ESMA says the first draft of the European Financial Reporting Advisory Group’s (EFRAG) European Sustainability Reporting Standards (ESRS Set 1) “broadly achieves” its investor protection and financial stability goals.
This standard was measured against the Corporate Sustainability Reporting Directive (CSRD). The CSRD will determine whether it provides high-quality material sustainability information, whether it allows for consistent content and format application, whether it is interoperable with ESMA’s EU regulations, and whether it is relevant to global sustainability reporting. Consider whether it meets the standards.
ESMA encourages the European Commission to address technical issues around coherence with EU-wide law and clarify definitions and terminology in order to be “fully competent” to achieve its objectives. Recommended. It also highlights the need for guidance on the materiality assessment process.
ESMA’s opinion will be considered in conjunction with that of other public bodies such as the European Bankers Association (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA). ESRS Set 1 will be adopted into delegated law by 30 June 2023, and ESMA will provide ongoing advice as the standard evolves.
ESMA Chair Verene Ross said: The development of her ESRS first draft set by EFRAG is a huge achievement. These standards improve the consistency and quality of information flowing through the sustainable investment value chain. It also allows European companies to be more accountable for their sustainability efforts and their impact on private investors.
“In line with the ESMA strategy, we will continue to actively contribute to the sustainability reporting standard-setting process with the aim of supporting the capital markets in funding the transition to a sustainable economy.”