Introductory remarks delivered by Patrick de Cambourg, president of the French accounting standard setter (ANC) and former chair of EFRAG's Project Task Force on European Sustainability Reporting Standards, during the European Parliament audition of candidates for the position of chair of EFRAG's Sustainability Reporting Board.
A directive is a key element of European law and please allow me to salute those efforts of all of those in the European Parliament, in the other European Union institutions and the stakeholders who have contributed their diverse opinions to drafting this reference text.
No public policy, no business strategy can be successful without reliable information, this EU Directive is therefore a major step forward.
The CSRD acknowledges the importance to implement its legislative proposition provisions in an efficient and pragmatic manner, the elaboration of such standards is indeed a cornerstone of a full-fledged corporate sustainability reporting designed, one, to foster business transparency on sustainability matters for all stakeholders and, two, to benefit the European businesses themselves.
EFRAG has received the mandate to elaborate those standards, as technical advice to the Commission, it will then adopt them as delegated acts following its own institutional process, involving Parliament and Council.
EFRAG is honored to be offered this opportunity to participate in such a process and to be in a position to demonstrate its professionalism and its dedication to the European public good. I'm fully aligned with the objectives, concepts and provisions of the CSRD.
Standards shall foster relevance, faithful representation, and comparability under a proportionate sustainability reporting addressing both impacts of businesses on planet and people, and risks and opportunities for businesses. This is indeed key for the success of public policies. It is also key for the success of the strategies, policies and transition plans, developed by the businesses themselves to meet their ESG challenges.
It is in the DNA of our union to be fully open to the rest of the world. I therefore believe, as stated in articles 29B and 29C and in recital 37, that it is paramount to build on, integrate and contribute to global progress of sustainability reporting. To do so it is necessary to further develop the already existing dialogue and co-construction relationships with other major international and national initiatives. As one of the frontrunners in this area, the European Union has a duty and an interest to support and cooperate with other committed standard setters, in particular the IASB and the GRI, to the maximum extent possible in order to stimulate global commonality, avoid potentially disrupting multiple reportings and address global challenges. At personal level, these objectives are fully in line with my experience so far and with the commitment I express today to contribute in the coming years.
For the last seven years in my current public role, as chair of the French standards setting agency and member of several boards related to this, including the EFRAG board, I have constantly advocated in favor of developing standardized sustainability reporting under strict quality principles. Sustainability reporting can and must become the second pillar of standardized corporate reporting, on an equal footing and interconnected with financial reporting. It may take time and we should be pragmatic because it is a challenge for many but the direction of travel is clear and it is creating a competitive advantage.
In my previous positions, without elaborating further, public interest, transparency, accountability and partnership spirit were foundational for me. In September 2020, I accepted with enthusiasm the challenge of chairing the EFRAG Project Taskforce of European Sustainability Reporting Standards under difficult conditions, notably the pandemic and the time constraints, working exclusively online except for its last, and only, in person meeting last April. The task force can be proud of the collective progress accomplished with the delivery of 13 exposure drafts on time. EFRAG is also acknowledged as a key player of sustainability standard setting at global level. All of this required the efforts of many contributors and I take this opportunity to express, in front of you, my gratitude for their time and dedication.
The newly established sustainability reporting pillar of EFRAG shall take full account of the lessons learned to focus even better on its tradition of efficiency and consensus. We are on a journey, I am fully conscious of what remains to be done and I therefore do not take anything for granted. The standards are still a work in progress and significant challenges ahead remain to be addressed. EFRAG has to deliver the first set of draft standards in November, having duly considered the responses to the public consultation which is underway, the conclusions of the cost benefit analysis we have organized and the initial feedback received from the 15 outreach events that have taken place.
The recently appointed multi stakeholder board and Technical Expert Group will of course have to deliberate on the indispensable amendments to be introduced in order to deliver quality standards. The effort required should not be underestimated: relevance and overall quality can be improved. prioritization and phasing in options shall be carefully considered and proper alignment between ESRS and other standards, the two ISSB standards for instance and the GRI standards, shall take place.
There is a need to strike the right balance between legitimate expectations, as crystallized in the CSRD, and the magnitude of each and every step to climb. At the same time, the next phases of standard setting for the second set must be organized and launched. Let me highlight the importance of inclusiveness and consensus in EFRAG decision making. The governance reform implemented by your former colleague, Jean-Paul Gauzès, has extended the membership in a fully inclusive manner, with a civil society chapter in particular, and created a well-balanced sustainability reporting pillar with clear and robust governance principles and due process procedures. In this context, the chairs' role is to organize the progress towards a consensus, where every member is listened to and able to understand the other members positions and where decisions are taken in full transparency during public sessions. I intend to promote a multi-stakeholder partnership spirit, if I may call it that way.
Let me also make a specific mention of SMEs. They play a key role in the European economic and social landscape. Most of the time they rely on limited resources. Proportionality is therefore the key word from them. In line with the latest CSRD amendments, SME sustainability reporting shall be designed for SMEs and not as a downgraded version of the standards applicable to large undertakings. It is key not to overburden them and not to impair their capacity to develop and compete successfully. It must be a virtuous circle for them, not one more obligation.
To conclude, as a former professional and entrepreneur operating under a demanding partnership spirit, as a public standards setter today, and also as a citizen, I stand ready to take up the challenge of bringing forward sustainability reporting in the Union and globally in compliance with the framework established by the CSRD provisions and under the aegis of the European institutions.
This is an edited transcript by Corporate Disclosures, any inaccuracies or discrepancies vis-à-vis the spoken speech is our responsibility.