10 August 2022

EFAMA highlights that alignment and interoperability with global standards are key

“As key users of company sustainability reports, asset managers recognise the vital importance of high-quality, standardised and relevant sustainability disclosures from companies they invest in, which is what EFRAG is aiming to achieve with their European Sustainability Reporting Standards (ESRS)"

EFAMA has stressed that global alignment of sustainability reporting standards will be necessary to ensure clarity for investors as Europe moves towards a zero emissions economy by 2050.

Vincent Ingham, Director of Regulatory Policy at EFAMA, stated “As key users of company sustainability reports, asset managers recognise the vital importance of high-quality, standardised and relevant sustainability disclosures from companies they invest in, which is what EFRAG is aiming to achieve with their European Sustainability Reporting Standards (ESRS). At EFAMA, we broadly support the content of EFRAG’s recent Exposure Drafts for ESRS and have made some specific recommendations for improvements to be taken into account when finalising the guidelines.”

In our consultation response, we stress the importance of ‘double materiality’ – disclosing economic, social and environmental impact in addition to financial impact – to allow for well informed and beneficial investor decisions in alignment with the EU Sustainable Finance Framework. While the EFRAG Exposure Drafts include this principle, the ISSB standards under development do not. Interoperability between EFRAG’s ESRS and ISSB disclosures would reduce reporting burden for both users and preparers and further the goal of a clear global standard. EFRAG has already shown admirable commitment to this ideal, however more can still be achieved here. When it comes to minimising the amount of irrelevant data reported, the principle of ‘rebuttable presumption’ will provide clear benefits to users of these sustainability reports (for instance asset managers). However, to ensure the burden of justifying these exclusions is not impractically high for reporting entities, publication of a materiality matrix and subsequent audit reviews should be sufficient evidence.

As a member and staunch supporter of EFRAG, EFAMA will continue contributing to the discussion around sustainability reporting standards, as this is a key topic for asset managers and investors going forward.

 

EFRAG Exposure Draft on ESRS : https://www.efrag.org/lab3?AspxAutoDetectCookieSupport=1

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