Legal & Regulatory News

European Sustainability Reporting Standards Draft Delegated Act

On 9 June 2023, the European Commission published a revised draft of the European Sustainability Reporting Standards (ESRS), being the reporting standards being introduced under the EU’s Corporate Sustainability Reporting Directive, inviting feedback to be provided on or before 7 July 2023.

The key points of the revised ESRS include:

• Materiality – all disclosures other than the “General disclosures” (required under ESRS 2) will be subject to a materiality assessment. When assessing materiality, organisations will need to consider both impact materiality and financial materiality.
• 'Comply or explain’ – where a matter is judged to be material, an organisation must disclose the necessary information (i.e. comply), or if they are unable to do so, explain why.
• Phase in of certain requirements – for example, all undertakings may omit information on certain datapoints related to their own workforce only in the first year that they apply the standards.
• Certain disclosures now voluntary – some mandatory disclosures have been converted into voluntary datapoints by the EC. For example, providing a transition plan for biodiversity and ecosystems.
• Alignment with global standards – further changes to ensure ESRS have a high degree of interoperability with the International Sustainability Standards Board standards and Global Reporting Initiative.

Following the closure of the consultation window, the European Commission will consider feedback and aim for the final standards to be submitted in time for the ESRS to be applicable to relevant firms from 1 January 2024.

Click here to read on EU corporate sustainability reporting.

Click here to read the latest ESRS draft.