Norges Bank Investment Management (NBIM) is advocating changes to the EU’s draft corporate sustainability reporting rules to make them more practical, while also praising many aspects of the work done on the framework so far.

The European Securities and Markets Authority (ESMA) and lobby group Insurance Europe have also published their responses to the European Financial Reporting Advisory Group’s (EFRAG) public consultation on the first set of draft European Sustainability Reporting Standards (ESRS) – with both organisations arguing, like NBIM, for more alignment with existing standards.

NBIM, which manages the NOK12.1trn (€1.2trn) Norwegian Government Pension Fund Global (GPFG), wrote that it welcomed the level of ambition and the topics covered in the ESRS, and EFRAG’s efforts to reflect international standards such as the OECD Guidelines on Responsible Business Conduct or the UN Guiding Principles on Business and Human Rights in the ESRS.

“However, we believe the draft standards might need to be further amended and simplified to be operationally practical for reporting companies, and to ensure that the costs to preparers are proportionate to the benefits for users,” the central bank subsidiary wrote.

The letter, signed by Carine Smith Ihenacho, NBIM’s chief governance and compliance officer, and Severine Neervoort, lead ESG policy adviser, went on to say that the standards could have fewer disclosure metrics and focus on key data likely to be useful – such as internal evaluations of how successful certain measures were, rather than the fact that a company was taking a particular measure.

The sovereign wealth fund manager also said the rules should take account of how complicated it might be to get certain input data from non-EU entities in a firm’s value chain, and make some aspects of the standards “comply or explain” only.

NBIM also said some metrics could be modified to harmonise better with other sets of standards such as the Global Reporting Initiative.

“Small adjustments could benefit both users and preparers of the information,” Smith Ihenacho and Neervoort said.

In its response to the consultation exercise meanwhile, ESMA emphasised that it supported “a strong materiality assessment” but said it was concerned about the suggested “rebuttable presumption” approach proposed in the draft set of rules.

Insurance Europe, in its joint response alongside the CFO Forum, also took issue with the latter proposed approach, saying: “EFRAG should not introduce the rebuttable presumption (requiring companies to consider all areas relevant unless they can prove otherwise) as it is currently proposed, since this would not only create inconsistencies with financial reporting and the ISSB proposals but could also lead to a situation in which the effort to justify non-disclosure by using the rebuttable presumption would exceed the effort to report immaterial data.”

ESMA said it also encouraged EFRAG to keep engaging with the International Sustainability Standards Board (ISSB) to ensure further alignment of the ESRS and the IFRS Sustainability Standards “to benefit both users of sustainability reporting and the companies that prepare the reporting”.

Insurance Europe stressed particularly that there should be a phased introduction of the standards.

The industry association said all the areas covered by the standards were important, but that trying to finalise all the proposed standards in the very short time available was not realistic and could create standards that were not of suitable quality.

“There is an urgent need for a phased approach in the development and implementation of the ESRS,” it said.

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