16 June 2023

Accountancy Europe makes EC’s draft DA and EFRAG’s Draft ESRS comparison available

The European Commission (EC) published the draft delegated act (DA) with the first set of European Sustainability Reporting Standard (ESRS). Accountancy Europe is working on its response to provide the European accountancy profession’s views.

We are making available our own working documents that compare the EC’s draft DA version to EFRAG’s drafts in track changes to facilitate the work of other respondents and stakeholders. These documents do not constitute Accountancy Europe’s views or an analysis of these changes.

What are the main changes to EFRAG’s technical advice with the Draft ESRS?

The note EC included a note with the main changes to EFRAG’s Draft ESRS, further summarised in this presentation the EC gave to the EFRAG Sustainability Reporting Board (SRB) on the 14th of June. In brief:

1. Materiality

All standards and disclosure requirements are subject to the materiality assessment, except for ESRS 2 “General disclosures”, which is mandatory.

2. Additional phasing-in:

  • Undertakings with less than 750 employees may omit:
    • scope 3 GHG emissions data in the first year
    • the disclosure requirements in ESRS S1 “Own workforce” in the first year
    • the disclosure requirements in ESRS E4 “Biodiversity and ecosystems” in the first two years
    • all non-own workforce standards (ESRS S2, ESRS S3 and ESRS S4) in the first two years.
  • All undertakings may omit the following information in the first year:
    • anticipated financial effects related to non-climate environmental issues (ESRS E2, ESRS E3, ESRS E4, ESRS E5)
    • certain datapoints related to their own workforce in ESRS S1 (social protection, persons with disabilities, work-related ill-health, and work-life balance).

3. Making certain disclosures voluntary, including:

  • biodiversity transition plans
  • certain indicators about “non-employees” in the undertaking’s own workforce
  • an explanation of why the undertaking may consider a particular sustainability topic not to be material.

4. More flexibilities in certain disclosures including in:

  • the disclosure requirements on the financial effects arising from sustainability risks and on engagement with stakeholders
  • the methodology to use for the materiality assessment process.
    Furthermore the Commission has modified datapoints in ESRS G1 “Business conduct”, that might be considered to have infringed on the right not to self-incriminate, regarding:
  • corruption and bribery
  • the protection of whistle-blowers

5. Coherence with EU legal framework

6. Interoperability with global standard-setting initiatives including with GRI and ISSB.

7. Other editorial changes

How to provide feedback to the EC’s draft DA with the first set of ESRS?

The feedback period is open until 7 July 2023. Respondents have the possibility to provide feedback via the EC’s survey tool on the website.

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