Consultation response

The climate emergency is clear to all. Transitioning requires fundamental change in policies and business practices. We commend the EC for its ambition to foster this change and for proposing the CSRD. All involved parties will have to play a balancing act between advancing quickly to meet the ambitious timeline and taking up the challenge of reporting credible and quality sustainability information as from 2024.

We support the EC’s proposal to extend the scope to all large and listed companies that significantly impact or can be impacted by the environment and society.

European common standards for sustainability reporting need to be set quickly by EFRAG. Such European standards will also provide the necessary basis for digitisation and assurance. We support the way forward, while emphasising the need for coordination of the different sustainability reporting initiatives. It is important for the EC to build on globally accepted standards and contribute to international convergence, especially with the IFRS Foundation’s global sustainability reporting standards in development. Ultimately, consolidated global standards would be best to meet investors’ and capital markets’ needs for information comparability whilst minimising duplications and unnecessary costs. Stakeholders, including companies, need to view the incoming legislation and standards as an opportunity and an efficiently driven process, avoiding a multi-layer of reporting or compliance orientated requirements.

Voluntary and proportionate reporting standards for SMEs should be designed to help SMEs address information demands at corporate level coming from financial institutions and larger supply chain partners. It should also set the limits for the information that can be reasonably expected from SMEs (see our SME sustainability checklist).

Investors are voicing the need for third-party independent assurance to introduce greater consistency and credibility to sustainability reporting. We support the EC’s proposal to require limited assurance as a first step. We also agree with the EC that the level of assurance should ultimately be at the same level as financial information. Thus, the EU regulatory framework should set reasonable assurance as an end goal, e.g. over 3 to 5 years (see our views on setting up high quality assurance). The European accountancy profession is stepping up to make the transition from limited to reasonable assurance happen.

To enhance credibility, quality and consistency of the assurance services provided across the EU, all assurance service providers should be required to apply the same professional assurance standards, ethical requirements, including independence, quality framework, and public oversight. The accountancy profession has already such mechanisms in place. Legislation and practice should ensure that all professionals across countries and sectors are subject to the same rules, ensuring a level playing field.

Furthermore, the IAASB’s ISAE 3000 standard (or its national equivalent) is widely used across the EU (see our factsheet on sustainability assurance practice across EU). The accountancy profession is ready to actively engage with the EC on assurance standards to work towards a solution accommodating the existing standards and the EU needs. Meanwhile, the coordination at EU level between local assurance standard-setters and supervisors will be of utmost importance to ensure consistent work effort and quality by those providing assurance on sustainability reporting.

Digitisation of sustainability reporting should be undertaken in a holistic manner with electronic filings envisaged in other legislation and should not unnecessarily conflict with existing electronic fling regimes in member states. There is still room for improvement to harmonise electronic filing in the EU.

Finally, for this reform to be a success, it is instrumental to enhance the responsibilities of Boards and Audit Committees. The level of management responsibility should be the same for financial information and sustainability information.

Related content

UpdateSustainability

25 November 2022

PublicationFAQs: all you need to know about the Corporate Sustainability Reporting Directive

23 November 2022

NewsEFRAG SRB issues first set of draft EU Sustainability Reporting Standards

23 November 2022

PublicationComparing European corporate governance models

17 November 2022

NewsNew SRB chair to further European sustainability reporting agenda

16 November 2022

EventSMEs’ sustainable transition: how to support it?

15 November 2022

PublicationSustainability education

14 November 2022

PublicationSME risk management – cyber risks & resilience checklist

10 November 2022

UpdateSustainability

28 October 2022

NewsEC’s proposal to ban products made using forced labour

28 October 2022

EventSustainable tax system: towards a green future

25 October 2022

PublicationSustainable tax systems – environment

24 October 2022

Consultation responseOECD’s consultation on the review of the G20/OECD principles of corporate governance

21 October 2022

EventMembers’ Engagement Day

19 October 2022

Consultation responseIPSASB’S consultation on natural resources

18 October 2022

Stories from practiceInsight from SME accountants: sustainability matters for the new generation

12 October 2022

EventThe impact of bribery and corruption on SMEs

11 October 2022

UpdateSME Update

30 September 2022

UpdateSustainability

23 September 2022

Consultation responseIPSASB’s consultation on advancing public sector sustainability reporting

9 September 2022

Sign up for our newsletter

* indicates required
Would you like to subscribe to our newsletter?
On which topics would you like to receive news?