ESG reporting - legal update
Written By
Counsel
Poland
I am a counsel and Head of ESG and Environmental Law department in the Energy & Utilities practice, specialising in environmental law and ESG.
Last week brought significant information and changes that will impact the whole ESG reporting scheme. EFRAG (i.e. the European Financial Reporting Advisory Group) published several documents and released information that introduces many changes related to non-financial reporting. Below is a brief summary of what is planned for 2024 and beyond:
Data points for CSRD-reporting
EFRAG published on 25 October 2023 the “Draft List of ESRS data points – Implementation Guidance”, which is a MS Excel workbook containing all 1,178 (!) data points for non-financial reporting corresponding with the issued and approved ESRS (i.e. European Sustainability Reporting Standards). In the MS Excel we can find information:
- which data points are voluntary and which are mandatory;
- the data type for each data point, for instance monetary / narrative / percentage / volumetric etc.;
- which data points refer to other EU regulations, like SFDR (i.e. the EU Sustainable Finance Disclosure Regulation) etc.
EFRAG has also published guidelines to assist in understanding and implementing the reporting requirements. The final version of the list is expected to be adopted by the end of 2023 (possibly on 15 November 2023).
The documents are available here:
- Data points
- List of ESRS datapoints– Implementation guidance - Cover Note
- Implementation guidance of the ESRS Data Points
- EFRAG Q&A Platform
Sustainability reporting Work programme for 2024
EFRAG also published a work document for the European Commission entitled "EFRAG Sustainability reporting Work programme for 2024 November 2023". The main topics are:
Implementation Guidance on Value Chain and Materiality Assessment
Note that the approved draft will be available by the end of 2023, followed by a 30-day public feedback period. Final versions are expected by January 2024. The guidance will be of great value, particularly because of the difficulty in assessing the importance of different types of stakeholders in value chains.
ESRS for Listed SMEs (LSME) and Voluntary ESRS for Non-listed SMEs (VSME)
Get ready for the Exposure Draft, which will be subject to a 4-month public consultation starting in January 2024. Technical advice will be provided to the EC in November 2024.
The aim of ESRS for VSME is delivering a simple, non-mandatory reporting framework designed for non-listed SMEs, allowing them to provide sustainability information when requested, especially when they are a part of the value chain of a reporting entity subject to sustainability reporting requirements.
Sector-specific ESRS
Note that the EC has extended the deadline for adopting sector-specific standards, now set at June 2026.
EFRAG will prioritise the development of sector-specific standards, including the General Approach to Sector ESRS, the Sector Classification ESRS and two high-impact sectors (likely oil and gas and mining), with two more sectors expected in H1 2024.
The ESRS for the financial sector is underway, with the Nomination Committee working to select members for the Advisory Panel. The development of value chain guidance is expected to start by the end of 2023, followed by drafting in H2 2024.
ESRS for Non-EU Groups
The EC has pushed back the deadline for adoption to June 2026. Keep an eye out for the Exposure Draft, scheduled for public consultation in Q4-2024/Q1-2025.
ESRS XBRL Taxonomy in progress
EFRAG is in the process of developing a preliminary XBRL taxonomy for the ESRS in conjunction with Article 8 of the Taxonomy Regulation. This initiative will enable seamless tagging of reported information in line with the ESRS and will be a valuable addition to the development of the European Single Access Point (ESAP).
The document is available here
