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Key points

The European Sustainability Reporting Standards (ESRS) exposure drafts (EDs) have been released for comment by EFRAG.
  • 13 ESRS EDs have been published by EFRAG.
  • The EDs set the overall architecture of the future sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD), covering the full range of sustainability matters (environment, social and governance).
  • Contents of the ESRS continue to be subject to changes resulting from the ongoing Trilogue negotiations towards the CSRD.
  • The comment period is 100 days, with a deadline of 8 August 2022. Interested stakeholders are encouraged to respond to a detailed questionnaire. The aim is that the Draft ESRS will be presented to the European Commission by Q4 2022 with a probable first application of the standards in 2025, based on FY 2024 reporting.
  • For further information, see details below.
What is the issue?
The European Commission’s proposal for the CSRD foresees the adoption of European Sustainability Reporting Standards (ESRS). The European Financial Reporting Advisory Group (EFRAG) has been mandated to develop draft ESRS with proper due process, public oversight and transparency, and with the expertise of relevant stakeholders.
On 29 April 2022, EFRAG published 13 ESRS EDs for public consultation (access to the EDs).
Compared to the previously published ESRS working papers (for an overview of the first batch of working papers, see In brief INT2022-02) the structure of the cross-cutting, the social and the governance standards has been revised, and the reporting concepts and requirements have been refined.
What is the impact?
With the new CSRD and ESRS reporting requirements, sustainability reporting will be on a par with financial reporting. Reported information will be relevant, comparable and reliable, containing forward-looking and retrospective, qualitative and quantitative information. The proposed disclosure requirements are expected to provide valuable insights for a large panel of stakeholders about an undertaking’s sustainability-related impacts, risks and opportunities. However, the ability of an entity to have the appropriate data available, and to identify the appropriate data sources and the relevant processes, will be very challenging for those preparing the reports.
Cross-cutting standards
The cross-cutting standards (ESRS 1 and 2) address disclosures on matters that are crucial to the relationship between sustainability matters and the company’s strategy and business model, its governance and organisation, and its materiality assessment. Following the concept of double materiality, companies have to identify their material sustainability-related impacts (‘inside-out') as well as risks and opportunities (‘outside-in’).
Topical standards - E, S and G
The topical standards cover a specific sustainability topic or subtopic from the areas of environment, social and governance. They set disclosure requirements related to sustainability impacts, risks and opportunities that are deemed to be material for all entities, regardless of the sectors in which they operate. Such disclosure requirements complement those prescribed by the cross-cutting standards, and they cover information to be reported on as follows:
  • the policies, targets, actions and action plans, resources adopted by the entity on a given sustainability topic or subtopic; and
  • corresponding performance measurement metrics for each sustainability topic or subtopic.
Such targets and performance measurement metrics correspond to the TCFD and ISSB ‘targets and metrics reporting’ pillar.
The ESRS architecture foresees the preparation of sector-specific standards, but those are not yet included in the public consultation.
When does it apply?
The ESRS apply to all companies within the scope of the CSRD. According to the European Commission’s proposal, the CSRD provisions apply to financial years starting on or after 1 January 2023. However, in the current ongoing Trilogue negotiations for the CSRD between the European Commission, the European Parliament and the Council of the EU, there is broad support for a one- or even two-year postponement. Therefore, it is probable that the ESRS will first apply to financial years starting on or after 1 January 2024.
Where should the information be reported and should it be audited?
The sustainability statements will be in a separate part of the management report. Initially, limited assurance should be provided, with a planned transition to reasonable assurance in the following years.
What are the next steps?
The public consultation period started with the publication of the EDs and ends on 8 August 2022. Comments can be provided through an online consultation survey that seeks feedback on three key aspects of the EDs:
  • The relevance of the proposed architecture, implementation of the CSRD principles and content of each ED.
  • Possible options for prioritisations in the implementation of the ESRS.
  • The adequacy of each disclosure requirement mandated by each ED.
General comments can be sent in the form of a comment letter. Additionally, various outreach events are planned during the consultation phase.
It is important for entities to take the time to read and understand these EDs, because they will have to apply the standards and prepare to implement their sustainability reporting.
Furthermore, the content of the ESRS is subject to changes resulting from the Trilogue negotiations with regard to the CSRD. Negotiations should be concluded in June 2022, during the French presidency of the Council of the EU.
What are the other initiatives?
Where do I get more details?
You can find more information on recent sustainability reporting requirements:
For more information, contact Peter Flick (peter.flick@pwc.com), Olivier Scherer (olivier.scherer@pwc.com) or Henry Daubeney (henry.daubeney@pwc.com).
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