The Commission risks backtracking on corporate sustainability reporting
Posted on 02 June 2023
The European Commission is expected to release the first set of European Sustainability Reporting Standards (ESRS), as planned by the robust Corporate Sustainability Reporting Directive, on Monday, 5th June.
The objective of these standards is to enhance transparency regarding how companies report on their sustainability impacts, while also ensuring that they adopt comparable and meaningful reporting practices for sustainability matters.
There is growing concern that the European Commission may make substantial revisions (1) to the proposed European Sustainability Reporting Standards (ESRS) put forth by the European Financial Reporting Advisory Group (EFRAG) in November 2022.(2)
"The European Sustainability Reporting Standards developed by the European Financial Reporting Advisory Group has received support from diverse experts, including companies and financial institutions. It was developed in conjunction with an extensive public consultation and is fully consistent with all major global reporting standards. If the Commission were to significantly alter it at the eleventh hour, it would deal a severe blow to its own long-standing efforts in advancing the sustainable finance agenda," said Sebastien Godinot, Senior Economist at the WWF European Policy Office.
These potential revisions include postponing the implementation of the ESRS, introducing materiality assessments for certain standards instead of making them mandatory, and even making specific standards voluntary, such as those related to biodiversity.
If these changes are implemented, they could severely impede the Commission's sustainable finance agenda, which has been primarily built since 2018 on providing accurate sustainability information to financial institutions to facilitate better-informed financial decision-making.
WWF calls on the Commission to adopt those ESRS in accordance with the draft proposed by the EFRAG.
Note to the editors
(1) The potential reversal by the Commission seems to have been prompted by a speech from President von der Leyen in March, wherein she proposed a 25% reduction in corporate reporting."EU competitiveness beyond 2030: looking ahead at the occasion of the 30th anniversary of the Single Market," EC press release, 16th March 2023: https://ec.europa.eu/commission/presscorner/detail/en/ip_23_1668 "In particular, there will be a new push for the rationalisation of reporting requirements across the EU's green, digital, and economic legislation, with initial proposals expected by autumn, aiming for a 25% reduction in burden." (2) European Financial Reporting Advisory Group (EFRAG) proposal: https://www.efrag.org/lab6. WWF is a member of the EFRAG.
Contact: Ines Abbas, Communications Officer, WWF European Policy Office +32 488 99 27 65