EFAMA: CSRD - Why we need to get improved corporate sustainability data by 2024
18 January 2022
Investors, asset managers and civil society organisations call for the prompt implementation of the reform on corporate sustainability reporting and EU standards
As the European Parliament and Council develop their positions on the EU Corporate Sustainability Reporting Directive
(CSRD) proposal, it is of the utmost importance that policymakers
support the timeline suggested by the European Commission and plans for
EU sustainability reporting standards as well as guarantee public
funding to support the standard-setting work.
The CSRD reform is tackling the gaps
observed in the implementation of the current legislation in order to
address problems in the comparability, consistency and relevance of
sustainability information disclosed by companies. The impact assessment accompanying the proposal and linked research from the Centre for European Policy Studies (CEPS)
are both categorical in showing that mandatory sustainability reporting
will bring clarity to businesses, help reduce the number of requests
for sustainability information from external stakeholders and lead to a
reduction in cost in the medium- and longer-term.
The EU Green Deal and Renewed
Sustainable Finance strategy depend on successfully redirecting private
and public capital to support the sustainability transition of the EU
economy as well as adequately measuring companies’ role, performance and
impact on sustainability matters. In this regard, implementing the EU
standards is instrumental to help companies provide relevant information
that is needed by all users of such data (including investors,
financial market participants and civil society) and in line with EU
public goals and commitments on climate, environment and human rights.
The EU Non-Financial Reporting
Directive currently in force was approved by legislators in 2014. Due to
the urgency and the central role of this reform within the broader
policy context, the undersigned organisations call policy-makers to take the next step by:
- Reaching agreement promptly in order to support swift implementation. The
CSRD proposal clarifies the implementation of sustainability disclosure
obligations, thereby providing additional and necessary certainty to
companies, as well as to investors and other stakeholders (i.e ensuring
compliance with respective disclosure and prudential requirements such
as investors disclosing how they integrate sustainability and banks having to assess their
exposure to climate risk). The reform would enter into effect in 2023,
with companies actually reporting the information on sustainability
risks, opportunities and impacts in 2024. In practical terms, companies
would need to start collecting data from 1st January 2023 on several
KPIs, including GHG emissions and energy use. Any delay will have a
negative impact on the ability of companies and financial market
participants to support the sustainability transition of our economy.
Moreover, it will put at risk the achievement of the objectives set in
the EU Green Deal and hinder the implementation of the Renewed
Sustainable Finance Strategy.
- Maintaining
the double materiality concept to achieve EU-specific policy
objectives, and demonstrating EU leadership to promote the consideration
of impact globally. The EU standards must be grounded in the double
materiality concept in order to align with the broader policy context
(including rules on investors’ disclosure, EU taxonomy, EU Green Bonds
Standard and ESG benchmarks) and achieve the EU’s commitments on
sustainability and respect for human rights. Furthermore, looking at
sustainability challenges at the global level, achieving international
standardisation and a level playing field is important and in the
interest of the EU. However, the international work led by the IFRS Foundation
will not cover the full spectrum of ESG (Environmental, Social and
Governance) matters at once and will look specifically at disclosures
relevant for enterprise value, rather than sustainability outcomes. It
is highly appreciated that the European Commission has already committed
to a review process to ensure European and international standards are
compatible. We stand ready to support the European Commission’s
contribution to the international standard setting so that the objective
of global harmonisation in reporting both risks and impacts, which is needed and required by all users of sustainability data, is achieved.
- Ensuring
the technical work to develop EU corporate sustainability reporting
standards is appropriately supported by EU public funding.
It is important that the EU Commission guarantees the viability and
transparency of the standard-setting process, free of bias and undue
interest, allowing all interested parties including users and preparers
to engage on an equal basis.
We call on European policymakers
to maintain momentum while finalising the negotiations for the reform of
the legislation. The business case for standardising sustainability
reporting is undisputed as well as the importance of sustainability data
as a critical cornerstone to achieve the objectives set in the EU Green
Deal and the sustainable finance agenda.
EFAMA
© EFAMA - European Fund and Asset Management Association
