08 August 2022

EuropeanIssuers calls for further prioritisation and clarity in its response to the EFRAG public consultation on the Draft European Sustaina

Whilst the draft sustainability standards are important, EuropeanIssuers notices that, in their current form, they require excessive complexity, length and extreme level of detail and granularity that need to be addressed in order to make the indicators more useful and practicable.

On 08 August 2022, EuropeanIssuers calls for further prioritisation and clarity in its response to the EFRAG public consultation on the Draft European Sustainability Reporting Standards (ESRS).

In its response published today, EuropeanIssuers welcomes the opportunity to respond to the EFRAG public consultation on the Draft ESRS which will be the future reference for reporting of non-financial information across Europe for all companies under the scope of the CSRD (Corporate Sustainability Reporting Directive)  

Chairman Luc Vansteenkiste, comments: “All listed Companies across Europe take their societal responsibility seriously and have not wait the ESRS to reinforce their commitments.  I see the draft standards as a unique opportunity to streamline our views through my contribution at the Sustainability Reporting Board and ensure proper alignment with the ISSB standards to prevent double reporting and respond to market expectations.”

Whilst the draft sustainability standards are important, EuropeanIssuers notices that, in their current form, they require excessive complexity, length and extreme level of detail and granularity that need to be addressed in order to make the indicators more useful and practicable. Furthermore, EuropeanIssuers regrets the short timeline given for contributions, which is detrimental for an in-depth analysis.

EuropeanIssuers Secretary General, Florence Bindelle stresses the need of rationalized reporting frameworks: “Companies face a myriad of challenges understanding new regulations and reporting standards. For a valuable contribution and engagement between users and preparers, clarity and practicality should be key components of the future standards.”

EuropeanIssuers also urges EFRAG to amend the draft standards with the new version of the Corporate Sustainability Reporting Directive (CSRD) and particularly avoid disproportionate administrative burden and costs, take account of difficulties in collecting the data, ensure quality and relevance of the information, and allow undertakings to omit information that might be prejudicial to their commercial position.

EuropeanIssuers also mentions that the principle of double materiality, does not mean that all stakeholders must be satisfied in all their desiderata, as this would contradict the materiality principle itself. Instead, the standards should describe in more detail the criteria to be followed in the materiality analysis process while clarifying that the materiality assessment should be run at the level of general topic.

 On the principle of rebuttable presumption, EuropeanIssuers considers it is not consistent with the directive, as it states that materiality analysis should serve to identify what to include on the report, not what to remove from the disclosure obligation and therefore asks to remove it.

As  the draft standards require an extensive reporting across value chains which goes beyond the mandate of CSRD, and as information must be of quality and thus based on solid data and reliable methodologies, EuropeanIssuers considers that the reporting should be proportionate and relevant to the scale of complexity of the activities.

Furthermore, EuropeanIssuers encourages EFRAG to implement prioritisation and gradual implementation of the Disclosure Requirements, by starting with information already required by the NFRD and SFDR, and advancing progressively on all three pillars of sustainability reporting.

With regards to the ESG standards, EuropeanIssuers expresses concerns. On environment, while reporting on climate issues should be prioritised, the obligation for companies to comply with the 1.5°C objective is not realistic. On social and governance standards, simplification is needed to respect the wording of the CSRD, which does not justify some extensive Disclosure Requirements and  go beyond the mandate of the CSRD

European Issuers

© EuropeanIssuers