20 April 2022

Accountancy Europe: Development of purposeful and effective sustainability reporting standards

Dear Commissioner McGuinness,

The recently released United Nations Intergovernmental Panel on Climate Change (IPCC) report again
shows that there is no time to lose. Accountancy Europe fully supports the European Green Deal
ambitions to turn Europe into the first climate neutral continent by 2050.

Companies of all sizes need to rapidly transform their business models if Europe is to become a
sustainable economy. Corporate reporting, as part of a larger legislative package that encompasses
supply chain due diligence and circular economy issues, will help companies, financial markets,
policymakers, and other stakeholders support and drive this necessary transformation. For that
purpose, sustainability reporting standards need to be clear, purposeful and pragmatic in order to avoid
becoming a mere compliance or academic exercise.

Accountancy Europe is committed to making sure that Europe meets its ambitious sustainability
objectives and uses companies’ reporting and assurance thereon as important means to this end.
Furthermore, we encourage the European Union (EU) to seize the current window of opportunity to
work towards an accepted global baseline for reporting sustainability information.

Below, we provide some important comments that we believe need to be addressed in order for the
European sustainability reporting standards (ESRS) to be a successful tool for the EU.

Meeting the Green Deal’s objectives
The European accountancy profession is becoming concerned that ESRS disclosure requirements, as
currently appearing in the European Financial Reporting Advisory Group’s (EFRAG) Project Task Force
(PTF) Working Papers (WP), will not help meet the Green Deal’s objectives. To be effective, reporting needs to capture information measuring what really matters. It will then enable the transition to circular and sustainable business models, and direct investment towards sustainable businesses.

For this to happen, standards need to be easy to understand and apply. Too complex or
burdensome reporting systems risk generating unhelpful pushback and slowing down adoption.
As they stand, the ESRS WP appear very prescriptive and include hundreds of datapoints. They oblige
to perform lengthy materiality assessments and may drive companies to adopt a checklist approach
rather than a sustainability-driven one....

more at Accountancy Europe

© Accountancy Europe