25 August 2022

ESRS: Key areas which need greater alignment with global standards

Granularity, integration, materiality and terminology are the four aspects of the ESRS that respondents to the EFRAG consultation would like to see better aligned with the global standards, Corporate Disclosures found out.

Analysing a selection of comment letters and survey responses submitted to EFRAG, Corporate Disclosures found that respondents wished for greater alignment between the EFRAG and ISSB standards, in particular on those four areas.


Many organisations, such as EuropeanIssuers and BDEW said the detailed and granular nature of the ESRS would require a greater volume of reporting than the IFRS standards.

The greater reporting burden was a concern for many organisations. Deutsche Bank said: "EFRAG should adopt a principle-based approach like the ISSB and not develop very granular rule-based standards that lack proportionality and are not operational"

The Association of International Accountants agreed that the volume of reporting should be decreased, it said that the "ESRS should be no more burdensome than their ISSB equivalents" unless necessary to comply with EU law.


Another area of divergence between the standards is the provision for integrated reporting which refers to sustainability reports being integrated into financial statements

Germany business association, VMEBF, and Allianz Group said that CSRD and ESRSs do not provide for integrated reporting whereas the IFRS standards "explicitly support integrated reporting".

Carl Zeiss warned this could hinder alignment. It said: "With the rejection of integrated reporting by the CSRD/ESRS, interoperability between the two sets of rules is limited."


The IFRS standards take a single materiality approach which means that companies are obliged to report on environmental issues which impact their finances, whereas the ESRS use a double materiality approach which will also require companies to report on their impact on the environment.

Siemens said: "This different understanding itself means that no interoperability is promoted between these two sets of rules." It added that they also had different understandings of what is meant by financial materiality which it believes should be redressed.


The terminology for the qualitative and quantitative information in the two standards are currently not aligned and both bodies need to ensure that they are in the final drafts, according to the Dutch Authority for Financial Markets.

Grant Thornton International added: "Using exactly the same terms and definitions will be particularly helpful to multinational organisations wishing to report globally on their sustainability achievements. Currently, there are too many differences between the two sets of standards for this to happen."