{"id":189009,"date":"2025-06-16T12:49:13","date_gmt":"2025-06-16T12:49:13","guid":{"rendered":"https:\/\/www.europesays.com\/uk\/189009\/"},"modified":"2025-06-16T12:49:13","modified_gmt":"2025-06-16T12:49:13","slug":"eu-omnibus-offers-opportunity-to-better-articulate-materiality-says-issbs-faber","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/uk\/189009\/","title":{"rendered":"EU Omnibus offers opportunity to \u2018better articulate\u2019 materiality, says ISSB\u2019s Faber"},"content":{"rendered":"

\"EU<\/p>\n

The chair of the International Sustainability Standards Board (ISSB)<\/a>, Emmanuel Faber, has said<\/a> the sustainability Omnibus presents an opportunity for the EU to \u201cbetter articulate\u201d materiality for investors and other stakeholders under the Corporate Sustainability Reporting Directive (CSRD)<\/a>.<\/p>\n

Faber said on Monday that \u201conly the information necessary for stakeholders\u2019 decision-making\u201d should be retained in the standards underpinning the directive.<\/p>\n

He stressed that one of the key objectives of the simplification, as set out by the European Commission, is to strengthen alignment with international standards which \u201cfocus on financing the economy\u2019s transformation\u201d.<\/p>\n

The EU\u2019s corporate sustainability disclosure rules, which came into force this year, are in the process of being revised. The scope of the regulation is up for debate<\/a>\u00a0and EU standards body EFRAG has been tasked with simplifying and cutting down the European Sustainability Reporting Standards (ESRS) by the end of October.<\/p>\n

The body is expected to deliver the first ESRS simplification update to the European Commission by 20 June<\/a>.<\/p>\n

EFRAG has said it will aim to align<\/a> the language of the ESRS \u201cas much as possible\u201d with ISSB for \u201ccommon\u201d disclosures.<\/p>\n

Faber has previously been critical of the EU\u2019s \u201csimplistic\u201d push for double materiality<\/a>. The ISSB focuses on financial materiality in its standards.<\/p>\n

In 2023, Faber called double materiality \u201cunrealistic\u201d and said there are \u201cdangerous\u201d blind spots related to this \u201cmateriality lens\u201d. He went on to warn that a push for double materiality alone is \u201cincompatible\u201d with the urgency of the transition.<\/p>\n

But this year, prior to the release of the Omnibus<\/a> proposal, the ISSB chair seemingly revised his stance, commenting that there was \u201cno reason\u201d for the EU to abandon<\/a> the double materiality aspect of CSRD.<\/p>\n

Responsible Investor understands that at least two drafts of the Omnibus were circulated<\/a> within the European Commission ahead of its release in February, one of which proposed abandoning the double materiality principle in CSRD.<\/p>\n

But when the package was announced, Commissioner Maria Lu\u00eds Albuquerque \u2013 whose department leads the work on the CSRD \u2013 said the Commission was preserving this, calling it the \u201ccore element of the Green Deal\u201d.<\/p>\n

Missing information<\/strong><\/p>\n

In his latest remarks, Faber also weighed in on the first wave of CSRD reports, which have been published this year.<\/p>\n

He said that, while much of the criticism aimed at the regulation stems from the burden it places on smaller companies, he has seen \u201ca tendency\u201d among some larger companies to not disclose \u201cessential\u201d information \u201con the grounds that it is too difficult to report\u201d.<\/p>\n

An example of this, he said, is the requirement to describe the current or anticipated financial effects of sustainability-related risks and opportunities.<\/p>\n

\u201cThis is a crucial issue: if the financial statements of a company do not reflect the impacts of sustainability, it will be impossible for financial markets to assess them,\u201d he wrote, adding that a consequence of this will be that the economy will not be able to activate the financial mechanisms needed for its climate resilience.<\/p>\n

Faber said it is \u201cessential\u201d to maintain this requirement.<\/p>\n

\u201cWithout transparency on the financial impacts of physical and transition climate risks, there can be no competitiveness \u2013 particularly in access to capital.\u201d<\/p>\n

The urgency is therefore not to remain vague, but for corporate accountants and finance professionals to \u201cfully engage with the issue\u201d, Faber said.<\/p>\n

According to initial analysis of some of the first CSRD reports, disclosures are substantially longer than previous sustainability reports and investors have raised concerns about this<\/a>.<\/p>\n

Speaking at Responsible Investor\u2019s flagship event RI Europe in London last week, Lloyd McAllister, head of sustainable investment at ESG boutique Carmignac, said the reports are \u201ctoo long\u201d and welcomed the EU\u2019s moves to cut down the disclosures.<\/p>\n

\u201cThere\u2019s a lot of data in text now, so it\u2019s difficult to see and use the tables. Now it\u2019s just pages and pages of text, sometimes with numbers embedded into the text,\u201d he said.<\/p>\n

McAllister also said he had observed a \u201cdecline in reporting\u201d in some areas, where crucial information which was previously included in corporate reports was missing in the first round of CSRD disclosures.<\/p>\n

\u201cTime series just seem to have gone in these first round of reports, and we\u2019ve also found that there are some missing metrics which used to be disclosed,\u201d he said.<\/p>\n

McAllister added that some corporates have taken a \u201cbackwards step\u201d on supply chain audit data, which previously included details on the number of audits conducted in a supply chain, the findings and the actions taken, which is \u201ccrucial information\u201d for investors.<\/p>\n","protected":false},"excerpt":{"rendered":"The chair of the International Sustainability Standards Board (ISSB), Emmanuel Faber, has said the sustainability Omnibus presents an…\n","protected":false},"author":2,"featured_media":189010,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5174],"tags":[14920,77553,2000,299,5187,77554,2443,39252],"class_list":{"0":"post-189009","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-eu","8":"tag-csrd","9":"tag-data-disclosure","10":"tag-eu","11":"tag-europe","12":"tag-european","13":"tag-issb","14":"tag-regulation","15":"tag-standards"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/114693129096032710","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/189009","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=189009"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/189009\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/189010"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=189009"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=189009"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=189009"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}