On 31 July 2023, the European Commission adopted the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD). The final text remains largely unchanged from the draft published for consultation on 9 June 2023. In particular, all standards and disclosure requirements will be subject to materiality assessment with the exception of the “general disclosure” standards.
Finance Watch, the pan-European NGO advocating to make finance serve society, welcomes the adoption of the long-awaited standards but regrets that the concerns shared by civil society and the financial sector during the consultation remain generally unaddressed. The adopted text brings more transparency in situations where a reporting entity would consider climate as a non-material topic. It also requires an explicit statement for non-material data points reported under Sustainable Finance Disclosure Regulation (SFDR) and the Capital Requirements Regulation (CRR). This may help the financial sector slightly, but the significant reduction of mandatory data points is problematic. Meaningful guidance from the European Financial Reporting Advisory Group (EFRAG) on how to perform the materiality assessment and its consideration during assurance engagements will be essential.
Vincent Vandeloise, Senior Research & Advocacy Officer at Finance Watch, said:
“Deviations from the original standards proposed by EFRAG are a concern. Climate change and social standards are not mandatory in the final text, which unfortunately puts more reliance on the quality of assurance work to make sure material topics have been identified. ”
The delegated acts will now be subject to scrutiny by the European Parliament and the Council.
To arrange an interview with Vincent Vandeloise, Senior Research and Advocacy Officer at Finance Watch, please contact Alison Burns at firstname.lastname@example.org or call on +32 (0)471577233
About Finance Watch
Finance Watch is an independently funded public interest association dedicated to making finance work for the good of society. Its mission is to strengthen the voice of society in the reform of financial regulation by conducting advocacy and presenting public interest arguments to lawmakers and the public. Finance Watch’s members include consumer groups, housing associations, trade unions, NGOs, financial experts, academics and other civil society groups that collectively represent a large number of European citizens. Finance Watch’s founding principles state that finance is essential for society in bringing capital to productive use in a transparent and sustainable manner, but that the legitimate pursuit of private interests by the financial industry should not be conducted to the detriment of society.
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