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26 January 2022

AFME welcomes progress on CSRD and highlights need for consistency with international frameworks

Finalising EU sustainability reporting standards has become especially urgent to enhance the availability and comparability of sustainability information, provide banks with the sustainability information needed to scale sustainable finance and to address the problematic sequencing of ESG disclosure rules.

In light of the continuing negotiations on the Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD), the Association for Financial Markets in Europe (AFME) has today published a paper welcoming the progress made so far and highlighting priorities for the Directive to be effective and proportionate.  

Oliver Moullin, Managing Director for Sustainable Finance at AFME, said: “Putting in place an effective corporate sustainability reporting framework is an urgent priority to enhance the availability and comparability of sustainability information.  

“Maximising the compatibility and consistency of EU and international standards and ensuring a proportionate approach to reporting on activities outside the EU is essential for the effectiveness of the EU corporate disclosures framework. The CSRD risks having a disproportionate impact on internationally active companies, which will have to report on their worldwide activities, including in jurisdictions where the necessary data is not yet available. 

“AFME believes that it is important to ensure a proportionate application to internationally active companies through limiting the scope of reporting to EU activities, at least for an initial period, and introducing greater proportionality in the scope of application to companies based outside the EU.” 

AFME’s paper “The importance of the international context for the CSRD” raises these concerns, particularly in light of recent momentum towards the development of international sustainability reporting standards.  

AFME also highlights the importance of maximising the compatibility and consistency of EU standards with the forthcoming international standards. It provides recommendations to introduce more proportionate requirements in the proposal, including by: 


  1.  limiting the scope of reporting to EU activities and EU exposures to companies that are subject to the same CSRD and Taxonomy transparency rules, at least for an initial period; and 

  1. introducing greater proportionality in the scope of application to companies based outside the EU.  


AFME has also published additional feedback addressing other key issues being discussed by the co-legislators, including: 

  • Supporting the Commission’s proposal for a proportionate inclusion of SMEs in the scope of the requirements. The proposal takes a proportionate approach by minimising the reporting burden through a dedicated, simplified standard and by allowing three additional years for SMEs to start reporting. 

  • Raising concerns with any further extension of the scope of the CSRD to non-EU companies. Instead, AFME calls for greater proportionality and close cooperation among international standard-setters to reduce fragmentation and facilitate the flow of sustainability information across jurisdictions. 

  • Highlighting the importance of maintaining the Commission’s proposed exemption for subsidiaries to report separately where covered by a parent entity’s consolidated report. 

  • Supporting concerns that have been raised with reporting on intangible assets (such as information on intellectual and human capital) and suggesting that companies could choose to provide additional disclosures on intangible assets when they deem them material to their sustainability profile. 

  • Ensuring that the legislation provides for appropriate sequencing of disclosures by the non-financial and financial sectors, providing for financial institutions to report under the CSRD one year after non-financial companies, in line with disclosures under the Taxonomy Regulation. 



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