While the omnibus reform package is over and done with, there are still lingering questions around the future of EU sustainability reporting. These questions include the pending changes to the European Sustainability Reporting Standards (ESRS). While market regulators have been mostly positive about the draft simplified ESRS, investors have been less optimistic. In addition to these stakeholders, another group is voicing its opinion on the issue. 29 Civil Society Organizations issued a joint statement urging the EU to refrain from deep cuts to the ESRS, stating:
“While simplification is a legitimate objective, the EFRAG draft already represents a radical rollback: around 71% of datapoints have been removed. The scale of the reductions is of concern to us, and for different topical standards it puts at risk the framework’s consistency and the meaningfulness of reporting.
We call on policy-makers to improve the standards and, at a minimum, to not further damage them by cutting more datapoints or challenging key principles that have guided reporting to date. The focus of the revised ESRS should continue to be on streamlining corporate sustainability disclosures while facilitating a pragmatic reporting process well integrated with companies’ risk and due diligence processes, instead of creating a separate, disconnected and costly approach.”
We’ll see if the EU takes the opinions of these Civil Society Organizations to heart, or if it continues on its course of reduction. One thing is clear: no matter the outcome, a group of stakeholders will be unhappy with the results. The question is whether that group will be investors and NGOs, or operating companies.
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