The ESRS proposed by EFRAG have received a haircut from the European Commission in the form of delegated acts that are currently being consulted on.
Corporate Disclosures went to Brussels last week and took the pulse behind some of the dramatic reactions to the Commission's haircut.
Nothing really surprising: NGOs and civil society organisations lament what they see as water downed standards, not much more ambitious than the ISSB standards some loathe with a passion. "We basically reverted to a voluntary reporting system," one bemoans.
At the end of the spectrum, corporates are both relieved and somewhat disillusioned. "Happy with the changes one said, clearly will make it easier for us to comply," one said.
Another added: "It doesn't change much for us; the final reporting will be the same. The question is whether those companies that don't buy into the sustainability narrative will have more leeway to not disclose things they should disclose."
Accountants are also divided on the matter. One regrets the Commission's 'authoritarian' take on the matter. CSRD and the ESRS have been designed with a multi-stakeholder audience focus, the accountant reminds. "To that effect, the ESRS proposed by EFRAG may not be perfect, but they were built out of consensus. What the Commission has done is not a consensus, and you can see how it has quickly revived some of the tensions between the different stakeholders involved."
But part of the accounting community sees a logic in the Commission's position. "Companies will report what is material to them, what is the point of reporting what is not material, it ties in with financial reporting," one said. "And don't forget all this reporting will have to be assured, so it doesn't mean that the disclosures are becoming voluntary."
So here we are, auditors will save the day? For those of us that have followed the audit failures and scandals of (at least) the last 20 years, there may be some doubts.
One corporate doubts as well: "Remember that this is new, there isn't even a finalised standards on sustainability assurance yet, so it will take years before auditors actually know what they are doing with this."
There might not be standards finalised yet, but with more sustainability reporting taking place globally comes more sustainability assurance. At least this is one the findings of a report by IFAC entitled, A Deep Dive into Sustainability Assurance Engagements.
We spoke to the report's author, David Madon, about the other findings, and were joined by Accountancy Europe deputy CEO Hilde Blomme who framed the discussion in the European context.
Will the sustainability assurance providers take companies through the 'darkness to the break of the day'? for you to decide... happy reading!