Eurosif (the European Sustainable Investment Forum) has formally submitted its response to the European Commission’s public consultations regarding the draft delegated acts for the revised European Sustainability Reporting Standards (ESRS) and the accompanying voluntary standard.
The sustainable investment association welcomed the European Commission’s draft framework, noting that the text remains broadly aligned with the core recommendations previously issued by the financial reporting standard-setter, EFRAG.
Eurosif emphasised that preserving mandatory reporting on both quantitative and qualitative anticipated financial effects remains critical. This data allows institutional investors to accurately evaluate sustainability-related risks and opportunities to inform cross-border capital allocation decisions.
The association further noted that maintaining the double materiality assessment as a foundational cornerstone, alongside the “fair presentation” principle and the established ESRS structure, is essential to ensure that corporate disclosures remain complete, comparable, and decision-useful for the financial sector. Eurosif also supported the Commission’s decision not to introduce further data cuts, highlighting that the 60 per cent reduction in data points originally proposed by EFRAG already provides significant administrative simplification for companies.
Structural concerns over data comparability and safeguards
Despite its broad support for the alignment, Eurosif detailed several critical concerns regarding the potential impact of the current drafts on responsible investment strategies:
- Data point modifications: Changes to critical data points—specifically those governing corporate climate transition plans, greenhouse gas (GHG) emissions, biodiversity metrics, secondary microplastics, internal workforce structures, and human rights—risk reducing the overall availability and comparability of market information.
- Extensive reporting reliefs: The absence of additional regulatory safeguards surrounding the extensive reporting reliefs could result in these phase-ins becoming common corporate practice rather than exceptional, temporary measures, which could undermine the long-term credibility of disclosures.
- Exclusion of managed assets: The current proposal to exclude assets managed on behalf of clients from specific reporting scopes would create a major blind spot when assessing the sustainability performance of financial institutions. Eurosif warned this exclusion would increase regulatory fragmentation between European rules and international standard frameworks.
- Value chain caps: The inclusion of a restrictive value chain cap, which limits information requests from small and medium-sized enterprise (SME) business partners, risks creating data gaps for investors. Eurosif pointed out that because the current draft cap does not encompass all data points found within the voluntary standard, it could trigger technical implementation challenges for larger corporations while inadvertently increasing the administrative burden on SMEs.
