25. February 2022

Initial Reaction of the ASCG on the Working Papers of EFRAG’s Project Task Force on European Sustainability Reporting Standards (PTF-ESRS)

On 25 February 2022 the ASCG’s Sustainability Reporting Technical Committee submitted their initial reaction on EFRAG’s PTF-ESRS working papers (WP) published on 20 January 2020.

In their letter ASCG’s Sustainability Reporting Technical Committee acknowledges the achievement of developing these WP and considers these WP in the light of the critical suc-cess factors for EFRAG’s standard setting which ASCG had identified in an earlier letter of November 2021. The Technical Committee points out aspects that in their view the PTF-ESRS should consider in their further work to ensure the development of high-quality, widely ac-cepted European sustainability standards. It points out the importance of the ISSB’s intend-ed Global Baseline, which should be reflected in the European standards. In particular, the Technical Committee considers the current WP to be too extensive and complex. Instead of the rule-based approach the PTF should consider a principle-based approach. Last but not least the Technical Committee emphasizes the need for a connection between sustainability and financial reporting.

The ASCG‘s Sustainability Reporting Technical Committee believes this early analyses of these working papers to be helpful in the light of the tight timeline: Already in June 2022 EFRAG will have to hand over its sustainability reporting standards to the European Com-mission. The PTF activities in this regard are in response to Article 19b of the COM’s draft of 21 April 2021 for a Corporate Sustainability Reporting Directive (CSRD). In this draft, the COM proposes to specify the new reporting requirements on sustainability through reporting standards. The draft directive also provides for a mandate to EFRAG to develop technical advice on the basis of which the COM will adopt the relevant delegated acts.
In Germany, about 15.000 entities will be in the scope of the CSRD and, hence, required to apply the ESRS that are currently being developed. At present, about 550 entities report on sustainability matters in line with the CSR-Directive. The scope of entities required to report on sustainability matters will especially extend to include large non-listed entities.