1. Introduction
In the push for sustainability, companies are expected to manage their resources efficiently and minimize waste. This involves understanding both the inflows (the resources a company uses) and outflows (the products, materials, and waste that result from its operations). By disclosing this information, companies can demonstrate their commitment to reducing environmental impact and promoting circular economy practices. In this article, we’ll explain what companies need to disclose about their resource inflows and outflows to meet these requirements.
How companies can effectively disclose this information will be covered in another article.
2. Resource Inflows & Outflows
Resource inflows
Resource inflows refer to all the materials, products, and resources that a company uses in its operations and supply chain. This includes everything from raw materials and water to equipment and packaging.
What companies need to disclose:
Types and quantities of resources: Companies must report the total amount of materials they use, such as the weight of products and materials, and specify critical raw materials like rare earths.
Sustainable sourcing: They should also disclose the percentage of these materials that are sustainably sourced, particularly biological materials, and provide details about any certification schemes they use.
Use of recycled materials: Companies need to highlight how much of their material use comes from recycled or reused sources, giving both the weight and percentage of these secondary materials.
Calculation methods: It’s important for companies to explain how they calculated this data, whether it’s based on direct measurements or estimates, and any key assumptions they made.
Resource outflows
Resource outflows include the products, materials, and waste that leave a company’s operations. This covers everything from finished goods to the waste generated during production.
What companies need to disclose:
Circular design: Companies should describe how their products and materials are designed with circular principles in mind, such as durability, reusability, and recyclability.
Product longevity and repairability: They must provide details on how long their products are expected to last compared to industry standards and how easy it is to repair them.
Waste management: Companies need to disclose the total amount of waste they generate, how much of it is recycled or diverted from disposal, and the methods used for waste treatment, such as recycling, incineration, or landfill.
Hazardous waste: Special attention should be given to hazardous and radioactive waste, with companies reporting the total amounts and how they are managed.
Methodologies: Just like with resource inflows, companies must explain how they calculate and classify their waste and products, specifying whether the data is measured directly or estimated.
Companies must disclose the types and quantities of resources they use, including how much is sustainably sourced and recycled. They also need to report on the waste generated, how it's managed, and how their products are designed for durability and recyclability.
3. Conclusion
Understanding and managing resource inflows and outflows is essential for companies committed to sustainability. By carefully tracking and disclosing this information, companies can show how they are reducing their environmental impact and advancing toward a circular economy.
In an upcoming article, we will explore how companies can report on these disclosures. Subscribe to stay updated.
Do you want to become more circular? Check out this article:
Relevant Standards
ESRS E5
Disclosure Requirement E5-4 – Resource inflows
28. The undertaking shall disclose information on its resource inflows related to its material impacts, risks and opportunities.
29. The objective of this Disclosure Requirement is to enable an understanding of the resource usein the undertaking’s own operations and its upstream value chain.
30. The disclosure required by paragraph 28 shall include a description of its resource inflows where material: products (including packaging) and materials (specifying critical raw materials and rare earths), water and property, plant and equipment used in the undertaking’s own operations and along its upstream value chain.
31. When an undertaking assesses that resource inflows is a material sustainability matter, it shall disclose the following information about the materials used to manufacture the undertaking’s products and services during the reporting period, in tonnes or kilogrammes:
(a) the overall total weight of products and technical and biological materials used during the reporting period;
(b) the percentage of biological materials (and biofuels used for non-energy purposes) used to manufacture the undertaking’s products and services (including packaging) that is sustainably sourced, with the information on the certification scheme used and on the application of the cascading principle; and
(c) the weight in both absolute value and percentage, of secondary reused or recycled components, secondary intermediary products and secondary materials used to manufacture the undertaking’s products and services (including packaging).
32. The undertaking shall provide information on the methodologies used to calculate the data. It shall specify whether the data is sourced from direct measurement or estimations, and disclose the key assumptions used.
Disclosure Requirement E5-5 – Resource outflows
33. The undertaking shall disclose information on its resource outflows, including waste, related to its material impacts, risks and opportunities.
34. The objective of this Disclosure Requirement is to provide an understanding of:
(a) how the undertaking contributes to the circular economy by i) designing products and materials in line with circular economy principles and ii) increasing or maximising the extent to which products, materials and waste processing are recirculated in practice after first use; and
(b) the undertaking’s waste reduction and waste management strategy, the extent to which the undertaking knows how its pre-consumer waste is managed in its own activities.
Products and materials
35. The undertaking shall provide a description of the key products and materials that come out of the undertaking’s production process and that are designed along circular principles, including durability, reusability, repairability, disassembly, remanufacturing, refurbishment, recycling, recirculation by the biological cycle, or optimisation of the use of the product or material through other circular business models.
36. Undertakings for which outflows are material shall disclose:
(a) The expected durability of the products placed on the market by the undertaking, in relation to the industry average for each product group;
(b) The reparability products, using an established rating system, where possible;
(c) The rates of recyclable content in products and their packaging.
Waste
37. The undertaking shall disclose the following information on its total amount of waste from its own operations, in tonnes or kilogrammes:
(a) the total amount of waste generated ;
(b) the total amount by weight diverted from disposal, with a breakdown between hazardous waste and non-hazardous waste and a breakdown by the following recovery operation types: i. preparation for reuse; ii. recycling; and iii. other recovery operations.
(c) the amount by weight directed to disposal by waste treatment type and the total amount summing all three types, with a breakdown between hazardous waste and non-hazardous waste. The waste treatment types to be disclosed are: i. incineration; ii. landfill; and iii. other disposal operations;
(d) the total amount and percentage of non-recycled waste.
38. When disclosing the composition of the waste, the undertaking shall specify:
(a) the waste streams relevant to its sector or activities (e.g. tailings for the undertaking inthe mining sector, electronic waste for the undertaking in the consumer electronics sector, or food waste for the undertaking in the agriculture or in the hospitality sector); and;
(b) the materials that are present in the waste (e.g. biomass, metals, non-metallic minerals, plastics, textiles, critical raw materials and rare earths).
39. The undertaking shall also disclose the total amount of hazardous waste and radioactive waste generated by the undertaking, where radioactive waste is defined in Article 3(7) of Council Directive 2011/70/Euratom.
40. The undertaking shall provide contextual information on the methodologies used to calculate the data and in particular the criteria and assumptions used to determine and classify products designed along circular principles under paragraph 35. It shall specify whether the data is sourced from direct measurement or estimations; and disclose the key assumptions used.