Norges Bank Investment Management (NBIM) has asked the European Commission to push companies further via its new sustainable reporting requirements and said the climate standard should remain mandatory, while the Church of England Pensions Board called the proposals a big retreat from the original ambition.

In its response to the Commission’s consultation on its draft Delegated Act adopting the first set of European Sustainability Reporting Standards (ESRS) – which was published on 9 June for feedback until 7 July – NBIM said it believed that overall, the Commission had taken a balanced approach to simplifying the standards and reducing some of the proposed reporting requirements.

“We also welcome the central role of the materiality assessment process, but suggest that the Commission reconsider maintaining the requirement for companies to disclose why it has concluded that a topic is not material,” said the manager of Norway’s Government Pension Fund Global (GPFG), referring to paragraph 31 in ESRS 1.

“The information on the company’s materiality assessment can help investors evaluate the reasons behind potential difference in corporate disclosures on a certain topic,” said NBIM, in a letter signed by Carine Smith Ihenacho, NBIM’s chief governance and compliance officer, and Elisa Cencig, senior ESG policy adviser.

The pair said it would also be helpful to have implementation guidance for reporting entities on how to conduct materiality assessments, as well as alignment with the forthcoming guidance on materiality assessment by the International Sustainability Standards Board (ISSB) as far as financial materiality is concerned.

Disclosures in the climate standard should remain mandatory, NBIM told the Commission, irrespective of the materiality assessment, as per the original advice from European Financial Reporting Advisory Group (EFRAG), the body which published the recommendations in November on which the Commission’s draft is based.

“In particular, information on key climate indicators such as Scope 1, 2, 3 GHG emissions and related targets, as well as corporate transition plans, is essential for investors to assess their portfolio carbon footprint, and support alignment with their own net zero objectives,” Smith Ihenacho and Cencig wrote.

Since its publication on 9 June, the draft ESRS, which form part of the Corporate Sustainability Reporting Directive (CSRD), have come in for criticism for making all data points and indicators voluntary instead of mandatory, with the Commission having rowed back from the EFRAG suggestion that at least all climate indicators should be mandatory under CSRD.

But the Commission wants the standards to align more closely with the ISSB by making them voluntary.

In its response to the consultation, the Church of England Pensions Board investment team said it is concerned by the proposals to move away from requiring certain key disclosure indicators to be reported on a mandatory basis, being instead subject to materiality assessment.

“We see this as a significant rollback of ambition compared to that envisaged by the European Financial Reporting Advisory Group (EFRAG),” the team said in the response, published on the Commission’s website.

“We respectfully urge the European Commission to uphold the integrity and ambition of the ESRS and mandate companies to report on the process and the outcome of the materiality assessment, as proposed within EFRAG’s final technical advice to the Commission published in November 2022,” it said.

The Commission had planned to adopt the first set of EFRS in the second quarter of this year.

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