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Disclosure standards are coming to Europe--and through Europe to global production that touoches on Europe in ways that trigger regulatory compliance obligation. Associated with that trajectory of regulaiton are the rules establishing the standards to be used for compliance. Already one has seen standards developed and circulated by the ISSB (ISSB General Requirements for Disclosure of Sustainability-related Financial Information (IFRS S1) and for Climate Related Disclosures (IFRS S2) Endorsed by IOSCO). The European Union has itself established standards as a companion to its Corporate Sustainability Reporting Directive (CSRD).
On 31 July 2023, the EU's Directorate-General for Financial Stability, Financial Services and Capital Markets Union circulated a Press Release announcing the EU's Sustainability Reporting Standards:
The Commission adopted today the European Sustainability Reporting Standards (ESRS) for use by all companies subject to the Corporate Sustainability Reporting Directive (CSRD). This marks another step forward in the transition to a sustainable EU economy.
Mairead McGuinness, Commissioner for Financial Services, Financial Stability and Capital Markets Union, said: “The standards we have adopted today are ambitious and are an important tool underpinning the EU’s sustainable finance agenda. They strike the right balance between limiting the burden on reporting companies while at the same time enabling companies to show the efforts they are making to meet the green deal agendaEN•••, and accordingly have access to sustainable finance.”
The standards cover the full range of environmental, social, and governance issues, including climate change, biodiversity and human rights. They provide information for investors to understand the sustainability impact of the companies in which they invest. They also take account of discussions with the International Sustainability Standards Board (ISSB) and the Global Reporting Initiative (GRI) in order to ensure a very high degree of interoperability between EU and global standards and to prevent unnecessary double reporting by companies.
The reporting requirements will be phased in over time for different companies.Delegated Regulation on the European Sustainability Reporting StandardsEN•••
Related links
Links to relevant documents follow. For GRI interoperability, see HERE.
Commission Delegated Regulation supplementing Directive 2013/34/EU as regards sustainability reporting standards (not in force until it is published in the Official Journal)
Annex 1 to the Commission Delegated Regulation supplementing Directive 2013/34/EU as regards sustainability reporting standards (not in force until it is published in the Official Journal)
Annex 2 to the Commission Delegated Regulation supplementing Directive 2013/34/EU as regards sustainability reporting standards (not in force until it is published in the Official Journal)
Questions and answers on the adoption of European Sustainability Reporting Standards
Timeline of the initiative, stakeholder's feedback and other language versions
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