On 7 July, ESBG submitted its response to the consultation launched by the European Commission on the draft Delegated Act for the first set of European Sustainability Reporting Standards (ESRS). This act supplements the Accounting Directive as amended by the Corporate Sustainability Reporting Directive, which requires large companies and listed companies to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment. This first delegated act sets out cross-cutting standards and standards for the disclosure of environmental, social and governance information.

In its response, regarding expanded materiality assessment vs. mandatory disclosures, ESBG suggests maintaining mandatory climate disclosure indicators and topics, including GHG emissions and climate targets, as well as retaining mandatory environmental and social disclosures necessary for SFDR compliance and Pillar 3 disclosure requirements. It also proposes reconsidering the voluntary nature of certain disclosures, such as those related to biodiversity and a company’s own workforce.

As for the phase-in of certain disclosure requirements, ESBG supports the intention of reducing the disclosure requirements on SMEs and expanding the flexibility on introducing the disclosure requirements. However, the new suggested phase-in approach risks making the implementation of the requirements more complex and less understandable and could potentially end up having the opposite of the desired effect.

Moreover, to ensure regulatory consistency and avoid duplication, ESBG recommends aligning the ESRS with the upcoming Corporate Sustainability Due Diligence Directive (CSDDD) and using a single definition based on the CSDDD for reporting purposes. Finally, the CSRD mandates the disclosure of a company’s business model and strategy, However, under the ESRS, the requirement to disclose a transition plan will be evaluated for its materiality, and there is a need for clarity on the priority between CSRD and ESRS disclosure requirements.

The Commission plans to adopt the Delegated (DA) in July, so then they can start the legal scrutiny period. The final adoption is envisaged to be by the autumn of 2023. ESBG will be following the developments in this regard.

Executive SummaryFull Position Paper

Andreea Lungu
Advisor- Financial Reporting and Taxation
e.: andreea.lungu@wsbi-esbg.org
t.: +32 2 211 11 64