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On Monday 31st of July, the European Commission published the European Sustainable Reporting Standards. These documents were drafted by EFRAG in order to achieve the CSRD objective of transparency, reliability and comparability of company reporting.
The 12 ESRS cover all the sustainability topics:
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The ESRS use the double materiality perspective, which consists of taking into account both impact materiality and financial materiality. To find out more about double materiality, read our article : https://fr.greenscope.io/studies/double-materiality
What should we bear in mind?
- The ESRS 1 ("General Requirements") do not themselves define reporting requirements. They only set out the general principles to be applied when publishing the information required in each ESRS.
- The ESRS 2 ("General Disclosures") specify the mandatory information to be published for all companies concerned by CSRD, regardless of the sustainability issue examined.
- On the other hand, the other ESRS, as well as the "Disclosure Requirements" and "Datapoints" that accompany them, must be subject to a materiality assessment. In this way, the company will only report relevant information and may omit information that is not 'material' to its business model and activity. The company's materiality assessment process must be subject to external verification.
- The European Commission is slightly more demanding with regard to the ESRS E1 on climate change. It is reinforcing the "comply or explain" policy for climate change. From now on, companies will have to demonstrate in detail that climate issues are not material to their business if they do not include them in their reports. Given that this is very difficult to prove, in most cases this means that companies will have to include in their reports the extensive quantitative and qualitative data required by the ESRS E1 on climate change.
For more details on ESRS, see our article: https://fr.greenscope.io/studies/csrd-esrs-standards !
The final version of the ESRS can be found here : https://finance.ec.europa.eu/regulation-and-supervision/financial-services-legislation/implementing-and-delegated-acts/corporate-sustainability-reporting-directive_en
In addition, it is now compulsory to disclose data that is essential for investors (such as those in the Sustainable Finance Disclosure Regulation (SFDR), the Benchmark Regulation (BR) or Pillar 3)... or to clearly indicate that it is not material. This measure is intended to simplify the work and reporting of investors concerning their own key portfolio performance indicators, such as "PAIs".
To avoid duplication of reporting, the standards now include interoperability arrangements with, among others, the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI).
You can read the ISSB and GRI statements on this subject here :