Key points

The European Sustainability Reporting Standards (ESRS) have been approved and will apply from 1 January 2024 as required by the CSRD.
What is the issue?
The sector-agnostic ESRS delegated act was adopted by the European Commission (EC) at the end of July. The European Parliament and the European Council had the ability to reject the delegated act over a two-month period (extendable by an additional two months), called the scrutiny period. The two-month scrutiny period expired on 21 October 2023 and was not extended. The sector-agnostic ESRS will be published in the Official Journal and will apply from 1 January 2024 along with the Corporate Sustainability Reporting Directive (CSRD).
When does it apply?
The ESRS will apply to companies within the scope of the CSRD. First-time application (as defined by the CSRD) varies, starting from FY 2024 (reporting in 2025). Determining when a company needs to start reporting will depend on many different factors (including size, whether listed or not, and whether the parent-entity is EU-based).
What are the next steps?
The EC is aiming to reduce the burden of reporting requirements by 25%. To do so, several measures are to be implemented:
  • A proposal for a Decision to postpone to 30 June 2026 (initially June 2024) the adoption of sector-specific ESRS and the standard for certain third-country undertakings.
This initiative will allow companies to focus on the implementation of the sector-agnostic standards.
  • A delegated directive to adjust the size criteria for micro, small, medium-sized and large undertakings or groups. The proposed increase in thresholds by 25% is to take into account the effect of inflation and will impact the entities that fall into the scope of the CSRD. Thresholds for medium-sized and large undertakings respectively would be:
    • balance sheet total: EUR 25 million (previously 20 million);
    • net turnover: EUR 50 million (previously 40 million); and
    • total employees 250 (no change).
Those thresholds could be further adjusted when transposed into local law.
  • The EC has also published a call for evidence on the rationalisation of reporting requirements. The initiative calls on preparers and third parties to identify reporting requirements currently in EU legislation that could be eliminated or rationalised without undermining the policy objectives.
In addition, EFRAG published its work programme for 2024, which includes:
  • ESRS XBRL taxonomy: in the first quarter of 2024, EFRAG will issue for consultation the XBRL taxonomy of the ESRS and, in the second half of 2024, it will issue its final advice to the EC.  ESMA will subsequently consult on the final digitalisation rules and effective date.
  • Sector-specific standards: the first set of sector-specific standards will be available for public consultations in early 2025 and will include oil and gas,  mining, quarrying and coal. EFRAG will also start, in the last quarter of 2023, the standard-setting research process for the three standards dedicated to financial institutions (banking, insurance and capital markets)
  • ESRS for listed SMEs: EFRAG expects to issue the exposure drafts related to ESRS for listed SMEs (mandatory) and non-listed SMEs (voluntary) in early 2024.
In addition, EFRAG has drafted three implementation guidance documents to support the application of ESRS. These documents cover the double materiality assessment, the value chain and provide a comprehensive list of all the ESRS datapoints. They are expected to be issued for consultation in November with a final release in early 2024.
And finally, EFRAG announced on 24 October the launch of its ESRS Q&A platform to collect and answer technical implementation questions to support preparers and other stakeholders with the implementation of the ESRS.
Where do I get more details?
You can find more details on the recent sustainability reporting initiatives in the EU:

For further information, contact Peter Flick, Olivier Scherer, Andreas Ohl or Henry Daubeney.
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