EU: EFRAG consults on draft sustainability reporting standards under CSRD

The European Commission asked the European Financial Reporting Advisory Group (EFRAG) to develop draft sustainability reporting standards that will be used in the forthcoming Corporate Sustainability Reporting Directive (CSRD), which is currently being negotiated by the European Parliament and Council (see here for our previous blog post on the CSRD proposal). 

The CSRD will replace the Non-Financial Reporting Directive (NFRD) and expand the scope of organisations that are required to make sustainability disclosures. In-scope organisations will be required to use the mandatory European sustainability reporting standards (ESRS) being developed by EFRAG. 

EFRAG have published exposure drafts of the first set of ESRS for public consultation (see here). The consultation closes on 8 August 2022. 

EFRAG needs to submit the final drafts of the first set of ESRS to the Commission by November 2022. The Commission will then need to adopt the final ESRS via delegated acts. 

The exposure drafts being consulted on cover the full range of sustainability matters (environment, social, governance and cross-cutting standards). The type of sustainability information required to be disclosed under the ESRS includes the principal adverse impact (PAI) KPIs required to be disclosed under the EU SFDR and the information required under the Taxonomy Regulation (among other things). 

We recommend reading the Cover Note to the consultation first, which explains the context and key features of the EFRAG exposure drafts. 

EFRAG have also published (in Appendices) tables comparing the draft ESRS with the TCFD recommendations and with the ISSB draft standards (see p.13 of the Cover Note for links to the Appendices). 

The exposure drafts include cross-cutting standards and topic standards covering specific sustainability topics (but from a sector agnostic perspective). 

EFRAG are in the process of developing a second set of draft ESRS that will cover sector-specific standards, as well as sustainability reporting standards aimed at SMEs, but those are not yet available for consultation.

For a discussion on the current status of the EU disclosure obligations for corporates, see our webinar recording.