This week’s EU Omnibus developments
A rundown of who is saying what this week, and what more we know about plans to revise Europe’s sustainability rules
The three candidates hoping to take charge of the European Sustainability Reporting Standards (ESRS) made their cases to European Parliament this week.
Chiara Del Prete, Kerstin Lopatta and Adam Pradela made speeches and answered questions about their hopes for becoming of EFRAG’s sustainability reporting board, ahead of a vote by MEPs.
Del Prete focused on her experience as an auditor and corporate reporting expert.
Among other things, she said it was too early to introduce sectoral requirements to the ESRS.
“But we should consider looking at the practices that are emerging in each and every sector, and working on non-mandatory illustrations that would help to reduce the burden of having to apply our standards.”
She also said she believed in aligning the ESRS with global standards, but adopting IFRS with additional European considerations “would not work”.
“The climate, environmental and human policies of Europe are all at stake here,” she told MEPs.
“If Europe lets other jurisdictions take over our rules, then Europe will have no more influence than any of the other 33 jurisdictions adopting those international standards. For example, we could never do an emergency procedure to simplify the standards like the one we are doing with the Omnibus right now.”
Lopatta said collaboration between global and regional standard-setters was “essential” but should happen “without abandoning double materiality” – something the US is currently campaigning for.
She emphasised her experience with both corporate and capital markets reporting, because of her work with banking giant HSBC, and said she wants to strengthen buy-in for the new ESRS by producing “practical implementation guidance, targeted group specific education programs and ad hoc support”.
If she became chair of the sustainability reporting board, Lopatta said she would create co-chair roles with different specialisms.
Pradela, who is the chief financial officer for corporate sustainability at DHL Group, talked the most about sustainability, saying he was “deeply convinced of the value of disclosing information on sustainability so that the financial market and the public have access to comparable and decision-useful data”.
He said the Corporate Sustainability Reporting Directive (CSRD) needs to move from a compliance exercise to one that “highlights tangible actions to improve sustainability” and that, while he supports double materiality, the current assessment took DHL spent six months.
“This cannot be done – that every year we [spend] six months on materiality analysis,” he continued, adding that it needs to be done “on a much smaller scale”.
Pradela said he wants to establish an “implementation support group” within EFRAG, made up of practitioners from local companies who can direct provide feedback on the ESRS.
“This was missing in the past, I never had anyone contact me and ask for my experience.”
There was a closed-door vote in Parliament after the speeches, which will be communicated to the European Commission in October.
Other EFRAG/ESRS developments
EFRAG published two new reports this week to support small and medium enterprises using the EU’s voluntary sustainability reporting standards.
The first paper provides a map of 100 digital tools that can help with GHG disclosures, including emissions calculators and geolocation platforms.
The second identifies 223 platforms and initiatives to support sustainability reporting and performance.
And a number of organisations have published their responses to EFRAG’s consultation on planned revisions to the ESRS.
Among them, the Global Reporting Initiative (GRI) called for closer alignment with its standards, including by adopting their definition of ‘impact materiality’ and using them to fill in gaps in ESRS coverage.
The Taskforce on Nature-related Financial Disclosures also asked EFRAG to mirror its standards, and reiterated a request for the ESRS for biodiversity, water and resource to be consolidate into a single “integrated nature-related standard”.
More pushback against the Omnibus
Eight ethical trade bodies published a statement calling on policymakers to safeguard CS3D during the upcoming Omnibus negotiations.
The Fair Labour Association, Amfori and the Ethical Trading Initiative were among the signatories asking for a risk-based approach to CS3D and legal certainty for companies.
A major statement from companies is also in the pipeline for next week.