Investors, asset managers and civil society organisations call for the prompt implementation of the reform on corporate sustainability reporting and EU standards
As the European Parliament and Council develop their positions on the EU Corporate Sustainability Reporting Directive (CSRD) proposal, it is of the utmost importance that policymakers support the timeline suggested by the European Commission and plans for EU sustainability reporting standards as well as guarantee public funding to support the standard-setting work.
The CSRD reform is tackling the gaps[1] observed in the implementation of the current legislation in order to address problems in the comparability, consistency and relevance of sustainability information disclosed by companies. The impact assessment accompanying the proposal and linked research from the Centre for European Policy Studies (CEPS) are both categorical in showing that mandatory sustainability reporting will bring clarity to businesses, help reduce the number of requests for sustainability information from external stakeholders and lead to a reduction in cost in the medium- and longer-term.
The EU Green Deal and Renewed Sustainable Finance strategy depend on successfully redirecting private and public capital to support the sustainability transition of the EU economy as well as adequately measuring companies’ role, performance and impact on sustainability matters. In this regard, implementing the EU standards is instrumental to help companies provide relevant information that is needed by all users of such data (including investors, financial market participants and civil society) and in line with EU public goals and commitments on climate, environment and human rights.
The EU Non-Financial Reporting Directive currently in force was approved by legislators in 2014. Due to the urgency and the central role of this reform within the broader policy context, the undersigned organisations call policy-makers to take the next step by:
We call on European policy-makers to maintain momentum while finalising the negotiations for the reform of the legislation. The business case for standardising sustainability reporting is undisputed as well as the importance of sustainability data as a critical cornerstone to achieve the objectives set in the EU Green Deal and the sustainable finance agenda.
[1] Multiple studies have proven the need to increase the relevance and comparability of companies sustainability disclosure: see Alliance for Corporate Transparency, CDSB or the German Environment Agency.
The European Parliament has adopted the Corporate Sustainability Reporting Directive (CSRD), which clarifies transparency obligations for large companies operating in the EU on their sustainability impacts, risks, and opportunities. Pursuant to the CSRD, companies across all sectors will report against the European Sustainability Reporting Standards, which were developed by the European Financial Reporting Advisory Group (EFRAG), submitted to the European Commission and published on 22 November.
NGOs and civil society groups will only support an ambitious first set of sector-agnostic ESRS that closely builds on the EFRAG drafts adopted last November. They urge the Commission to follow EFRAG’s technical advice alongside 60+ companies and investors worth 651bn USD, and caution against making significant changes at this stage, as this would risk discrediting the process so far and undoing a good compromise.
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