Global standard setter ISSB pushes for separating financial, and environmental and social information in CSRD reports<\/p>\n
Four months after the EU finally struck a deal<\/a> to reduce company sustainability reporting requirements, the boat is once again being rocked as policymakers attempt to finalise changes to the European Sustainability Reporting Standards, which underpin the Corporate Sustainability Reporting Directive.<\/p>\n Many sustainability supporters heaved a collective sigh of relief when the deal under the EU omnibus proposal left the principle of \u201cdouble materiality\u201d intact. The result means that companies remaining in scope of the CSRD will need to report their own impact on\u00a0the economy, environment and society (impact materiality) and the impact\u00a0of\u00a0these factors on their business (financial materiality).\u00a0<\/p>\n The draft simplified ESRS, published last December, were largely welcomed<\/a> as a positive step for business and investors. The European Commission is expected to launch a public consultation on further revisions to the standards later this month, and some are concerned this could include closer ties with the International Sustainability Standards Board standards, which are based on single materiality. <\/p>\n Speaking in the European parliament last month, ISSB chair Emmanuel Faber<\/a> said: \u201cWe found a way to remove the interoperable mechanisms\u2009[between ESRS and ISSB standards].\u2009The only condition needed for this is that those reports as a whole are written in a way to provide all financially relevant\u00a0information clearly and not obscured by information that is provided for other users.\u201d<\/p>\n \u201cThis would of course fully respect the double materiality principle,\u201d said Faber. \u201cEurope would keep its approach and its standards, and its sovereignty in the field.\u201d He insisted the ISSB standards<\/a> were a \u201cbaseline\u201d that \u201cjurisdictions can build on\u201d. <\/p>\n A spokesperson<\/a> for the ISSB tells Sustainable Views that its objective is to \u201creduce the burden\u201d for companies so they can \u201cefficiently comply\u201d with the ESRS and ISSB standards. Allowing flexibility in how businesses present their sustainability-related information would mean companies would only have to produce one report that meets both sets of requirements, they say. <\/p>\n The standards already have an aligned concept of financial materiality and clearly identifying information that is intended for investors enables \u201cbetter use\u201d of the information provided, they add. <\/p>\n MEP adviser and former CSRD negotiator Abrial Gilbert-D\u2019Halluin describes this approach as a \u201crevamped version\u201d<\/a> of the so-called building block approach, for which the ISSB has long advocated. <\/p>\n