The European Fund and Asset Management Association (Efama) has said the accelerated development of mandatory European sustainability reporting standards (ESS) could “become a game-changer unleashing the impact of sustainable finance”.

The lobby group was reacting to recommendations delivered to the European Commission by EFRAG yesterday, which the Commission has said it will take into account ahead of presenting its proposal for a revised Non-Financial Reporting Directive (NFRD), scheduled for next month.

Efama said it believed that mandatory ESS were “essential for the achievement of the EU´s Green Deal objectives and evolving sustainable finance policies, and at the same time, drive cooperation towards convergence behind a global sustainability reporting architecture”.

It said the EFRAG proposals were positive in several ways, including because they recognised the need for an urgent solution and aimed to “operationalise the double materiality concept and strengthen the interactions between impact and financial materiality perspectives”.

It also expressed approval for the recommendation to contribute to international standard-setting initiatives in a “co-constructive spirit”.

The group also highlighted the benefit of ESS in addressing inconsistencies within the EU sustainable finance policy package, a point also made by the EFRAG taskforce.

Efama said the corporate ESS disclosures should be channelled into the European Single Access Point (ESAP). The ESAP refers to the notion of a centralised European database, the establishment of which is the first action on the Commission’s latest action plan for a capital markets union.

Efama said the ESAP should “prioritise the centralisation of ESG company data on the principle of open access”.

“We also find that the information reported under an ESS can help corporate directors set credible targets and sustainability objectives, and asset managers perform their role as stewards of investee companies, contributing to the objectives of the sustainable corporate governance initiative,” it said.

Dominik Hatiar, regulatory policy advisor at Efama, said: “The EU’s sustainability disclosure ecosystem should co-operate towards a globally accepted system by leveraging alignment with existing, highly relevant frameworks, such as SASB and TCFD.”

The Global Reporting Initiative (GRI), a standard-setter focussed on companies’ social and environmental impacts, also saw a close alignment between the proposed ESS approach and its standards.

“We welcome the intent to work with existing sustainability reporting initiatives and the recognition that sustainability and financial reporting are of equal importance,” said Eric Hespenheide, chair of GRI. “GRI looks forward to working with the Commission and EFRAG, contributing our expertise and unique perspective from more than 20 years as the global pioneer of sustainability reporting.”

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