European Commission adopts ESRS reporting standards

On 31 July, the European Commission adopted the European Sustainability Reporting Standards (ESRS). The ESRS specify the content and, where applicable, the structure to be used to meet the reporting obligations of the Corporate Sustainability Reporting Directive (CSRD). The European Commission made changes to the final text after an online consultation.

Houthoff took part in this consultation. The European Commission adopted some of our recommendations, which were supported by other feedback from the consultation. These recommendations can be found in the final text. Jacques Kröner and Yentl Coenradie briefly explain this in more detail below.

Open standards will be clarified

At the European Commission's request, EFRAG will adopt additional guidelines to clarify the open standards used in the ESRS. This is in line with our proposal. This change is expected to improve legal certainty and consistency in the terminology used, which will then increase the value of ESG reports in annual accounts for investors and other stakeholders.

We hope that these guidelines will also better define the concept of 'dependencies on principal risks' and how to report on it, especially if those dependencies concern subjects to be reported on under the ESRS.

Exceptions to reporting requirements will be expanded and improved

The exceptions to the reporting requirements will be expanded and improved. Despite our arguments, the exception for scope 3 emissions will not change. However, the exceptions will apply to more subjects, and on some subjects reporting may be omitted for the first two years, instead of just the first reporting year. Some of these exceptions apply to all companies and some of them apply to companies with fewer than 750 employees. This will likely reduce the administrative burden considerably, particularly for SMEs, once they will be required to report under the CSRD. This alternative largely reflects the second proposal in our consultation response.