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Sustainability Reporting
July 10, 2023

A coalition of investment and sustainable investing groups – including Eurosif, PRI, IIGCC, EFAMA, UNEP FI – alongside more than 90 asset managers announced the publication of a joint statement calling on the European Commission to reconsider its recent proposed changes to the European Sustainability Reporting Standards (ESRS), which would ease several aspects of the EU’s upcoming Corporate Sustainable Reporting Directive (CSRD).

According to the statement, the changes would impact investors’ ability to obtain sustainability-related information required for investment decisions, in addition to reducing their ability to meet their own reporting requirements including those under the EU’s Sustainable Finance Disclosure Regulation (SFDR).
The statement said:
“The proposed approach would limit investor access to the consistent, comparable and reliable information needed to inform decisions and allocate capital in line with sustainability goals, including those of the European Green Deal, the EU Biodiversity Strategy for 2030 and the EU Climate Law.”

Banking association AFME’s response, detailed below, raised similar concerns.
The CSRD, on track to begin applying from the beginning of 2024, is aimed as a major update to the 2014 Non-Financial Reporting Directive (NFRD), the current EU sustainability reporting framework. The new rules will significantly expand the number of companies required to provide sustainability disclosures to over 50,000 from around 12,000 currently, and introduce more detailed reporting requirements on company impacts on the environment, human rights and social standards and sustainability-related risk.

The European Financial Reporting Advisory Group (EFRAG) was mandated by the European Commission in June 2020 to prepare for new EU sustainability reporting standards, and in November 2022, EFRAG submitted its final ESRS draft.

Following EFRAG’s submission, the EU Commission held consultations with regulators and member state sustainable finance groups, which the Commission said raised some concerns about the “challenging nature” of some of the reporting requirements. In June 2023, the EU Commission released a series of proposed changes to the ESRS, easing several of the reporting requirements. One of the key changes was a proposal for all disclosure requirements, with the exception of a set of general disclosures, to be subject to materiality assessments, effectively allowing companies to focus reporting on sustainability factors that they consider material to their businesses.

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