Accountancy Europe congratulates EFRAG in delivering to the European Commission (EC) its technical advice on Draft Simplified European Sustainability Reporting Standards (Draft Revised ESRS). In the less than one year time given to simplify the 12 original ESRS, EFRAG produced easier, simpler and less granular standards.
We recognise that the Draft Revised ESRS are not perfect and that there are challenges, partially also due to the extremely ambitious timeframe given for their revision. We also agree that some topics raise questions of interpretation and application or are not supported by established practices. However, time should be allowed for practices to develop. Preparers, users, assurance providers, and regulators should start and stay on a learning path to invest and develop practices together to tackle those challenging elements in the standards.
As the EC is in the process of producing the draft Delegated Act on Revised ESRS and ultimately adopting it, we call for stability in the EU sustainability reporting ecosystem.
The ESRS stem from the Corporate Sustainability Reporting Directive (CSRD), which is part of the European Green Deal, whereby the ultimate objective is to make Europe climate-neutral by 2050 while transforming the EU into a modern, resource-efficient, competitive economy, and aiming for a just transition.
Therefore, indirectly, the ESRS also support this policy objective. The Draft Revised ESRS strike a good balance between simplifying standards and serving as a tool to catalyse business transitions towards sustainability. We caution on further cuts as this may risk the standards no longer being capable of serving the Green Deal’s policy objectives.
EFRAG already ran a stakeholder consultation and targeted field-tests to collect feedback on the proposed contents of the standards and the Draft Revised ESRS represent the consensus of the multi-stakeholder representation in EFRAG’s sustainability reporting pillar.
Therefore, Accountancy Europe calls for the EC to keep the standard-setting process technical and avoid subjecting it to political pressures. The EC should refrain from further diluting the standards or reopening technical elements as this would undermine the due process the Draft Revised ESRS went through at EFRAG level.
The EC should instead focus on critical changes and addressing fatal flaws to ultimately improve the ESRS’ robustness and their ability to serve policy objective as well as maximise alignment with the International Sustainability Standards Board’s (ISSB) standards.
