Practitioner's Guide to ESRS S4

Michelle Horsfield

25 years: Sustainable Finance

In this video, Michelle explores ESRS S4, she explains how the standard addresses key impact areas like privacy, product safety, and social inclusion, especially for vulnerable groups such as children or people with disabilities. She walks us through the disclosure requirements for managing impacts, risks, and opportunities (IRO), including how companies must engage users, remediate harm, and set measurable targets.

Regulation and Initiatives

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Practitioner's Guide to ESRS S4

12 mins 8 secs

Key learning objectives:

Understand how ESRS S4 defines consumers and end-users, including vulnerable groups
Outline the main impact areas of S4: information, safety, and social inclusion
Outline the S4 disclosure requirements for IRO management and target-setting
Understand how companies can apply a human rights approach to consumer relationships

Overview:

ESRS S4 focuses on how companies impact consumers and end-users by requiring disclosures on safety, privacy, accessibility, and transparency. It addresses information-related harms, personal safety risks, and barriers to social inclusion, especially for vulnerable groups. Companies must outline how they manage these issues, engage with users, and respond to concerns, alongside setting measurable targets for improvement. The standard reinforces the importance of applying a human rights lens to consumer relationships, promoting trust, responsibility, and long-term value through ethical practice.

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Summary

What is ESRS S4 and who does it apply to?

ESRS S4 addresses how companies impact consumers and end-users, people who purchase or use goods and services. This includes not just active customers, but also those who might be affected indirectly. The standard covers physical products, services, digital platforms, and virtual interactions. Its purpose is to ensure that companies assess and disclose how their offerings influence individual rights, safety, inclusion, and access to accurate information. Importantly, it places emphasis on vulnerable populations such as children or those with disabilities.

What are the three main areas of impact under ESRS S4?

The standard requires companies to assess and manage:

Information-related impacts (e.g. user privacy, transparency, manuals)
Personal safety (e.g. product health risks, accurate labelling)
Social inclusion (e.g. accessibility, non-discrimination, responsible marketing)

Each area focuses on how products and services may help, or harm, users. For example, inclusive design can eliminate barriers for users with disabilities, and privacy controls can protect user data in digital services.

Why does the standard highlight particular interest groups?

ESRS S4 lists four high-risk groups to ensure that reporting doesn’t overlook those most vulnerable to harm. These include people exposed to inherently harmful products, those affected by poor data protection, those needing accurate usage information (e.g. allergy sufferers), and users at greater risk due to age or financial status. By naming these groups explicitly, the standard ensures they are not lost in general consumer analysis and receive targeted protection and disclosure.

What does IRO management look like under ESRS S4?

IRO management (Impacts, Risks, and Opportunities) in S4 involves five key disclosure steps:

S4-1: Policy summary - what governs consumer impact decisions

S4-2: Engagement - how consumers are consulted and informed

S4-3: Remediation - how harm is addressed or compensated

S4-4: Mitigation - what steps reduce risks and promote safety

S4-5: Targets - goals for impact reduction or positive outcomes

Together, these create a transparent framework to show how companies actively manage their responsibilities toward consumers and end-users.

Why are metrics and targets important in ESRS S4?

Without measurable goals, progress remains vague. S4-5 requires companies to set time-bound, outcome-oriented targets for consumer-related impacts. These should be specific enough to allow tracking over time. A good example is Nestlé’s target to reduce added sugar, which drove internal innovation. The act of publicly committing to a target often creates accountability, internal focus, and reputational incentives that push businesses to go further than they might otherwise.

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Michelle Horsfield

Michelle Horsfield, an environmental scientist with a climate change specialisation, transitioned into the financial sector four years ago to apply her knowledge to the largest reallocation of capital in history, as the economy moves towards a lower carbon future.

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