• Discover the 5 key elements of the latest report of EFRAG’s European Reporting Lab.

• A full summary of the 200+ pages of the report is available for members upon request.

• Members are also invited to register for the webinar on 28th April to hear directly from the Commission and the EFRAG Lab about the next steps.

Europe is getting closer to the development of a standard for corporate sustainability reporting. In the latest report of EFRAG’s European Reporting Lab, the task force proposes a roadmap of suggestions for the development of a set of EU sustainability reporting standards that the European Commission is willing to develop in light of the revision of the Non-Financial Reporting Directive (NFRD).

CSR Europe has prepared for its members a full summary of the 200+ pages of the report, accessible upon request. Furthermore, members are invited to register to the upcoming webinar on 28th April to receive an update directly from the Commission and the EFRAG Lab about the building blocks of this potential reporting standard and the next steps ahead.

Here are the five key elements of the proposed architecture outlined in the report:

1. A Principle-based approach that considers the regulatory environment

   The new standard should balance principle-based information to be consistent with EU’s legal environment and the need for more detailed disclosure requirements aimed at securing  relevant and comparable information.

2. Reporting should look at the past and the future

   The adopted framework should balance retrospective and forward-looking information. This will be ensured by covering the following areas:

   • Strategy: business model, the materiality assessment process, specific governance, management responsibilities, processes to address and monitor sustainability issues

   • Implementation: policies, targets, actions plans, and resources, which aim to translate your strategy into actions

   • Performance measurement: targets and policies, your transition trajectory, considering past performance and future objectives

3. Double Materiality to reflect overall value creation

   The framework should consider double materiality requiring companies to apply both:

   • Impact materiality –sustainability issues that have an impact on the operations of your organization and its value chain

   • Financial materiality - sustainability issues that are financially material for the company

4. Towards an integrated approach

   All the required reporting elements should be interconnected under an integrated approach that aligns financial and sustainability reporting.

5. Coherence and comprehensiveness  

The framework should include sector-agnostic disclosure requirements to ensure comparison between different organisations. Nevertheless, additional sector-specific and company-specific disclosures would be included to ensure that the framework reflects specific challenges that an organization might face.

The report was prepared at the request of the Commission following an invitation from the Economic and Financial Affairs Council. Despite the lack of an official mandate, it is likely that the EFRAG Lab will be tasked by the Commission to develop this standard.

The European Commission’s attempt to standardize ESG Reporting reflects investors’ increasing requests for more comparable data to meets the needs of stakeholders. CSR Europe is currently screening other global initiatives, such as those undertaken by the International Financial Reporting Standards, the World Economic Forum and the Big Four, and the Value Reporting Foundation.

For more information:

Ilaria La Torre,

Project Manager

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