The Institute has issued its response to the public consultation on draft European Sustainability Reporting Standards (ESRSs), prepared by the European Financial Reporting Advisory Group (EFRAG). Under the Corporate Sustainable Reporting Directive (CSRD), the European Commission have proposed changes to the nature and extent of sustainability reporting in the EU over the coming years. The CSRD proposes mandated European Sustainability Reporting Standards and aims to strengthen sustainability reporting requirements currently mandated under the Non-Financial Reporting Directive. The public consultation involved the consideration of 13 exposure drafts across the following areas; Two cross-cutting exposure drafts covering general principles, strategy, governance and materiality assessment. Five environmental topical standards covering Climate change Pollution Water & marine resources Biodiversity, and Resource use and circular economy. Four social topical standards covering Own workforce Workers in the value chain Affected communities, and Consumers and end users Two governance topical standards covering Governance, risk management and internal control, and Business conduct The Institute assembled an experienced working group of industry experts to review the consultation and prepare a response. Some of the summary points to note in the response include; The Institute fully support the introduction of sustainability reporting standards to ensure that certain entities report transparently on their Environmental, Social and Governance (ESG) impacts. There are concerns regarding the short timeframe allowed for responding to such a comprehensive consultation. It is critical that the ESRSs are closely aligned to the ISSB standards which are currently being drafted. One way of achieving this alignment would be for EFRAG to work with the ISSB to agree on a global baseline of minimum disclosure requirements. This would be an alternative to having standards requiring differing disclosures about the same ESG matter. The Institute has voiced concerns regarding materiality as proposed in the draft standard. There is a lack of guidance on how to apply “double materiality” as proposed in the ESRSs which may lead to inconsistent use across entities. There are also concerns regarding the workability of the rebuttable presumption contained in the standard and it is unclear how this can be applied which may lead to a lack of comparability between entities. The transition to the ESRSs will be challenging for entities as many of the concepts within ESRS and the systems needed to report are not yet well established. There are some concerns noted regarding the verifiability of information required to be reported on under the ESRSs. Information to be reported about an entity’s supply chain may be difficult to verify and gain assurance on in some instances. The response highlighted some terminology improvement recommendations as well as opportunities for greater harmony across governance disclosure requirements. There is no provision for disclosure exemption on the basis of commercial sensitivity and legal prejudice in the ESRSs. Overall, whilst the Institute believes that the introduction of ESRSs is an important step in businesses reporting transparently on their ESG impacts, there is much room for improvement in the standards as they are currently drafted. The Institute encouraged EFRAG to take the time necessary to address respondents concerns and to make the standards more operable before they are finalised.

  In this week’s sustainability/ESG bulletin we bring you news of the Irish Government’s Climate Conversation, which invites people across the country to fill in an online questionnaire about Ireland’s climate. Also covered is new funding for social enterprise projects, a public consultation opened on a proposed small-scale renewable electricity generation scheme, the UK Government’s response to the ISSB exposure drafts, and the EU’s plans to measure progress on Green Deal environment and climate goals. The Climate Conversation 2022 The Irish Government is inviting people across the country to contribute to the 2022 Climate Conversation. Through an online questionnaire people can give their views on shopping, reuse and recycling, food and food waste, heating homes and businesses, sustainable living, local environment and climate change, as well as how actions in these areas – by individuals, Government, businesses and society as a whole – can positively impact our climate goals. This initiative is part of the National Dialogue on Climate Action (NDCA) which aims to empower everyone in society to help the Government co-design the annual Climate Action Plan. You don’t need to be a climate expert for your opinion to be valued, but you might find the Climate Jargon Buster useful, as well as Climate Essentials for Accountants. The survey closes 9 September 2022. 10 minutes of your time can make a huge difference! €1.5 million announced for Scaling-up Scheme for Social Enterprise Minister for Rural and Community Development, Heather Humphreys, TD, has announced a €1.5 million Scaling-up Scheme for Social Enterprise, funded by the Dormant Accounts Fund. The scheme, which is open to applicants from now until 15 September 2022, is designed to improve the impact and sustainability of social enterprises, i.e. businesses that work to achieve a social, societal, or environmental impact. Like other businesses, social enterprises pursue their objectives by trading in goods and services, but any surpluses they generate are re-invested into achieving their core social objectives, rather than maximising profit for their owners. Public consultation opens on small-scale renewable electricity generation scheme The Government has opened a public consultation to gather stakeholder feedback on aspects of a proposed support scheme for Small-Scale Generation (SSG), i.e. renewable electricity generation technologies with an electricity output greater than 50kW, but smaller than typical commercial generators. The scheme aims to fill the gap in tariff-based supports between the Micro-generation Support Scheme (MSS) and the larger Renewable Electricity Support Scheme (RESS), and to provide an easier route to market for community projects while enabling farmers, businesses and others to maximise their participation in the energy transition. The closing date for submissions is 5.30pm on Thursday 29 September 2022. UK Government’s response to International Sustainability Standards Board exposure drafts The UK Government has responded to the first two exposure drafts from the International Sustainability Standards Board (ISSB): IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (General Requirements Exposure Draft); and IFRS S2 Climate-related Disclosures (Climate Exposure Draft). Read the response here. The UK Endorsement Board (UKEB) – the body that influences, endorses and adopts new or amended international accounting standards issued by the International Accounting Standards Board (IASB) for use by UK companies – has also published its Final Comment Letter and Feedback Statement on the drafts. EU to measure progress on Green Deal environment and climate goals The European Commission has presented a list of headline indicators for monitoring progress towards the EU’s environment and climate goals to 2030, as well as the 2050 long-term vision to ‘live well, within planetary boundaries'. The indicators will capture progress towards environmental wellbeing, including economic and social aspects, and will include the 2-3 most policy relevant and statistically robust indicators for each of the thematic priority objectives to 2030, covering climate mitigation, climate adaptation, circular economy, zero pollution, and biodiversity. Commenting, Executive Vice-President Frans Timmermans, in charge of the European Green Deal, said: “We have very ambitious environmental and climate targets to help us deliver the just green transition that Europe and the world needs. But what you cannot measure, you cannot manage. To keep us on track, we need to keep a close eye on whether we are meeting our goals. These indicators help us do so.” The Commission will report annually on the progress made, based on stocktaking done by the European Environment Agency from 2023 onwards, with the help of the selected headline indicators. Of interest Accountancy Ireland (Aug/Sept 2022) has just published with articles on offshore energy, social enterprise, ESG reporting and ethical business (Accountancy Ireland) How to shop in season in Ireland this August (RTÉ) Explaining greenwashing (RTÉ)  Upcoming events 2022 Responsible Business Awards in Northern Ireland, 8 Sep Dublin Climate Action Week, 12-17 September Ireland Climate Finance Week, 17 - 21 October Natural Capital Finance & Investment Conference, 19-20 October   You can find information, guidance and supports to help members understand sustainability and meet the challenges it presents in our online Sustainability Centre.