EFRAG to develop sustainability reporting standards
Against the backdrop of the European Commission’s adoption of the European Sustainability Reporting Standards (ESRS) as part of the bloc’s Corporate Sustainability Reporting Directive (CSRD), the regulator announced in a statement that the European Financial Reporting Advisory Group (EFRAG) is developing voluntary standards for SMEs outside of the CSRD’s scope.
According to the Commission, non-listed SMEs will still receive requests for sustainability information from various stakeholders. In response to this, EFRAG is set to develop simpler, voluntary standards to use for sustainability reporting.
While this sounds like yet another set of standards, EFRAG was responsible for developing the ESRS and as such the presumption is natural that there will be significant overlap between the ESRS and EFRAG’s new standards. As such, they should hopefully also be deemed compliant with international standards.
The ESRS were officially adopted as part of the CSRD framework on 31 July 2023. The latter is set to reduce the burden of ESG reporting on GPs by widening the scope of companies it applies to and shifting the responsibility increasingly to the GP’s portfolio companies.
In a recent package of reforms to the framework underlying financial sustainability, the Commission additionally declared the ESRS as compliant with global ESG reporting standards to reduce fragmentation of international reporting standards.