Environmental Defense Fund Europe applauds the European Commission and all contributing actors (with special mention to EFRAG) on the development of the European Sustainability Reporting Standards. This is a monumental achievement on Corporate Sustainability Disclosing in the EU and beyond. We believe it is a major step forward and a good improvement over previous reporting. We also support the European Commission in elevating ESRS to shape international standards.

However, the changes included in the draft Delegated Act that deviate from EFRAG technical advice pose important structural flaws and undermine an essential part of ESRS: to provide comparable, relevant, reliable, and meaningful sustainability information for investors and citizens. This, therefore, weakens one of the main tools to transform the EU economy in a sustainable and equitable way, a transformation that can reinforce growth and the EU’s leadership.

In this regard, we request the European Commission to:

1. Re-state the mandatory status (irrespective of materiality assessment) of the core set of metrics as proposed by EFRAG, i.e., Climate and Own workforce. This will help reducing the reporting burden: requirements will be the same for all companies, and in addition, will increase comparability and data assurance.

2. Revert to EFRAG’s list of voluntary disclosures datapoints and make their application subject to materiality assessment. Do not proceed with the extended list of voluntary disclosures downgraded from mandatory. Otherwise, there is an increased risk of greenwashing as some datapoints could be excluded based on company’s discretion.

3. Assure consistency and interoperability with the rest of EU legislation, specially SFDR. Not aligning mandatory reporting indicators with SFDR will create unnecessary complexity for investors and asset managers when requesting information from investees while creating additional layers for data accessibility and consistency.

We are aware that the reporting requirements could, in the short-term, create an increased workload for economic actors; however, we believe that the benefits of the ESRS in terms of increased consistency of disclosures outweigh the short-term burdens. The work that the European Commission has done through phase-ins and other modifications on proportionality could help reducing those initial concerns.

More about this initiative: European sustainability reporting standards – first set (europa.eu)