The body charged with carrying out work on EU corporate sustainability reporting standards has published a paper setting out the rationale for a recently proposed climate standard prototype.
The prototype was set out earlier this month and EFRAG, the EU financial reporting advisory body, has since followed up with publication of a paper elaborating on the proposed content of the future climate standard.
The prototype and the “basis for conclusions” paper were developed by one of the clusters within the project task force on European sustainability reporting standards (PTS-ESRS).
Neither of these two outputs are being submitted for public consultation, with EFRAG instead saying the documents were made publicly available for transparency purposes and represented the view of the relevant cluster only.
In parallel to the work on climate the PTS-ESRS is working on draft standards covering other sustainability topics referred to in the European Commission’s proposed legislation on corporate sustainability reporting, known as the CSRD.
The aim is to have a preliminary pre-exposure draft version of all the standards ready by the middle of October.
Once the task force has decided on such a draft, the next step would be for this to be submitted for review and input to external expert working groups to be set up for this purpose.
EFRAG has indicated it is looking to create up to 11 such groups addressing matters such as conceptual guidelines, cross-cutting standards, sector-specific standards, and specific standards.
The deadline for applying to become a member of one of these working groups was 15 September.
Views on due process
This was also the deadline for responses to a consultation by EFRAG on the “due process procedures” for developing the standards. The plan is for responsibility for the EU standards to pass from the PTF-ESRS to new EFRAG sustainability reporting bodies as soon as these have been established following planned governance reforms.
The consultation on due process has drawn responses from bodies including PensionsEurope and the Principles for Responsible Investment (PRI).
PensionsEurope said EFRAG’s consultation paper reflected the urgency with which climate change needed to be addressed, but that “we would like to stress the importance of leaving stakeholders sufficient time to respond to public consultations”.
The pension fund association also noted that the development of the EU corporate sustainability reporting standards was linked to the development of the European Single Access point, saying there should be regular exchanges to ensure consistency between the two projects.
The PRI said it was crucial for the standard-setting process to allow consistent feedback from users, in particular investors, and prepares of sustainability information and international standard-setters.
The PRI also said it recommended EFRAG to consistently engage global sustainability standard-setters and reporting initiatives, such as the IFRS Foundation’s proposed international sustainability standards board and the Task Force on Climate-related Financial Disclosures (TCFD), and take international developments into consideration as they develop.