
improved.

4.2 ESRS 4 Biodiversity and Ecosystems - Detailed feedback paragraphs
Interaction with other ESRS
5:


Note that the step towards (potential) impacts on biodiversity requires an additional
assessment step: pressure-impact modelling. Pollutant A can have a much higher impact
than pollutant B when emitted at the same location in equal quantity.

Strategy
Disclosure Requirement E4-1 – Transition plan and consideration of biodiversity and ecosystems in
strategy and business model
12:


Is it clear enough what is meant by strategy and business model? Sales strategy, sourcing
strategy, diversification strategy, etc.? If not, this may lead to many different
interpretations, hindering comparison between undertakings. Some information is
provided in ‘Disclosure Requirement SBM-1’, article 40 and 42, but this is still limited.
Would be good to prescribe or at least provide guidance on what topics to address here.



Key point. The Netherlands urges to make the reporting requirement about the transitional
plan for biodiversity mandatory, in case biodiversity is deemed to be material based on the
materiality assessment. Just like the transition plan for climate is mandatory. Steps must
be taken, doing nothing should not be an option. According to the Intergovernmental

15:

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



Platform for Biodiversity and Ecosystem Services, biodiversity loss is at least as great a
threat to humanity as global warming, and can lead to serious (financial) risks. It is critical
that companies fulfil their responsibility in this regard. A transition plan would furthermore
encourage companies to take an integrated look at climate and biodiversity related
impacts and dependencies, and consider potential synergies and trade-offs. After all,
climate and biodiversity are strongly interdependent. Such an obligation is in line with the
Global Biodiversity Framework and EFRAG's advice.
Furthermore, it should include the actual criteria for transition plans developed by EFRAG,
to avoid that companies are completely free to frame what transition means and what to
disclose, as this would open doors for greenwashing. Moreover, making it mandatory
would support getting more and comparable data of better quality, which is instrumental
to support the transition to a nature-inclusive society as well as support the
implementation of SFDR (on nature-related and other ESG issues) and meaningfully
integrating ESG into investment strategies.
The EU demonstrated leadership in Montreal at the UN Convention on Biological Diversity
COP15, significantly contributing to the adoption of an ambitious Global Biodiversity
Framework. Target 15 of the Framework has been described by many as potentially one of
the most transformative, as governments have committed to requiring all large businesses
and financial institutions to assess and disclose their risks, impacts, and dependencies on
nature, through their operations, supply and value chains, and portfolios. Such an
ambitious outcome was achieved because of the support from leaders such as the EU and
reinforced by more than 400 companies, with combined revenues of $2 trillion calling to
make assessment and disclosure on nature mandatory
(https://www.businessfornature.org/make-it-mandatory-campaign).

Impact, risk and opportunity management
Disclosure Requirement related to ESRS 2 IRO-1 Description of processes to identify and assess
material biodiversity and ecosystem-related impacts, risks, dependencies and opportunities
16a:


Note that assessing actual impacts is a challenge, since impacts will often be the result of
multiple drivers induced by multiple stakeholders in the same landscape. What are the
'assessment criteria'? Should there be a reference to attribution rules commonly applied
by international frameworks like the Partnership Biodiversity Accounting Financials (based
on Partnership Carbon Accounting Financials)?

16b:




Ecosystem services used are not necessarily located at the undertaking's own site (e.g.
using water from water catchments far from the production location). Better to speak of
dependencies of an undertaking's own production processes and the processes of value
chain partners
What about the dependencies of other stakeholders, like local communities? They are not
mentioned here, but will be key to identify to assess transitional risks. See also 16e and
21f.

16eiii:




"ecosystem services of relevance to affected communities in its own operations". What is
meant here? Communities in an undertaking's operations? If so, why this limitation? What
about impacts on priority ecosystem services of relevance to communities outside an
undertaking's operations?
What about avoidance first and what if mitigation is not enough? Should an undertaking
also report on potential compensating measures, e.g. to take responsibility for a reduction
in income by local communities?

16, Scenario analysis, {c} (correct numbering is missing):


Considering also including expectations of local communities and local experts. This can be
very relevant from a location-specific perspective.

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17a:



‘Biodiversity-sensitive areas’ should be defined.
Negatively affect should also read 'potentially negatively affect'. It may not be certain if
activities will negatively affect an area, but this can be more or less likely (expectation,
potential). In case of actual impact the harm is already done

17ai:



17aii:


Key point. Why are only protected areas mentioned? A 'biodiversity-sensitive area' could
also be a Key Biodiversity Area which is not protected. See also 22a.
Key point. P. 135, para 34. Add the wording: 'other effective area-based conservation
measures (OECMs)': ...near these protected areas, OECMs, or key biodiversity areas. This
is in line with the language used in the GBF and it completes the list of biodiversitysensitive areas
This is difficult to read. There is an opening bracket before 'Directive', but not a closing
bracket? Consider revising the text.

17bii:






Is this also about dependencies? 17a only refers to negatively affecting biodiversitysensitive areas. Requiring a breakdown of sites according to impacts and dependencies is
confusing.
Explain 'ecological status'. Does this refer to an official status like 'protected area' or to
indicators like the Ecosystem Integrity Index or Biodiversity Intactness Index?
Explain 'with reference to the specific ecosystem baseline level'. Level of what? The
ecological status before impact?
Explain 'where they are located'. Does this mean GPS coordinates, country or region?

17biii:


Explain 'specifying the biodiversity-sensitive areas'. The location is already disclosed under
17bii?

17c:


Note that SFDR does not talk about material negative impacts, just about 'the activities of
which cause...'. Maybe remove 'material' or explain?

17d:




This disclosure is limited to an undertaking's own operations, similar as the requirement in
the SFDR. One could argue that this should also apply to threatened species affected in
value chains.
Include the definition of threatened species, for example from SFDR (reference to IUCN
red list).

Disclosure Requirement E4-2 – Policies related to biodiversity and ecosystems
19:


Key point. Does ‘and/or’ mean they can leave out one or more of these topics from their
policy? It seems most desirable to have “and”.

21c:


Suggest to separate 'impacts', 'dependencies' and 'risks and opportunities'. This is also In
line with the work done by the Taskfoce on Nature-related Financial Disclosures.

21d:


Suggest to also add dependencies here. The term 'significant' is used, instead of 'material'.
It will be important to explain the difference.

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21e:


Production 'in'. Managed by the undertaking and/or value chain partners?



To what extent should also SBTN's Science Based Targets on fresh water and land be
referenced here?

22:

Disclosure Requirement E4-3 – Actions and resources related to biodiversity and ecosystems
26:


To what extent should also information be provided on 'Transformation' related actions
(e.g., referred to by SBTN)? Not necessarily part of the mitigation hierarchy, but important
from a transition perspective.

26bii:


Financing effects can also include direct and indirect cost savings or financial benefits. For
example, when nature conservation activities are important to the company (like
pollination services or water purification). Suggest to include this.

26biii:


What is meant by 'area', 'type' and 'quality criteria'? Different undertakings may have
different interpretation.

Disclosure Requirement E4-4 – Targets related to biodiversity and ecosystems
30a:


The disclosure shall include whether ecological thresholds and allocations of impacts to the
undertaking were applied when setting targets. What is meant by 'allocations of impacts to
the undertaking'? Attribution?

30b:


To what extent should planetary boundaries be referenced in the list of required
information as well (even though translating these to the level of an undertaking may be
challenging)?



It is mentioned that the undertaking may disclose whether ecological thresholds and
allocations of impacts to the undertaking were applied when setting targets. This seems to
be contradictory to 30a, which states that it is mandatory to disclose if ecological
thresholds were applied when setting targets.

31:

Disclosure Requirement E4-5 – Impact metrics related to biodiversity and ecosystems change
35:




Key point. Note that this may result in a 'sector average' land-use depending on the input
data of the LCA. Better to ask for actual land-use data for an undertaking's own operation
and allow LCA based land-use data in value chains.
Mention is made of 'or impact on the extent and condition of ecosystems'. This impact can
also be linked to impact drivers other than land-use change. However, the disclosure only
refers to the disclosure of land-use. Why?

37:


If the undertaking has concluded that it directly contributes to the impact drivers of landuse change, freshwater-use change and/or sea-use change, it shall report relevant
metrics. Because the metrics can be freely selected it will be difficult to compare
disclosures by companies. Would it be possible to come up with a set of 'core metrics'? For

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example, based on metrics suggested by the Taskforce on Nature -related Disclosures
(TNFD) or Global Reporting Initiative (GRI)?
38:


Why make this optional? The introduction of invasive alien species can an important
impact driver and disclosure of how introduction is managed should not be so difficult.
There is a lot of knowledge on this already. IPBES is currently compiling this information in
its assessment on invasive alien species, including how introduction can be managed. IAS
is a key driver of biodiversity loss.



Why make this optional? The state of species is considered a key part of the Global
Biodiversity Framework. Reporting on the presence of threatened species according to
IUCN's Red list for an undertaking's own sites can be quite useful (see 39d)



Why is this not mandatory for a selection of metrics (e.g., starting with 40a) for an
undertaking's own operations/sites? By making this mandatory more data become
available for more accurate impact assessments.

39:

40:

Disclosure Requirement E4-6 – Anticipated financial effects from material biodiversity and
ecosystem-related impacts, risks and opportunities
42:


Sentence is repeated twice.



What about the financial effects on other stakeholders? The monetary value of changes in
ecosystem services can also be quantified (e.g., using the Ecosystem Services Valuation
Database) and provides insight in other stakeholders affected and related transitional risks
and opportunities. It is recommended to at least refer to the financial effects on other
stakeholders.



Also refer to the methodology used to quantify the effects? Or is this captured under the
‘critical assumptions’?

43:

44:

Appendix A Disclosure Requirement E4-1
Transition plan and consideration of biodiversity and ecosystems in strategy and business model



Also see the feedback provided earlier. The transition plan must be mandatory in case
biodiversity is deemed material for the company.

R1d:


'How it contributes to biodiversity and ecosystem impact drivers'? How it contributes to
addressing ......

AR1e:


Key point. ‘Whether the mitigation hierarchy was considered should be 'how the mitigation
hierarchy was considered'. The mitigation hierarchy should not be optional. All steps in the
mitigation hierarchy should be applied before allowing any biodiversity offsets

Disclosure requirements related to ESRS 2 IRO-1 – Description of the processes to identify and
assess material biodiversity and ecosystem-related impacts, risks and opportunities
AR6:

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

Maybe add, 'not necessarily in that order'. Especially financial institutions will often use the
Evaluate, Locate, Assess order (ELAP).

AR8ci/AR8cii:



Or close to?

AR8d:


Note that for classifying ecosystems, the Taskforce on Nature-related Financial Disclosures
(TNFD) follows the UN SEEA EA classification instead of the CICES classification.

Disclosure Requirement E4-2 – Policies related to biodiversity and ecosystems
AR12a:


Is this limited to direct contributions or does this also include indirect contributions by
suppliers to suppliers?

AR12b:


How are ‘recognised standards’ defined? Following ISO definitions of certifications and/or
ISEAL recognized standards? See also AR17.

AR12c:


Have been managed or are managed?

AR16:


Why is this not mandatory to enable users of the disclosure to understand the reasoning
behind the policy with regard to managing negative impacts (and dependencies?)?

AR16a:


It is not clear how this links to the sentence before.

AR16b:


What is meant by ‘cleared’ ecosystems? Like clearing a forest?

Disclosure Requirement E4-3 – Actions and resources related to biodiversity and ecosystems
AR18a,b,c:


This seems to refer to infrastructure projects. Avoidance can also result from, for example,
product design where raw materials with a relatively high impact are removed or
substituted and where product functioning is altered to avoid impacts.

AR19:


What are 'key actions'? Actions with the highest avoidance/mitigation potential? The
disclosures below seem to be somewhat random.

Disclosure Requirement E4-4 – Targets related to biodiversity and ecosystems
AR22:


Clarify that this needs to be done for each material impact. What about dependencies?

AR23:


The difference between AR22 and AR23 is not completely clear. AR22 refers to material
impacts, AR23 to potentially material sustainability matters but refers to AR4, where
impact drivers, impacts, dependencies etc. are mentioned. Is the difference material
versus potentially material?

A24:
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

Seems randomly selected. This could be more systematic, e.g. a focus on impact drivers,
on the state (extent, condition and function) of ecosystems, on habitats, species, etc. This
would help undertakings to disclose in a structured way.

Disclosure Requirement E4-5 – Impact metrics related to biodiversity and ecosystems change
AR25:


Since describing the methodologies, metrics and data used is voluntary, it will not be clear
if they were considered (which is mandatory). Moreover, if an undertaking does not
disclose the methodologies, metrics and data used, including assumptions and limitations,
users of the disclosure end up with 'black box' assessments of impact which cannot be
interpreted. See also ‘Disclosure Requirement IRO-1 - Description of the process to identify
and assess material impacts, risks and opportunities’, paragraph 53.

AR26:




'Shall be considered' and 'may disclose' will make it difficult to verify if this was considered
(see also AR25).
What is meant by 'data and mechanisms used should be supported by well-established
organisations"?
(What does 'must be' mean? Shall be? Including disclosure?

AR28c:


Also refer to the importance of modelled data in cases where location data is missing
and/or where the number of locations/data points to be included in the assessment is too
large to handle. An important example is the use of modelled data in the value chain.

Disclosure Requirement E4-6 – Potential Anticipated financial effects from material biodiversity and
ecosystem-related risks and opportunities
AR38:


If the disclosure of products and services at risk and critical assumptions are not disclosed,
it will be difficult to interpret the potential anticipated financial effects.

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