The European Commission published its final draft European Sustainability Reporting Standards (ESRS). The new drafts contain a number of changes from the previous version and reduce the total number of data points by 70%. Ropes & Gray writes of the new drafts:
“As noted by the Commission in its announcement, compared to the current ESRS: ‘The draft revised ESRS reduce mandatory datapoints by over 60% and total datapoints by over 70%. The new ESRS are shorter and clearer, introduce new flexibilities for companies, and simplify the materiality assessment used to determine what must be reported. Overall, these changes are expected to reduce reporting costs per company by more than 30%.'”
Last month, I wrote about a potential shakeup coming to the ESRS. Reporting indicated that the European Commission considered bifurcating CSRD reports into financially material and non-financial material sections. This approach would have aligned the financially material disclosures with the ISSB’s IFRS 1 and 2 standards. However, the final drafts do not include this change, and it appears the Commission chose to stick to a more familiar formula.
The new changes are under public consultation until June 3, after which they will be adopted. The ESRS will then undergo a two to four-month no objection period before entering into force. The new ESRS are the last major changes expected to the CSRD. If all goes smoothly, then sustainability professionals will finally have certainty around EU reporting.
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