PRI statement on the revised European Sustainability Reporting Standards

The new draft standards introduce several changes, including but not limited to: 

• Further harmonisation  with requirements and proportionality measures in the ISSB standards.
• Additional relief provisions, including  delayed implementation for reporting on specific issues (biodiversity, workers in the value chain, affected communities, consumers and end users) and on certain metrics (own workforce and pollution, anticipated financial effects of sustainability matters, financial exposure to physical and transition risks).
• New guidance on the following areas: materiality assessment, biodiversity transition plans and nature-related target-setting.
• Editorial and structural changes, and reduced granularity of metrics in some areas, to achieve further simplification and improve understandability. 

PRI welcomes EFRAG’s efforts to simplify the structure and content of the ESRS. This should facilitate implementation by companies and improve sustainability disclosures for investors. The revisions also preserve much of the information on policies, targets, action plans and metrics that investors need for decision-making and stewardship, across all sustainability issues. 

As the Commission prepares to adopt the standards as a delegated act, maintaining the following key elements currently within the proposed ESRS will preserve investors’ access to the data needed to consider companies’ material sustainability matters and meet their own reporting requirements, and harmonise this data across their global portfolios. 

• Alignment of disclosure requirements, definitions and relief measures with ISSB, GRI and TNFD where possible.
• Coherence with the EU sustainable finance regulatory framework, with adjustments as needed to account for revisions to SFDR.
• Issue-agnostic and issue-specific reporting on how companies identify, assess and manage their sustainability risks, opportunities and impacts.
• Quantitative and qualitative reporting on anticipated financial effects of climate and other sustainability-related risks and opportunities, to promote connectivity with financial reporting and alignment with global standards. While we acknowledge potential methodological difficulties, this data should be provided to investors in a timely manner, as this will already be done by companies exposed to ISSB-aligned requirements in nearly 40 other jurisdictions.  

Elise Attal, PRI’s Head of Europe Policy, comments: 

“We welcome EFRAG’s efforts to simplify the European Sustainability Reporting Standards (ESRS) and are broadly supportive of this latest proposal. It successfully improves the usability of the standards while ensuring sufficient decision-useful information remains available for investors.   

“To inform decision-making and stewardship, investors need data on investees’ risks, opportunities and impacts across sustainability issues. Equally important is transparency around how these matters are identified, assessed and managed.  

“It is crucial that the Commission retain comprehensive disclosure requirements capturing this information to enable investors to assess long-term value creation and resilience. We encourage the Commission to align with  international standards and frameworks including ISSB, GRI and TNFD, to ensure that investors benefit from comparable investee disclosures. This should be done across all sustainability issues, including for issue-agnostic disclosures such as anticipated financial effects.  

“Finally, the Commission must ensure coherence within the wider EU sustainable finance regulatory framework, particularly SFDR, so that investors are able to meet their own sustainability reporting obligations.”