The EU is currently in the process of simplifying the European Sustainability Reporting Standards (ESRS) used with the Corporate Sustainability Reporting Directive (CSRD). Previously, I wrote about the European Central Bank’s (ECB) feedback that raised several concerns about the simplified ESRS. Now the European Securities and Markets Authority (ESMA) has weighed in, signaling its support for the new ESRS. However, despite supporting the changes, the ESMA suggests a few areas of improvement stating in a press release:
“In the interest of investor protection and financial stability, ESMA advises the Commission to make some adjustments to the revised ESRS, namely:
- introduce time limits to certain permanent reliefs,
- refine requirements on transition plans,
- strengthen reporting on the sustainability competences of administrative, management and supervisory bodies,
- enhance transparency on the financial resources allocated to sustainability actions, and
- adjust the exemption from reporting sustainability risks and opportunities for subsidiaries excluded from consolidated financial statements due to immateriality.”
Several of these issues were echoed in the ECB opinion. The opinions particularly align on recommending that some permanent reliefs not be permanent. Instead, market officials would rather see reliefs phased out or revisited over time. We’ll see how EFRAG incorporates the feedback from market regulators and if the ESRS change substantially as a result.
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