Consumers & End-Users
Shel
The objective of this standard is to specify disclosure requirements that help users of the sustainability statement to understand the material impacts on consumers and end-users related to the company’s operations and value chain. This includes impacts through its products or services and business relationships, as well as related material risks and opportunities. The disclosure should address:
how the company affects consumers and/or end-users of its products and/or services, in terms of actual or potential positive and negative impacts;
any actions taken to prevent, mitigate, or remediate negative impacts, and the results of these actions;
the nature, type, and extent of material risks and opportunities related to the company’s impacts and dependencies on consumers and end-users, and how the company manages these risks and opportunities;
the financial effects on the company in the short, medium, and long-term from material risks and opportunities related to its impacts and dependencies on consumers and/or end-users.
To meet this objective, the standard requires the company to explain its general approach to identifying and managing material actual and potential impacts on consumers and/or end-users connected to its products and/or services in relation to:
information-related impacts for example, privacy, freedom of expression, and access to quality information;
personal safety of consumers and/or end-users for example, health and safety, security, and protection of children;
social inclusion of consumers and/or end-users for example, non-discrimination, access to products and services, and responsible marketing.
The standard also requires an explanation of how these impacts, as well as the company’s dependencies on consumers and/or end-users, can create material risks or opportunities. For instance, negative impacts on the reputation of the company’s products and/or services can harm its business performance, while trust in products and/or services can bring business benefits, such as increased sales or a wider future consumer base.
The company may highlight special issues relevant to material impacts for a shorter period, such as initiatives regarding consumer health and safety related to product contamination or a severe breach of privacy due to a massive data leak.
This standard does not cover the unlawful use or misuse of the company’s products and services by consumers and end-users.
CH 1. Strategy
The company should disclose how the interests, views, and rights of its consumers and/or end-users, including respect for their human rights, inform its strategy and business model. Consumers and/or end-users are a key group of affected stakeholders.
ESRS 2 SBM-2 requires the company to explain if and how it considers whether its strategy and business model contribute to, worsen, or helps mitigate significant material impacts on consumers and/or end-users, and whether and how the business model and strategy are adjusted to address such material impacts.
Although consumers and/or end-users may not directly engage with the company at the level of its strategy or business model, their views can inform the company’s assessment of these aspects. The company may disclose the views of materially affected consumers and/or end-users or their legitimate representatives, or those of credible proxies who have insight into their situation.
The company should disclose:
whether and how actual and potential impacts on consumers and/or end-users, as identified in ESRS 2 IRO-1:
originate from or are connected to the company’s strategy and business model, and
inform and contribute to adapting the company’s strategy and business model, and
the relationship between its material risks and opportunities arising from impacts and dependencies on consumers and/or end-users, and its strategy and business model.
The company should disclose whether all consumers and/or end-users who are likely to be significantly affected by the company, including impacts from its own operations, value chain, products, services, and business relationships, are included in the scope of its disclosure under ESRS 2. The company must also disclose the following information:
a short description of the types of consumers and/or end-users affected by its operations or value chain, and specify if they are:
consumers and/or end-users of products that are harmful to people or increase the risk of chronic diseases;
consumers and/or end-users of services that could negatively affect their rights to privacy, protection of personal data, freedom of expression, or non-discrimination;
consumers and/or end-users who rely on accurate and accessible product- or service-related information, such as manuals and labels, to avoid potential harm from using a product or service;
consumers and/or end-users who are especially vulnerable to health or privacy impacts or impacts from marketing and sales strategies, such as children or financially vulnerable individuals;
if there are material negative impacts, whether they are either:
widespread or systemic in the areas where the company sells or provides its products or services, for example, government surveillance that affects the privacy of service users;
related to individual incidents, for example, a defect with a specific product or specific business relationships, for example, a partner company using marketing that inappropriately targets young consumers;
If there are material positive impacts, a brief description of the activities that cause the positive impacts, for example, product design that makes it more accessible for people with disabilities, and the types of consumers and/or end-users who are positively affected or could be positively affected. The company may also disclose whether the positive impacts occur in certain countries or regions; and
any material risks and opportunities for the business arising from impacts and dependencies on consumers and/or end-users.
Impacts on consumers and/or end-users from the company’s business model or strategy can arise in various ways. For example, impacts may relate to:
the company’s value proposition, for instance, providing online platforms that could cause both online and offline harm;
its value chain, for example, the speed in developing products or services, or delivering projects that pose risks to health and safety; or
its cost structure and revenue model, such as sales-maximizing incentives that put consumers at risk.
When describing the main types of consumers and/or end-users who are or could be negatively affected, based on the materiality assessment set out in ESRS 2 IRO-1, the company should disclose whether and how it has developed an understanding of how consumers and/or end-users with specific characteristics, or those using certain products or services, may be at higher risk of harm. Examples include young consumers and/or end-users who may be more vulnerable to physical and mental development impacts, or who lack financial knowledge and may be more likely to fall victim to exploitative sales or marketing practices. This could also include women in contexts where women are consistently discriminated against in accessing certain services or in the marketing of specific products.
The company should disclose which, if any, of its material risks and opportunities arising from impacts and dependencies on consumers and/or end-users relate to specific groups of consumers and/or end-users, for example, certain age groups, rather than to all consumers and/or end-users. Risks could arise because of the company’s dependence on consumers and/or end-users in situations where low-probability but high-impact events could cause financial effects. For instance, a global pandemic could lead to severe impacts on certain consumers’ livelihoods, resulting in significant changes in consumption patterns.
CH 2. Impact, risk and opportunity management
This disclosure requirement requires the company to describe its policies for managing the material impacts of its products and/or services on consumers and end-users, as well as the associated material risks and opportunities. The information that should be disclosed here should be in accordance with ESRS 2 : MDR-P (Policies adopted to manage material sustainability matters). The company should also specify whether these policies apply to specific groups or all consumers and/or end-users.
A policy may be a stand-alone document specifically for consumers and/or end-users, or it may be part of a broader document, such as a code of ethics or a general sustainability policy, which the company has already disclosed as part of another ESRS. In such cases, the company should provide an accurate cross-reference to identify the parts of the policy that meet the requirements of this disclosure requirement.
The company should describe its human rights policy commitments that are relevant to consumers and/or end-users, including processes and mechanisms to monitor compliance with the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, or the OECD Guidelines for Multinational Enterprises. The disclosure should focus on material matters, as well as the general approach regarding:
respect for the human rights of consumers and/or end-users;
engagement with consumers and/or end-users;
measures to provide and/or enable remedy for human rights impacts.
The company should disclose whether and how its policies regarding consumers and/or end-users align with internationally recognized instruments, including the UN Guiding Principles on Business and Human Rights. The company should also disclose the extent to which cases of non-compliance with the these instruments, involving consumers and/or end-users, have been reported in its downstream value chain, and, if applicable, provide an indication of the nature of such cases.
The description disclosed in this section should include the key information necessary to provide an accurate representation of the policies in relation to consumers and end-users. Therefore, the company should explain any significant changes to its policies adopted during the reporting year, for example, new expectations for business customers or new approaches to due diligence and remedy.
In disclosing how external-facing policies are integrated, the company may consider its internal-facing sales and distribution policies and their alignment with other policies relevant to consumers and/or end-users. The company should also consider its policies for ensuring the truthfulness and usefulness of information provided to potential and actual consumers and/or end-users, both before and after the sale.
The company may illustrate how it communicates its policies to those individuals, groups, or entities for whom they are relevant, either because they are expected to implement them (such as the company’s employees, contractors, and suppliers) or because they have a direct interest in their implementation (such as workers, investors). The company may disclose the communication tools and channels used (such as flyers, newsletters, dedicated websites, social media, or face-to-face interactions) to ensure the policy is accessible and that different audiences understand its implications. The company may also explain how it identifies and removes potential barriers to dissemination, such as through translation into relevant languages or the use of visual depictions.
This section requires the company to disclose its general processes for engaging with consumers and end-users, as well as their representatives, regarding actual and potential impacts on them. It also clarifies whether and how the company takes the perspectives of consumers and/or end-users into account in its decision-making processes. If the company cannot disclose the required information because it has not adopted a general process for engaging with consumers and/or end-users, it should disclose this and may provide a timeline for when it aims to establish such a process.
The company should disclose whether and how the perspectives of consumers and/or end-users influence its decisions or activities aimed at managing actual and potential impacts on them. This should include, where relevant, an explanation of:
whether engagement happens directly with affected consumers and/or end-users or their legitimate representatives, or with credible proxies who have insights into their situation;
the stages at which engagement occurs, the type of engagement, and the frequency of engagement;
the function and the highest-ranking role within the company responsible for ensuring that this engagement occurs and that the results inform the company’s approach; and
where applicable, how the company assesses the effectiveness of its engagement with consumers and/or end-users, and any agreements or outcomes resulting from this engagement.
Credible proxies who have knowledge of the interests, experiences, or perspectives of consumers and end-users could include national consumer protection bodies, for certain consumers.
The company should disclose whether and how the perspectives of consumers and/or end-users influence its decisions or activities aimed at managing actual and potential impacts on them. This should include, where relevant, an explanation of:
whether engagement happens directly with affected consumers and/or end-users or their legitimate representatives, or with credible proxies who have insights into their situation;
the stages at which engagement occurs, the type of engagement, and the frequency of engagement;
the function and the highest-ranking role within the company responsible for ensuring that this engagement occurs and that the results inform the company’s approach; and
where applicable, how the company assesses the effectiveness of its engagement with consumers and/or end-users, and any agreements or outcomes resulting from this engagement.
When describing the function or role responsible for engagement and/or ultimate accountability, the company may disclose whether this is a dedicated role or part of a broader role or function, and whether any capacity-building activities have been offered to support staff in company engagement. If the company cannot identify such a position or function, it may state that this is the case. This disclosure may also be fulfilled by referencing information disclosed according to ESRS 2 : GOV-1 (The role of the administrative, management, and supervisory bodies).
Where applicable, the company should disclose the steps it takes to understand the perspectives of consumers and/or end-users who may be particularly vulnerable to impacts or marginalized, for example, people with disabilities or children.
The company may provide examples from the current reporting period to show how the perspectives of consumers and/or end-users have influenced specific decisions or activities.
The goal of this disclosure is to provide information on how consumers and/or end-users can make their concerns and needs known directly to the company, and/or how the company supports the availability of such channels, for example, grievance mechanisms, through its business relationships. It should also explain how follow-up is carried out with consumers and/or end-users regarding the issues raised and the effectiveness of these channels.
The company should describe:
its general approach and processes for providing or contributing to remedy where it has identified that it has caused or contributed to a material negative impact on consumers and/or end-users, including whether and how the company assesses the effectiveness of the remedy provided;
any specific channels it has for consumers and/or end-users to raise their concerns or needs directly with the company and have them addressed, including whether these channels are established by the company itself or through participation in third-party mechanisms;
the processes through which the company supports or requires the availability of such channels by its business relationships; and
how the company tracks and monitors issues raised and addressed, and ensures the effectiveness of the channels, including involvement from stakeholders who are the intended users.
Channels for raising concerns or needs may include grievance mechanisms, hotlines, dialogue processes, or other means through which consumers and/or end-users or their legitimate representatives can raise concerns about impacts or express needs they want the company to address. This may include channels provided directly by the company, and should be disclosed alongside any other mechanisms the company uses to understand how impacts on consumers and/or end-users are managed, such as compliance audits. If the company is relying solely on information about the existence of such channels provided by its business relationships to fulfil this requirement, it may state this.
Third-party mechanisms could include those run by governments, NGOs, industry associations, and other collaborative initiatives. The company may disclose whether these mechanisms are accessible to all consumers and/or end-users who may be affected by the company, or to individuals or organizations acting on their behalf or who are aware of negative impacts. These channels should allow consumers and/or end-users (or their representatives) to raise complaints or concerns related to the company’s activities.
The company should disclose whether and how it assesses that consumers and/or end-users are aware of and trust these structures or processes as a way to raise concerns or needs and have them addressed. It may provide relevant and reliable data about the effectiveness of these channels from the consumers’ or end-users’ perspective. For example, it may include survey data from consumers who used the channels, showing their satisfaction with the process and outcomes. The company may also disclose the number of complaints received from consumers and/or end-users during the reporting period.
In addition, the company should disclose whether it has policies in place to protect individuals from retaliation when using such structures or processes. It may describe whether it treats grievances confidentially and respects privacy and data protection rights. It may also explain if these mechanisms allow consumers and/or end-users to remain anonymous, for example, through representation by a third party. If this information has already been disclosed according to ESRS G1-1, the company may refer to that disclosure.
To provide more insight into the information covered in this section, the company may explain whether and how affected consumers and/or end-users can access these channels at the level of the company related to each material impact.
To describe the effectiveness of the channels for consumers and/or end-users to raise concerns, the company may be guided by the following questions from principle 31 of the UN Guiding Principles on Business and Human Rights, which outlines the “effectiveness criteria for non-judicial grievance mechanisms”. These considerations may apply to each individual channel or the overall system of channels:
do the channels have legitimacy by providing appropriate accountability for their fair conduct and building stakeholder trust?
are the channels known and accessible to stakeholders?
do the channels have clear procedures, set timeframes, and transparency about the processes?
do the channels ensure reasonable access to information, advice, and expertise?
do the channels offer transparency by providing sufficient information to complainants and, where applicable, to meet any public interest at stake?
do the outcomes from the channels align with internationally recognized human rights?
does the company identify insights from the channels to improve them and prevent future impacts?
does the company focus on dialogue with complainants to reach mutually agreed solutions, rather than unilaterally determining the outcome?
If the company has not adopted a channel for raising concerns or does not support the availability of such mechanisms by its business relationships, it should disclose this and may provide a timeline for when it aims to have such a channel or processes in place.
The goal of this disclosure requirement is to:
provide information on actions and initiatives through which the company aims to:
prevent, reduce, and fix negative significant impacts on consumers and/or end-users, and/or
create positive significant impacts for consumers and/or end-users;
explain how the company is dealing with material risks and pursuing material opportunities related to consumers and/or end-users.
Regarding material impacts, the company should describe:
actions taken, planned, or in progress to prevent, reduce, or fix material negative impacts on consumers and/or end-users;
whether and how it has acted to provide or enable remedies for an actual material impact;
any additional actions or initiatives aimed at positively contributing to improved social outcomes for consumers and/or end-users; and
how it tracks and evaluates the effectiveness of these actions and initiatives in achieving intended outcomes for consumers and/or end-users.
the processes through which it determines what action is needed and appropriate in response to a specific actual or potential negative impact on consumers and/or end-users;
its approaches to taking action for specific material negative impacts on consumers and/or end-users, including actions related to its own practices regarding product design, marketing, or sales, and whether broader industry or joint actions with other parties are needed; and
how it ensures that processes to provide or enable remedy for material negative impacts are available and effective in their implementation and results.
When disclosing whether and how it considers actual and potential impacts on consumers and/or end-users in decisions to terminate business relationships, the company may include examples and address how it seeks to handle any negative impacts that result from such termination.
In disclosing how it tracks the effectiveness of actions to manage material impacts during the reporting period, the company may mention lessons learned from previous and current periods.
Processes used to track effectiveness can include internal or external audits or verification, court proceedings and related decisions, impact assessments, measurement systems, stakeholder feedback, grievance mechanisms, external performance ratings, and benchmarking.
Regarding material risks and opportunities, the company should describe:
what actions are planned or underway to reduce material risks for the company caused by its impacts and dependence on consumers and/or end-users, and how it tracks effectiveness in practice; and
what actions are planned or underway to pursue material opportunities for the company related to consumers and/or end-users.
The company should disclose whether and how it takes steps to avoid causing or contributing to material negative impacts on consumers and/or end-users through its own practices, including, where relevant, in marketing, sales, and data use. This may include explaining the approach when conflicts arise between preventing or reducing material negative impacts and other business pressures.
When preparing this disclosure, the company should consider whether severe human rights issues and incidents related to its consumers and/or end-users have been reported and, if applicable, disclose them.
Where the company evaluates the effectiveness of an action by setting a target, it should refer to ESRS 2 MDR-T.
The company must disclose what resources are allocated to manage its material impacts, providing information that helps users understand how these impacts are managed. It may explain which internal functions are involved in managing these impacts and the actions they take to address negative impacts and promote positive ones.
If material negative impacts on consumers and/or end-users during the reporting period are connected to entities or operations outside its direct control, the company may disclose how it uses leverage with relevant business relationships to manage those impacts. This may include using commercial leverage (such as enforcing contractual requirements or offering incentives), other forms of leverage within the relationship (such as providing training or building capacity on proper product use or sales practices), or collaborative leverage with peers or other actors (such as responsible marketing or product safety initiatives).
When the company reports its involvement in an industry or multi-stakeholder initiative to address material negative impacts, it may explain how the initiative and its own involvement aim to tackle the material impact. It may also disclose relevant targets set by the initiative and its progress towards them under ESRS S4-5.
Regarding initiatives or processes based on the needs of affected consumers and/or end-users, the company may disclose:
whether and how consumers and/or end-users, or their representatives, are involved in decisions about the design and implementation of these programs or processes; and
information on the intended or achieved positive outcomes for consumers and/or end-users from these programs or processes.
When disclosing the intended positive outcomes of actions for consumers and/or end-users, a distinction should be made between evidence of activities (e.g., a certain number of consumers receiving information on healthy eating) and evidence of actual outcomes (e.g., a certain number of consumers adopting healthier eating habits).
The company may disclose whether any initiatives aimed at delivering positive impacts for consumers and/or end-users also support the achievement of one or more UN Sustainable Development Goals (SDGs). For example, if advancing UN SDG 3 (“ensure healthy lives and promote well-being for all at all ages”), the company may work to make its products less addictive and harmful to health.
When disclosing whether initiatives also help mitigate material negative impacts, the company may consider programs that raise awareness of online scams, leading to fewer end-users experiencing data privacy breaches.
When disclosing material risks and opportunities related to the company’s impacts or dependencies on consumers and/or end-users, the company may consider:
risks from its impacts on consumers and/or end-users, such as reputational or legal exposure due to poorly designed or defective products causing harm;
risks from its dependencies on consumers and/or end-users, such as business disruption if an economic crisis prevents consumers from affording products or services;
opportunities from its impacts on consumers and/or end-users, such as market differentiation from offering safe products or privacy-respecting services; and
opportunities from its dependencies on consumers and/or end-users, such as gaining a loyal customer base by ensuring the respect of diverse groups like LGBTQI people and inclusive selling practices.
When disclosing policies, actions, resources, and targets related to managing material risks and opportunities, if these risks and opportunities arise from a material impact, the company may refer to its disclosures on policies, actions, resources, and targets related to that impact.
The company should consider how its processes for managing material risks related to consumers and/or end-users are integrated into its existing risk management processes.
CH 3. Metrics and targets
The company should disclose any time-bound and outcome-oriented targets it has set related to reducing negative impacts, advancing positive impacts, and managing material risks and opportunities related to consumers and/or end-users. The summarized description of these targets should include the information requirements defined in ESRS 2 MDR-T.
Additionally, the company should disclose the process for setting the targets, including whether and how it engaged directly with consumers and/or end-users, their legitimate representatives, or credible proxies with insight into their situation in setting these targets, tracking the company’s performance against them, and identifying any lessons or improvements resulting from the company’s performance.
When disclosing targets, the company may disclose:
the intended outcomes to be achieved in the lives of consumers and/or end-users, being as specific as possible;
the stability of the targets over time, in terms of definitions and methodologies, to ensure comparability; and/or
references to standards or commitments on which the targets are based, which should be clearly defined in the reporting such as codes of conduct, sourcing policies, global frameworks, or industry codes.
Targets related to material risks and opportunities may either be the same as or different from targets related to material impacts. For instance, a target to ensure equal access to finance for underserved consumers could both reduce discrimination impacts on those consumers and expand the company’s customer base.
The company may also distinguish between short, medium, and long-term targets that cover the same policy commitment. For example, the main objective could be to make its online services accessible to people with disabilities, with the long-term goal of adapting 100% of its online services by 2025, and the short-term objective of adding a certain number of accessible features every year until 2025.
When modifying or replacing a target during the reporting period, the company may explain the change by cross-referencing it to significant changes in the business model or to broader changes in the accepted standard or legislation that the target is based on.
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