ESRS S3, which covers reporting on communities affected by a company's activity, was originally adopted in 2023 as part of the set of ESRS standards supporting the application of the SRHR Directive. On 31 July 2025, EFRAG published a revised version of this standard, opening a public consultation until 29 September 2025.<\/p>\n
In terms of structure, the proposed standard maintains the core themes of the 2023 version (policies, commitments, remediation mechanisms, incidents and community-related targets), but reorganises the content to better align it with ESRS 2 (General Disclosures). It also introduces a clear separation between mandatory requirements and methodological guidance, avoiding overlaps that complicated application in the previous version.<\/p>\n
ESRS S3 required reporting on all topics included in the standard, without a clear delineation between relevant and secondary issues. Proposal 2025 introduces the principle of materiality applied granularly - if only a sub-topic is relevant (e.g. rights of indigenous peoples), the company will report exclusively on that topic. This change significantly reduces the reporting burden for companies for which only certain risks are applicable.<\/p>\n
ESRS S3 required the description of policies on affected communities, without providing a clear reporting framework, leading to different interpretations in practice. The 2025 proposal explicitly asks whether the policies target general or specific communities (e.g. indigenous peoples), and whether they contain measures on fundamental rights such as access to water, food, adequate shelter, or protection of territories. Policies are linked to international references: UNGP, OECD Guidelines, Bill of Human Rights.<\/p>\n
ESRS S3 mentioned the importance of community engagement and the existence of referral channels, without setting clear requirements for their effectiveness. Proposal 2025 introduces explicit requirements on how these mechanisms should work. Companies must show how they consult with communities, what channels are in place for raising concerns, whether free, prior and informed consent (FPIC) principles are applied to indigenous peoples, and how the effectiveness of these channels are assessed, including against UN standards on remedy mechanisms.<\/p>\n
ESRS S3 required descriptions of actions, but did not differentiate between prevention, mitigation, compensation and remediation, and the extent of resources involved was rarely documented in practice. The 2025 proposal explicitly requires explicit reporting of actions taken according to the nature of the company's involvement (e.g. direct causation vs. commercial links), and how they are tracked, evaluated and adjusted. It also asks for details on situations of tension between actions for communities and business interests, such as those arising in the context of energy transition or industrial expansion.<\/p>\n
ESRS S3 was limited to mentioning the possibility of reporting serious incidents. 2025 proposal: introduces an obligation to report if such incidents have been identified, within the limits of confidentiality regulations. Information is linked to SFDR indicators and ESG transparency requirements for investors.<\/p>\n
ESRS S3 provided for the formulation of targets without requiring the involvement of affected parties in setting them. The 2025 proposal requires companies to declare the extent to which they have involved communities in setting targets and monitoring progress. This is a substantive change that encourages a participatory approach and the building of long-term relationships of trust.<\/p>\n
For companies with activities that have a local impact (such as those in the extractive, energy, or transport sectors) the new requirements provide a clearer and more locally applicable structure. In addition, companies that are part of European or global value chains may be required to provide data consistent with these standards.<\/p>\n