Accountancy Europe welcomes the European Commission’s (EC) adoption of the delegated act with the revised European Sustainability Reporting Standards (ESRS). The revised ESRS are simpler and less granular whilst continuing to support the European Green Deal’s policy objectives. The revised ESRS effective date is 1 January 2027; however, earlier application is permitted for the financial year 2026.
The delegated act is now in the scrutiny phase with the Council of the European Union and the European Parliament. If no objections are raised within the initial two months, the act will be published in the EU Official Journal and enter into force. Otherwise, the scrutiny period may be extended by an additional two months.
Accountancy Europe calls for the revised ESRS to enter into force as soon as possible. This will create certainty and stability in the system, allowing stakeholders to learn and prepare to apply the standards by the effective date. In addition, it would particularly give certainty to wave 1 preparers, who are currently subject to the original ESRS, and who may choose to apply the revised standards for the financial year 2026 too.
Afterwards, we call for a period of calm and stability in standard-setting, to allow for practices to develop among stakeholders to address challenging matters and improve the overall quality of reporting.
The revised ESRS reduced by 61% the number of mandatory datapoints and make materiality the core principle. In addition to other simplifications such as clearer language of standards, additional flexibilities and phase-ins, the cost-benefit analysis estimates an average of 34% cost savings.
Accountancy Europe welcomes these simplifications. Throughout of the development of the ESRS we have called for principle-based standards, underpinned by the materiality assessment, that focus providing decision-useful information to users. We support the reduction of granularity in the standards and focus on “material information”.
However, challenging issues remain in the ESRS, for which practices should evolve and ease their application. These include the double materiality assessment, the perimeter of reporting, value chain considerations, reporting the anticipated financial effects, applying the reliefs, reporting of asset managers. As a result, the real cost-benefit of the revised ESRS will be determined only after the first years of application.
Accountancy Europe supports both international sustainability reporting standards and the ESRS. We have always called for the maximum possible alignment between the ESRS and the International Sustainability Standards Board’s (ISSB) standards. Therefore, we welcome the latest additions in the revised ESRS delegated act aiming at further international alignment, including the flexibility in the ESRS statement presentation.
Despite this, double reporting and its associated costs and efforts can only be fully eliminated by equivalence. An increasing number of jurisdictions are mandating sustainability reporting standards, mostly built on the ISSB standards. Equivalence also promotes competitiveness as it would ensure compliance with other jurisdictions’ frameworks, as well as facilitate access to global capital.
Therefore, we call on the European Commission to prioritise equivalence and related mechanisms. This would allow companies in scope of the Corporate Sustainability Reporting Directive (CSRD), particularly non-EU groups, to make use of the alternative provided and apply ESRS equivalent standards to comply with the requirements.
