The EACB suggests that the technical quality, feasibility, and usability of the proposed ESRS EDs should be improved. At the same time, the complexity of the ESRS should be significantly reduced. Greater clarity is needed around the relationship between key concepts, principles and definitions such as materiality, relevance, significance, matters, topics, sub-topics, sub-sub-topics, and impacts, risks and opportunities.
Moreover, the draft ESRS disclosure requirements are very challenging to implement given the legislation timeline. We would encourage EFRAG prioritising ESRS E1 “Climate change”, also because focusing on climate disclosure would bring more convergence with international standards such as ISSB. The EACB suggests keeping all the DR necessary for SFDR PAI from ESRS E2-E5 and either postponing the other DR of E or move them to the sector-specific standards.
EACB members have concerns about the feasibility of the rebuttable presumption’s definition which places the burden of proof on the undertaking. We suggest introducing at least a best effort basis for the entity to determine its materiality based on its own assessment, without introducing any tedious conditions or constraints. Our proposal is to limit the disclosure to information that the company deemed material without adding the proof that the other information was considered not material. EACB also encourages EFRAG to consider the idea of applying the rebuttable presumption per sector and not per topic in order to limit the scope, while not questioning the need to provide justification on the non-material assessment.
When it comes to the reporting boundary and value chain, we suggest allowing undertakings to omit some of the mandated requirements in legitimate and well justified cases. The fact that some of the mandated requirements cannot be omitted in justified individual cases is impractical and not in tune with the real challenges of collecting data. In addition, requiring undertakings to approximate missing information in cases where data is unavailable for the upstream and downstream value chain goes against the objective of faithful representation.
Further, the number of disclosure requirements in the ESRS EDs significantly exceeds those proposed by the ISSB. The differences between EFRAG and ISSB draft sustainability standards might hamper the interoperability of the two standards.
Finally, we are further concerned that EFRAG requirements will lead European entities to disclose sensitive information that will disadvantage them against their international competitors not subjected to such requirements.