Proposed sustainability reporting rules raise investor concerns

Investor concerns are being raised over the proposed sustainability reporting rules for European companies by the European Commission. The draft standards, which may be finalized in July, have been criticized by Eurosif – The European Sustainable Investment Forum, stating that they represent a significant setback in ambition.  

Investor concerns are being raised over the proposed sustainability reporting rules for European companies by the European Commission. The draft standards, which may be finalized in July, have been criticized by Eurosif – The European Sustainable Investment Forum, stating that they represent a significant setback in ambition. 

The European Sustainability Reporting Standards (ESRS) were issued under the EU’s Corporate Sustainability Reporting Directive, requiring large and listed companies in Europe to report regularly on their social and environmental risks and impacts, and their financial implications.  

However, the proposed rules have eased the recommendations made by the European Financial Reporting Advisory Group, allowing companies to assess the materiality of reporting and providing flexibility in what and when to report.  

Eurosif argues that this would allow companies to exclude important parts of their sustainability disclosures. The group warns that these draft rules could undermine the EU’s sustainable finance framework and its commitments to the Green Deal and Climate Law ambitions. Investors and experts are particularly concerned about the proposal to make some climate disclosures voluntary, as it could lead to data inconsistencies and poor climate transparency.  

The comment period on the draft rules ends in July, with final adoption scheduled for midyear. The rules will be phased in for larger EU and EU-listed companies from January 2024, with compliance required by January 2028 for all companies. 

Read more: https://www.pionline.com/esg/esg-rules-proposed-european-commission-worry-investors