In the context of the CSRD data collection and gap analysis process, your company may encounter two types of challenges related to data points under specific sub-topics: non-applicability and non-availability.
Non-applicability refers to a situation where a specific data point does not apply to your company’s sector or operations at all. The company is not required to disclose this information because it is irrelevant to its business model, industry, or operational scope.
Non-availability occurs when the company currently lacks the data or systems to report on a particular data point. However, this gap can be filled in the future by deploying additional resources, processes, or technologies. In this case, the data could eventually become available with the right investments or actions.
It is essential to differentiate between these two scenarios to avoid underreporting or making incorrect disclosures, as non-applicability absolves the company of reporting responsibility, while non-availability signals a future opportunity or obligation to disclose once systems are in place.
Practical Guidelines for Differentiating Non-applicability and Non-availability:
Understand Sectoral Relevance:
Review whether the specific data point or KPI is explicitly linked to your industry or operations. If the regulatory framework does not consider this data point relevant to your sector, tag it as non-applicable.
Example: A manufacturing company might find that very specific metrics about Species Collapse around its premises are non-applicable if its activities have no direct impact on natural ecosystems.
Examine Operational Feasibility:
Assess whether the company’s operations can theoretically produce the required data. If it’s physically or technically impossible for the company to generate this data due to its business structure, tag it as non-applicable.
Example: If a company is entirely office-based, a KPI related to industrial water use would be non-applicable.
Evaluate Data Systems and Resources:
Investigate whether the data point could potentially be collected if resources, processes, or new technology were deployed. If the answer is yes, then it is non-available for now but could be addressed in the future.
Example: A company might not currently have a system to track Scope 3 emissions from its supply chain but could implement a system in the next reporting cycle.
Assess Regulatory Flexibility:
Some data points may not be required in the current reporting period but will become mandatory in the future. If the company can work towards achieving this requirement, mark it as non-available, not non-applicable.
Consult Internal Stakeholders:
Work closely with subject-matter experts across departments (e.g., finance, operations, IT) to accurately assess whether the data point can be made available in the future, clarifying if it is a gap that can be filled over time or simply irrelevant to the company's operations.
Document Justification:
Provide clear reasoning and evidence for tagging a data point as non-applicable or non-available. This ensures transparency during audits and facilitates future updates as the business evolves.
Periodic Review:
Ensure the list of non-applicable and non-available data points is reviewed annually. Data that is currently non-available may become available as technology, regulations, or the company's operations evolve.
This structured approach will help you navigate the complexities of ESG reporting without confusing the two terms, ultimately leading to more accurate disclosures and a better understanding of the company's current and future reporting obligations.