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EFRAG launches draft Sustainability Report Standards

The European Financial Reporting Advisory Group (EFRAG) has released exposure drafts (ED) of the European Sustainability Reporting Standards (ESRSs). With this proposal, requirements are set out for European companies to report on various environmental, social and governance (ESG) topics including societal impacts, risks and opportunities.

The European Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD) envisages the adoption of the EU Sustainability Reporting Standards (ESRS). Regarding the latter, EFRAG was requested to assist the European Commission in establishing Sustainability Reporting Standards.

EFRAG, as a technical advisor, aims at providing relevant stakeholder information and analyses on sustainability and ESG subjects to the European Commission. This is done to inform the manner of ESRS adoption by the EU. EFRAG decided to launch the public consultation based on the exposure drafts created under the responsibility of the Project Task Force (PTF-ESRS).

A consultation period of 100 days has been launched with the deadline of 8 August 2022 wherein companies can comment on the draft and share relevant information. Incorporating the input and result from the public consultation together with the feedback on the exposure drafts, EFRAG will agree on the final set of draft ESRS to be submitted to the European Commission.

After further evaluations, the finalised version of the ESRS applies the new sustainability standards according to the disclosures made under the EU’s Corporate Sustainability Reporting Directive (CSRD). Bridging finance and sustainability, the ESRS promise to expand mandatory sustainability reporting to European companies as the ongoing drafts are a “journey towards a faithful representation of sustainability performance”.

EFRAG invites comments on all aspects of the draft ESRS and expects feedback no later than 8 August 2022.