Latest news with #EFRAG
Yahoo
27-05-2025
- Business
- Yahoo
ICAEW calls for alignment with ISSB in ESRS
The Institute of Chartered Accountants in England and Wales (ICAEW) has called for the European Sustainability Reporting Standards (ESRS) to align with and build from the International Sustainability Standards Board's (ISSB) standards. With more than 6,500 ICAEW members situated in the European Economic Area and various UK companies potentially subject to these standards, the organisation emphasised the need for clarity and alignment in sustainability reporting. ICAEW expressed its support for the ambitions of the European Green Deal and the provisions outlined in the Corporate Sustainability Reporting Directive. However, the institute highlighted that the ESRS development in an accelerated manner led to flaws that could weaken the Green Deal objectives. The organisation expressed concerns regarding the principal purpose and objectives of ESRS, which are not easily understood. According to ICAEW, the prescribed information often lacks value for decision-making, and there are contradictions and ambiguities within the standards. Other concerns highlighted by the organisation include the overly detailed requirements which it says are not in line with public messaging on interoperability, and a lack of clarity over important aspects of the double materiality requirements. The European Financial Reporting Advisory Group's (EFRAG) standard-setting process has been unduly rushed, leaving insufficient time to properly consider stakeholder feedback. ICAEW's head of corporate reporting, audit and assurance Nigel Sleigh-Johnson said full alignment with ISSB standards would remove duplication of effort in standard-setting and allow the EFRAG time to focus on addressing the most challenging provisions. Incorporating the ISSB's work could simplify the development of standards applicable beyond the EU, according to Sleigh-Johnson. He also emphasised the importance of aiming for equivalence rather than mere interoperability to foster stakeholder trust in global sustainability reporting. Sleigh-Johnson said: 'We therefore support calls for the European Commission to prioritise the work needed to enable equivalence to be possible.' While acknowledging the pressure on the EFRAG to expedite the workplan, ICAEW insists on due process procedures that ensure quality and stakeholder engagement. These procedures should include a full public consultation and careful consideration of feedback, crucial for the success and credibility of the reporting standards. "ICAEW calls for alignment with ISSB in ESRS" was originally created and published by The Accountant, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Forbes
12-05-2025
- Business
- Forbes
Mixed Sustainability Messages Create Uncertain Path For Businesses
Life seemed much easier for business leaders when they could just complain about what they perceived to be excessive and inconsistent sustainability regulations. Complex, global disclosure requirements – some mandatory, some voluntary – elaborate supply chain due diligence processes, greenhouse gas emissions reporting: they all seemed challenging enough. But when the regulators themselves started changing, editing, simplifying and clarifying already agreed upon sustainability mandates, and adjusting course on associated policy, that's when things got really complicated. In the European Union (EU), for example, recently leaked documents have revealed continued disagreement among EU Member States over key details of the Omnibus Simplification Package, an initiative launched earlier this year to harmonize and simplify existing sustainability mandates. The mere introduction of the simplification initiative caused a stir as most of the world thought the rules were already finalized. Now that they've been reopened, the drama has only intensified. Meanwhile, the European Financial Reporting Advisory Group (EFRAG), the organization appointed to develop the original technical guidance and now working on the revision of the European Sustainability Reporting Standards (ESRS) as part of this Omnibus Simplification Package, recently had its work plan rejected as some Council members have expressed a lack of confidence in its implementation plans. In the U.S., where the Environmental Protection Agency (EPA) has launched its biggest ever deregulatory action and the Securities and Exchange Commission has abandoned its plans to introduce climate disclosure rules, the situation for businesses has become even more complicated. While some companies have seized on the changing political winds to distance themselves from corporate sustainability initiatives, numerous investors and other stakeholders have started to push-back and are still demanding clarity on climate goals and other sustainability commitments. Suddenly, it seems that navigating sustainability has become less about following a straight-line path to compliance and more about avoiding the rocky outcroppings of hidden risks. For businesses caught in the middle, the only real solution is to focus on the material bottom-line sustainability and resilience risks and opportunities that will affect the business. For example, even though the EU is still in the process of determining the best next steps for the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) and the U.S. looks like it will not be enforcing the proposed climate disclosure rules, those things do not mean climate and sustainability-related risks have gone away for businesses. In fact, it is important to note that in Europe, although the regulatory drivers have been delayed or are being simplified, the laws are still on the books, and in scope companies around the world will no doubt eventually need to comply with whatever the final versions stipulate. The North Star for businesses trying to find their way through this period of uncertainty needs to be concrete data identifying real business risks stemming from climate-related extreme events, carbon emissions, employee safety, human capital and rights and environmental impact. Regardless of the specific details of any piece of legislation, these core fundamentals will affect every business' ability to be viable and profitable for the next ten, twenty or thirty years through countless different economic and political cycles. One good guide for companies looking to keep moving forward with their disclosure reporting is the EFRAG Voluntary Sustainability Reporting Standard for Non-Listed SMEs (VSME). Although this standard was developed initially for small businesses who wanted to voluntarily align their sustainability reporting practices with the CSRD, it is now increasingly being looked upon by considerably larger enterprises as a possible playbook, offering a standardized approach. Now that the reporting threshold for the CSRD has risen to include only companies with 1,000 or more employees, the VSME has become a sort of de facto guide for those businesses that had already started preparing for CSRD before they fell out of scope as a part of the Omnibus negotiations. While a few companies may look at the current delays, policy shifts and general sense of deregulation as an excuse to slowly roll back their sustainability initiatives, the fact is that investors, employees, consumers and other stakeholders are still demanding some level of accountability and transparency. Moreover, they are looking for that information to be reported in a standardized, consistent and most of all, comparable format from one company to the next. Those companies that recognize that need and continue to do the work now to keep their sustainability houses in ship shape order, will still be best positioned to not only anticipate and respond to real business risks but also to be sustainable in the true sense of the word. That means they will be viable, resilient and able to maintain and create value for many years to come.
Forbes
29-04-2025
- Business
- Forbes
EU Financial Regulator Submits Timeline For Reduced Sustainability Reporting Standards
On April 25, the European Financial Reporting Advisory Group submitted a work plan for the rewrite of the European Sustainability Reporting Standards. The request is in response to a letter from Maria Luís Albuquerque, the EU Commissioner for Financial Services and Investments, asking for updated recommendations to comply with the Omnibus Simplification Package's proposed reductions to sustainability reporting requirements. A vote by EFRAG's Sustainability Reporting Board in mid-April failed to garner enough support, giving hope to sustainability advocates. However, the SRB met the Council's requested completion timeline of October 31. As part of the European Green Deal, the EU proposed a series of regulations aimed at controlling businesses' climate related activities. In 2022, the Corporate Sustainability Reporting Directive was adopted to create requirements for businesses to report greenhouse gas emissions and other environmental, social, and governance actions. The CSRD called for the drafting of European Sustainability Reporting Standards to create the regulatory framework for reporting. That responsibility was delegated to EFRAG. EFRAG released the first round of ESRS in late 2022. The European Commission officially adopted them in July 2023 and EFRAG was tasked with drafting sector specific and non-EU company ESRS. However, companies struggled with implementing the first round of ESRS. This forced the Commission to delay further development by EFRAG, shifting focus to drafting additional guidance. By the summer of 2024, the tide had shifted on sustainability and other green initiatives. During the 2024 European Parliament elections, the regulatory burden on businesses became a major theme. During the campaigns, the European Green Deal took the majority of the blame for the EU's faltering economy. The elections resulted in a shift to the right, with environmentally focused parties losing seats. In February, the European Commission adopted a proposal to drastically reduce sustainability reporting requirements in the European Union, including a rewrite of the ESRS. While the proposal has yet to be adopted by the European Parliament, the Commission is moving forward by requesting EFRAG begin the rewrite, in anticipation of the final passage. The instructions indicate that they expect passage of reforms by the end of 2025. In the letter sent on March 25, Albuquerque stated, 'as you will be aware, on 26 February the Commission adopted a first 'omnibus' package of proposals to simplify EU rules, boost competitiveness, and unlock additional investment capacity. You will also have seen that, as part of this initiative, we propose to adopt a delegated act to revise and simplify the existing European Sustainability Reporting Standards (ESRS).' The work plan adopted by EFRAG's SRB states that they will immediately start work to 'establish a vision on actionable levers for substantial simplification.' Initial input is being sought from stakeholders via an online survey open until May 6. Mid-May through July will be focused on 'drafting and approving the Exposure Drafts amending ESRS.' An Exposure Draft, or public draft of the proposal, will be published in August. EFRAG will hold a public consultation in September. The final draft will be submitted to the Commission in October. While the work from ERGAG is being conducted at the direction of the Commission, the final proposal to reduce CSRD requirements is facing a debate in the European Parliament. However, the tight deadlines and clear direction from the Commission indicate confidence that sustainability reporting requirements will be significantly reduced by the end of the year.
Forbes
15-04-2025
- Business
- Forbes
EU Financial Regulator Seeks Input On Reduced Sustainability Reporting Requirements
European Union Flag EU Flags side by side in the Wind- European Union Flags in a row in front of the ... More facade of the European Commission Headquarter blowing in the wind. European Commission, Downtown Brussels, Belgium, Europe On April 8, the European Financial Reporting Advisory Group announced a public call for input on the proposed rewrite of sustainability reporting standards. The request is in response to a letter from Maria Luís Albuquerque, the EU Commissioner for Financial Services and Investments, asking for updated recommendations to comply with the current proposal. EFRAG was given until April 15 to draft a timeline with a target completion deadline of October 31. Participants have until May 6 to fill out the online survey. As part of the European Green Deal, the EU pushed through a series of regulations aimed at controlling businesses' climate related activities. In 2022, the EU adopted the Corporate Sustainability Reporting Directive to create requirements for businesses to report greenhouse gas emissions and other environmental, social, and governance actions. The CSRD called for the drafting of European Sustainability Reporting Standards to create the regulatory framework for reporting. That responsibility was delegated to EFRAG. EFRAG released the first round of ESRS in late 2022. The Commission officially adopted them in July 2023 and EFRAG was tasked with drafting sector specific and non-EU company ESRS. However, companies struggled with implementing the first ESRS, forcing the Commission to delay further development by EFRAG, shifting focus to drafting additional guidance. In the letter sent on March 25, Albuquerque stated, 'as you will be aware, on 26 February the Commission adopted a first 'omnibus' package of proposals to simplify EU rules, boost competitiveness, and unlock additional investment capacity. You will also have seen that, as part of this initiative, we propose to adopt a delegated act to revise and simplify the existing European Sustainability Reporting Standards (ESRS).' While the final adoption of reforms to the CSRD in the Omnibus Simplification Package are still in the early stages of consideration by the Parliament, at the behest of the Commission, EFRAG is moving forward with the rewrite of the ESRS. In the statement calling for public input, the regulator stated: "EFRAG wishes to gather public input from all relevant stakeholders in relation to potential revisions, as well as feedback from the first wave of preparers who implemented the standards in their 2024 sustainability reports. Input is expected on the basis of an online questionnaire. 'The public call for input aims to gather input on the key areas of simplification identified in the Explanatory Memorandum of the Omnibus proposal, including: ESRS mandatory datapoints that are least important or problematic for general-purpose sustainability, per each Disclosure Requirement (with separate consideration given to cross-cutting, environment, social and governance matters); suggestions on how to modify the ESRS provisions that are deemed unclear; suggestions on how to improve consistency with other EU legislation; suggestions on how to improve the ESRS provisions on materiality to ensure that undertakings report only material information, do not report unnecessary information and do not dedicate excessive resources to the materiality assessment process; suggestions on how to simplify the structure and presentation of the standards; suggestions on how to further enhance interoperability with global sustainability reporting standards; and any other modifications that could simplify the ESRS without compromising their role in supporting the Green Deal.' The call for input is limited to companies based in the European Union that are required to meet sustainability reporting requirements. Participants have until May 6 to fill out the online survey.
Forbes
30-03-2025
- Business
- Forbes
EU Wants New European Sustainability Reporting Standards By October 31
Portuguese EU commissioner for financial services and the savings and investments Maria Luis ... More Albuquerque arrives for the first meeting of the new College of Commissioners of the European Union in Brussels on December 4, 2024. (Photo by Nicolas TUCAT / AFP) (Photo by NICOLAS TUCAT/AFP via Getty Images) In February, the European Commission adopted a proposal to drastically reduce sustainability reporting requirements in the European Union, including a rewrite of the European Sustainability Reporting Standards. While the proposal has yet to be discussed in the Council or the European Parliament, the Commission is moving forward by requesting the regulatory authority to begin the rewrite, in anticipation of the final passage. The instructions indicate that they expect passage of reforms by the end of 2025. As part of the European Green Deal, the EU pushed through a trilogy of regulations aimed at controlling businesses' climate related activities. In 2022, the EU adopted the Corporate Sustainability Reporting Directive to create requirements for businesses to report greenhouse gas emissions and other environmental, social, and governance actions. The CSRD called for the drafting of European Sustainability Reporting Standards to create the regulatory framework for reporting. That responsibility was delegated to the European Financial Reporting Advisory Group. EFRAG released the first round of ESRS in late 2022. The Commission officially adopted them in July 2023 and EFRAG was tasked with drafting sector specific and non-EU company ESRS. However, companies struggled with implementing the first ESRS, forcing the Commission to delay further development by EFRAG, shifting focus to drafting additional guidance. By the summer of 2024, the tide was shifting on green initiatives. As the financial obligations in the directives became clear, the business community began to push for reforms. During the 2024 European Parliament elections, the burden on businesses became a major theme, with the European Green Deal taking the majority of the blame for the EU's faltering economy. The elections resulted in a shift to the right, with environmentally focused parties losing seats. The reform process began almost immediately behind closed doors. In November 2024, Ursula von der Leyen, president of the European Commission, publicly announced her intention to revamp the Taxonomy, CSRD, and CSDDD to reduce the burden on businesses. The Omnibus Simplification Package was officially adopted by the Commission on February 26. Included in the proposal was a 'stop the clock' directive to delay new sustainability reporting until 2028. That proposal was adopted by the Council on March 26. The Parliament is considering the delay, but could adopt it as soon as April 3. The broader directive to reduce reporting requirements will be heard over the next few months. On March 25, Maria Luís Albuquerque, the EU Commissioner for Financial Services and Investments, sent a letter to EFRAG asking for updated recommendations to comply with the current proposal. EFRAG was given until April 15 to draft a timeline with a target completion deadline of October 31. In the letter, she stated, 'as you will be aware, on 26 February the Commission adopted a first 'omnibus' package of proposals to simplify EU rules, boost competitiveness, and unlock additional investment capacity. You will also have seen that, as part of this initiative, we propose to adopt a delegated act to revise and simplify the existing European Sustainability Reporting Standards (ESRS).' As to the specific language in the omnibus proposal, Albuquerque provided the following excerpt: 'The revision of the delegated act will substantially reduce the number of mandatory ESRS datapoints by (i) removing those deemed least important for general purpose sustainability reporting, (ii) prioritising quantitative datapoints over narrative text and (iii) further distinguishing between mandatory and voluntary datapoints, without undermining interoperability with global reporting standards and without prejudice to the materiality assessment of each undertaking. The revision will clarify provisions that are deemed unclear. It will improve consistency with other pieces of EU legislation. It will provide clearer instructions on how to apply the materiality principle, to ensure that undertakings only report material information and to reduce the risk that assurance service providers inadvertently encourage undertakings to report information that is not necessary or dedicate excessive resources to the materiality assessment process. It will simplify the structure and presentation of the standards. It will further enhance the already very high degree of interoperability with global sustainability reporting standards. It will also make any other modifications that may be considered necessary considering the experience of the first application of ESRS.' Looking at the timeline, Albuquerque stated, "at this stage we cannot know exactly when that directive will enter into force, since it is dependent on the pace and conclusion of negotiations between the co-legislators. We therefore cannot exclude that the target date for the submission of EFRAG's technical advice may change. However, for the time being we believe that the target date of 31 October 2025 is reasonable and that it would allow the Commission to adopt the corresponding delegated act in time for companies to apply the revised standards for reporting covering financial year 2027, potentially with an option to apply the revised standards for reporting covering financial year 2026 if companies wish so." This letter shows a clear expectation that the Council and Parliament will adopt the full reduction of sustainability reporting requirements in the CSRD. However, expect a vigorous public debate in the Parliament with climate activists and interested businesses pushing for the protection of the existing requirements.
