MEPs have reaffirmed their commitment to the European Sustainability Reporting Standards (ESRS) after a vote in the European Parliament confirmed that mandatory sustainability reporting will now apply to 50,000 companies from January 2024.
According to the Global Reporting Initiative (GRI) and EFRAG, the body mandated to develop the ESRS, a high level of interoperability between the ESRS and the widely used GRI standards has been achieved, providing definitions, concepts and explanations on the impact are fully coordinated where possible. .
The ESRS is considered a central part of the Corporate Sustainability Reporting Directive (CSRD) and will apply to all large and listed companies in the EU. From 2028, non-EU companies operating in Europe must also report their impact using the ESRS or equivalent standards.
“The adoption of the ESRS by the European Parliament is welcome as it signals the transition from a political debate to the practical implementation of these new rules – which are a game changer for corporate responsibility, in the EU and globally,” said Eelco van der Enden. photo), CEO of GRI.
“We will continue to actively work with EFRAG and other standard setters, at national and international level, to further increase the momentum behind impact reporting, so that companies can deliver the sustainability information their stakeholders need, while reducing the reporting burden. This reflects our evolving role as a trusted partner for regulators, with GRI reporting forming the basis for high-quality and increasingly mandatory sustainability reporting.”
GRI said it is currently finalizing interoperability tools, including a digital taxonomy and multi-tagging system, to simplify the reporting process and support companies to report in accordance with both ESRS and GRI standards within a single sustainability report.
In July, concerns were raised about the possibility that standards could be ‘lowered’ to ensure alignment between different sustainability reporting frameworks. A subsequent series of changes led to a reduction of some disclosures from mandatory to voluntary, the phasing in of some disclosures, such as Scope 3, and the ability for companies to decide what is or is not material, as some sustainability commentators call this investments. a compromise”.
Carol Adams, chair of the GRI Global Sustainability Standards Board (GSSB), said the initiative is poised to deepen their involvement in the EU regulatory process.
“As we approach implementation of the ESRS, this work will be prioritized in the current GSSB work programme. Furthermore, we will work with EU institutions to reach an agreement that reporting based on GRI standards is accepted as equivalent for non-EU companies.”
The news has been welcomed across the sustainable finance sector, with Jurei Yada, program lead for EU sustainable finance at climate change think tank E3G, saying that last-minute calls to reject and water down sustainability standards were “a shameful attempt to instrumentalize the business community and SMEs must justify inaction.”
“Amid the international backlash on corporate sustainability reporting and a growing anti-ESG movement, Europe held the fort for sustainable companies,” said Tsvetelina Kuzmanova, senior sustainable finance policy advisor at E3G.
“Standardized, transparent and comparable data will not only guide companies in their transition, but also inform investors and consumers.”