The members of the EACB gladly take the opportunity to comment on the IFRS Foundation’s consultation about Sustainability Reporting. The EACB answer will focus on all the 3 aspects of the consultation concerning the need for global sustainability standards, the IFRS Foundation role and the scope of that role.
The EACB members believe that the current fragmentation is confusing and far too complex. For this reason, there is an urgent need to improve the consistency and comparability of sustainability reporting.
The EACB believes that companies should disclose their environmental & social strategies, their transition policy and their governance as well as how they implement these strategies (action plans and KPIs). The Sustainability reporting should better clarify the risks and opportunities (definition of short/medium/long term risks and opportunities), as well as the processes for identifying and assessing those risks and opportunities. EACB believes that the current disclosure requirements of the Sustainability reporting do not fully ensure companies report the information that financial sector companies will need to meet the requirements imposed by a range of new regulatory pieces (i.e. Taxonomy Regulation, Disclosures Regulation, Climate-related Benchmarks Regulation, provisions under the CRR2/CRD5 package). The new sustainability reporting should also be implemented taking into consideration the development of the disclosure requirements established by the technical screening criteria of the Taxonomy Regulation.
In general, EACB advocates the creation of international non-financial reporting standards instead of only European ones. Ideally the ESG reporting should be developed globally and at all levels of the economy to fulfil the data gap. Nevertheless, if the EU would decide to set standards(e.g NFRD, EC new mandate to EFRAG) it should continue its commitment to global standards and contribute actively to a global solution. It is therefore worth considering the creation of an international standard setter for non-financial reporting under the auspices of the IFRS Foundation.