The European Central Bank (ECB) staff have published their opinion on the revised European Sustainability Reporting Standards (ESRS) which were submitted to the European Commission as EFRAG’s technical advice last year.
The staff acknowledged EFRAG’s efforts to streamline the standards but also identified “three critical points for improvement” to ensure the updated ESRS strike the right balance between simplification and the preservation of the EU’s policy objectives.
“First, the introduction of numerous permanent relief measures, phase-ins and exemptions from disclosure requirements, together with the removal of some critical datapoints, will limit the availability of meaningful data and hamper the comparability of disclosures across companies,” the opinion reads.
“Second, while improvements have been made to increase interoperability with international standards […], staff have identified some critical deviations,” it continues. “Third, ECB staff have identified some key points where clarification is needed to ensure that the revised draft ESRS are appropriate for meaningful disclosures by the financial sector.”
The ECB staff recommend adding time limits to the reporting reliefs, removing the additional three-year phase-in reliefs for first time reporters on anticipated financial effects, and adding an explicit provision stating that the use of reliefs “must remain exceptional and not become the norm”.
They also recommend:
- Adding new guardrails on the new value chain flexibilities for the double materiality assessment
- Not providing financial institutions with the exemption from providing GHG emissions reduction targets under ESRS E1
- Ensuring that sector guidance adequately covers the deletion of company-level datapoints
- Publishing non-mandatory guidance “in a timely manner”
Companies:ECB