The European Financial Reporting Advisory Group (EFRAG) has approved the
final version of the European Sustainability Reporting Standards (ESRS) at its meeting on 15 November, subject to editorial changes.
Earlier this year, EFRAG launched a public consultation on the thirteen Exposure Drafts forming the ESRS. The consultation period, which ended on 8 August, received a large response from a broad range of stakeholders (
including the Institute). Since August, EFRAG has considered these responses and made changes to the original draft standards. This has culminated in the approval of the final version of the standards by EFRAG on 15 November. The standards will now be sent to the European Commission to be considered for adoption. The standards have been updated based on stakeholders comments and feedback, with one of the key changes being the removal of the "rebuttable presumption" related to materiality which was contained in the original draft standards.
The news of the finalisation of ESRS comes a week after the European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD). The CSRD will now be considered by the European Council on 28 November, where it is expected to be signed into EU law. Following this, member states of the EU will be required to enact legislation locally to bring the requirements of CSRD into effect in their state.
It is hoped that the ESRS and CSRD will help to ensure that companies report more transparently and consistently on their sustainability-related impacts, opportunities and risks and this is intended to be a significant update on the 2014 Non-Financial Reporting Directive.
The rules of ESRS and CSRD are expected to apply for periods commencing on or after 1 January 2024 for larger companies, with the requirements being phased-in in subsequent years for smaller companies.