Investors and financial industry call for ambitious EU Sustainability Reporting Standards (ESRS)

The investment and financial industry community is calling on the European Commission to uphold the ambition of the European Sustainability Reporting Standards and reconsider its latest changes to the first set of ESRS.

In a joint statement published on 7 July, Eurosif alongside UN PRI, IIGCC, EFAMA and UNEP FI as well as 92 asset managers, institutional investors and other financial market participants, are expressing concerns about the latest changes applied by the European Commission to the first set of the European Sustainability Reporting Standards (ESRS).
The investment and financial industry community jointly call on the European Commission to uphold the integrity and ambition of the first set of ESRS, as envisaged within EFRAG’s final proposals of November 2022. This is crucial to meet EU Climate and Green Deal goals and fill the sustainability data gaps across the EU, enabling investors to make informed investment decisions and comply with their own disclosure requirements under EU sustainable finance rules.
The statement cosignatories request that the European Commission implements the following adjustments to the draft Delegated Act laying down provisions for set 1 of ESRS:

• Require key climate disclosure indicators as mandatory, including scope 1, 2, and 3 GHG emissions and disclosures enabling investors to assess the credibility of corporate transition plans.
• Ensure that environmental and social indicators relevant to SFDR, EU Climate Benchmark Regulation and Climate Benchmarks Delegated Acts, Pillar 3 disclosures and other investor reporting regulations are disclosed by in-scope companies on a mandatory basis.
• Require explanations as to why certain sustainability topics are not considered material by a company.
• Reconsider the fully optional nature of: (i) own workforce disclosures on non-employees; and (ii) biodiversity transition plans to provide investors with information on how companies will align their strategy and business models in line with the EU Biodiversity Strategy for 2030 and Kunming-Montreal Global Biodiversity Framework.
• Ensure maximum possible interoperability of the ESRS with ISSB and GRI Standards, to reduce fragmentation across the global reporting landscape and support cross-border capital flows while upholding the double materiality principle enshrined in CSRD and ESRS

Aleksandra Palinska, Eurosif’s Executive Director, commented: “The first set of the European Sustainability Reporting Standards, as published by the European Commission on 9 June, fails to address investors’ needs and risks undermining the effective implementation of the EU sustainable finance regulatory framework. The European Commission is now presented with a final opportunity to correct its course and find a compromise that would truly reflect all industry and stakeholders’ needs and better match the ambition of EU climate neutrality targets and the EU Green Deal”.

Eurosif has also submitted its individual response to the European Commission consultation on its draft Delegated Acts on ESRS.