ESRS S4 - Consumers and End Users

What is ESRS S4 – Consumers and End Users?

ESRS S4 is one of the standards developed by the European Financial Reporting Advisory Group (EFRAG) to ensure companies comply with the European Union’s sustainability regulations. This standard specifically focuses on consumers and end users, analyzing how business practices affect their well-being, safety, and rights, as well as the environmental impact of the products and services they consume.  The main objective of ESRS S4 is to provide a clear framework for companies to identify, measure, and report risks and impacts related to consumers and end users, including:

• The safety and quality of products and services.
• The environmental impact of products throughout their lifecycle.
• Transparency in communicating risks associated with products.
• Promoting responsible and sustainable consumption.

Ultimately, this standard seeks to encourage greater corporate responsibility toward consumers and end users, aligning with the EU’s sustainability goals.

The importance of ESRS S4 in corporate sustainability

ESRS S4 is particularly relevant in a global context where consumers are increasingly aware of the environmental and social impacts of the products and services they use. According to a European Commission report (2021), 72% of European consumers consider sustainability a key factor in their purchasing decisions. This highlights the need for companies to be transparent and responsible in their practices.

From an environmental perspective, ESRS S4 is closely tied to carbon footprint measurement. For example, companies must evaluate the environmental impact of their products not only during production but also during their use and end-of-life disposal by consumers. This includes measuring carbon emissions under Scope 3, which covers indirect emissions across the entire value chain.

Structure and requirements of ESRS S4

ESRS S4 is divided into several sections that address different aspects of the relationship between companies and consumers. Key components include:

1. Identification of risks and impacts

Companies must identify social and environmental risks associated with their products and services, including those related to safety, health, and environmental impact.

2. Measurement and evaluation

It is necessary to measure the impact of products on consumers and end users using specific metrics, such as carbon emissions associated with product usage.

3. Transparency and communication

Companies must provide clear and accessible information about the risks and benefits of their products, promoting responsible consumption.

4. Mitigation and improvement

Companies are expected to implement measures to mitigate negative impacts and improve the sustainability of their products and services.

Performance indicators

ESRS S4 also establishes a set of performance indicators that companies must report, such as:

• The percentage of products meeting specific sustainability standards.
• Carbon emissions associated with product usage by consumers.
• The number of incidents related to product safety or quality.

These indicators enable companies not only to meet legal requirements but also to demonstrate their commitment to sustainability and social responsibility.

How to comply with ESRS S4

To comply with ESRS S4, companies should adopt a comprehensive approach that combines impact identification, data measurement, and corrective actions.

1. Implement impact measurement systems

Accurate measurement of environmental and social impacts is essential for ESRS S4 compliance.

2. Develop mitigation strategies

Once impacts are identified, companies should develop strategies to mitigate them. This may involve improving product energy efficiency, using sustainable materials, and promoting responsible consumption practices among consumers.

3. Improve transparency

Transparency is a core component of ESRS S4. Companies should clearly and accessibly communicate information related to the impacts of their products, using customized reports and data export tools.

4. Collaborate with strategic partners

Collaboration with strategic partners, such as suppliers and certification organizations, can help companies more efficiently meet ESRS S4 requirements.

Benefits of complying with ESRS S4

Compliance with ESRS S4 is not only a legal obligation for companies subject to the CSRD but also offers several benefits, including:

• Enhanced reputation: Companies demonstrating a commitment to sustainability are perceived more positively by consumers and other stakeholders.
• Risk reduction: Identifying and mitigating product-related risks reduces the likelihood of incidents and legal issues.
• Access to new opportunities: Sustainable companies are more likely to qualify for grants, tenders, and other government incentives.

Manglai: Your ally in complying with ESRS S4

ESRS S4 – Consumers and End Users is an essential standard for ensuring companies responsibly manage the social and environmental impacts of their products and services. Compliance contributes to global sustainability while offering tangible benefits for companies, such as improved reputation and access to new opportunities.

With advanced tools like those offered by Manglai, companies can efficiently measure, manage, and report their impacts, ensuring compliance with ESRS S4 and other sustainability standards.