The ESRS standards have been announced, and the industry has responded with mixed reactions. We take a look at the different perspectives on what this means for the future of corporate sustainability reporting.
The European Commission adopted the European Sustainability Reporting Standards (ESRS) on Monday, July 31. The standards are mandatory for all companies subject to the Corporate Sustainability Reporting Directive (CSRD) and will affect over 50,000 companies.
The ESRS has been met with mixed reactions. Some see them as a step forward in the transition to a sustainable EU economy, while others believe that they are too lenient and give companies too much control over the level of information they are required to disclose.
We share some reactions from the green economy, both good and bad.
Philippe Diaz, senior manager, sustainable finance at WWF Germany
“Sustainability reporting is nothing new – the Global Reporting Initiative has existed for decades. Yet the European Commission still caved in to pressure from conservative industry groups and has weakened the Standards to the point that loopholes have become motorways for greenwashing. This is a serious betrayal of trust and undermines Europe’s claim to leadership in building an economy that is socially just and compatible with the planetary boundaries.”
Eelco van der Enden, CEO of GRI
“As provider of the world’s most widely used standards for impacts, we support the maximum level of interoperability between ESRS and GRI, which will mean double reporting by companies can be avoided. We believe in a user-friendly reporting system that addresses all sustainability topics – for impacts as well as risks and opportunities – on a global scale. This position also reflects our commitment to continued collaboration with the ISSB to arrive at the global comprehensive baseline for sustainability reporting.”
Aleksandra Palinska, Executive Director at Eurosif
“We regret that the investors’ calls to retain key ESG indicators as mandatory have not been heard. Investors need specific corporate disclosures to allocate capital in line with EU Climate Law and Green Deal objectives and to prepare their own sustainability-related disclosures.”
Mark Vaessen, chair of the global corporate & sustainability reporting topic team at KPMG
“Now the final text of the ESRSs is clear, companies in scope have no time to lose before these standards become mandatory. The scale and ambition of these standards is unparalleled, and there are key differences to other international frameworks. Companies need to get ready to meet the challenges and realise the opportunities that enhanced reporting will bring.”
Mirjam Wolfrum, policy engagement director for Europe at CDP
“The much anticipated adoption of the ESRS marks the dawn of a new age of environmental responsibility in business and financial planning. However, compromises were made to ensure successful adoption: all disclosures, including climate related, are now subject to companies’ own materiality assessment. In addition, certain disclosures including scope 3 emissions and all of biodiversity related disclosures have been phased in. Understanding why companies disregard certain topics will be essential to ensure comparable and meaningful information for investors, auditors, and regulators.”
Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union
“The standards we have adopted today are ambitious and are an important tool underpinning the EU’s sustainable finance agenda. They strike the right balance between limiting the burden on reporting companies while at the same time enabling companies to show the efforts they are making to meet the Green Deal Agenda, and accordingly have access to sustainable finance.”
Jean-Paul Servais, Chair of IOSCO
“Coming just after the recent endorsement of the ISSB standards by IOSCO, this announcement by the European Commission means that the EU, which is such an important part of global financial markets, takes significant steps towards integrating ISSB disclosure requirements and adds the 27 Member States of the European Union to the global wave of support for the ISSB standards around the world, and it does so at a crucial time”.
