Last week, I wrote about the recent ESRS exposure drafts published by EFRAG. In that blog, I note that changes to ESRS were made with interoperability with ISSB in mind. While this is true – and certain portions of the new ESRS are closer to their ISSB counterparts – other areas drift further away from interoperability. A recent Responsible Investor article discusses how the new ESRS may negatively affect interoperability:
“EFRAG has proposed additional reporting reliefs that go beyond the ones in ISSB’s standards which would result in new interoperability differences. These include extending the concept of “undue cost and effort” to apply to all metrics, a new relief to allow reporting on partial scope, which providing transparency on assumptions, limitations and actions to increase data availability over time, and a new relief to exclude nonmaterial activities from calculation of metrics where they are not expected to be drivers of impacts, risks and opportunities (IROs). EFRAG has also proposed removing the systemic preference for direct data as input to the calculation of value chain metrics, limiting disclosures on financial effects to the information on future investments and plans, and introducing a relief for the double materiality assessment and reporting on acquisitions and disposals.”
In addition to these changes, seven data points were removed that mapped to ISSB data points. Previously the ESRS were thought to exceed the requirements of ISSB reporting. Now, while still likely more expansive on the whole, key reliefs and provisions of the ESRS fall well below the ISSB benchmark. Thus far, opinions are mixed on whether the new ESRS cumulatively improves or decreases interoperability with the ISSB, but this is likely to be a key area for feedback in the ESRS’s open consultation. We’ll have to wait until next year to see how the final revisions impact interoperability.
Our members can find more information about the CSRD and ESRS here.
Members save hours of research and reading time each week by using our filtered and curated library of ESG/sustainability resources covering over 100 sustainability subject areas – updated daily with practical and credible information compiled without the use of AI.
If you’re not already a member, sign up now and take advantage of our no-risk “100-Day Promise” – during the first 100 days as an activated member, you may cancel for any reason and receive a full refund. But it will probably pay for itself before then.
Practical Guidance for Companies, Curated for Clarity.
