Europe – The European Sustainability Reporting Standards (ESRS) have been adopted by the European Commission on July 31, 2023.
The standards cover the full range of ESG issues, including climate change, biodiversity, and human rights. They provide information for investors to understand the sustainability impact of the companies in which they invest. To achieve a seamless alignment between EU and global standards and avoid redundant reporting by companies, these standards have been developed in close consultation with the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI). The reporting requirements will be phased in over time for different companies.
In addition, a Q&A on the adoption of the ESRS was published on August 1, 2023. Among others, the document includes the answers to the following questions:
- What will companies have to report?
- What has been modified compared to the EFRAG draft?
- What does the approach to materiality mean?
- What about SMEs?
- Where to get further guidance on the ESRS application?
One of the biggest decisions: the European Commission decided that all the sustainability reporting requirements will be subject to a materiality assessment, with the exception of ESRS 2 (“General Disclosures”). ESRS 2 is only mandatory for all companies under the CSRD. In addition, when evaluating ESRS E1 as not material, extensive justifications are to be given.
Source: EU Commission