The European Banking Authority (EBA) has called proposed sustainability reporting standards a “well-balanced approach” to corporate disclosures.
In a new opinion commenting on the draft European Sustainability Reporting Standards (ESRS), the EU’s supranational bank regulator said that the proposal is consistent with international standards and would align with EBA’s own Pillar 3 framework.
The proposed standards were released by the European Financial Reporting Advisory Group (EFRAG) in November 2022. They are designed to implement the EU’s corporate sustainability reporting directive, which requires all large EU companies and companies with securities listed on EU-regulated markets above certain thresholds to make sustainability-related disclosures.
The EBA was asked by the European Commission to comment on the proposed standards as most banks will be required to comply with them once finalised.
The draft standards contain two cross-cutting standards: ESRS 1 which covers general requirements, while disclosure requirements are governed by ESRS 2. In addition, there are eleven ESG sector-specific standards which include disclosures for pollution, biodiversity, the circular economy, and climate change.
The proposed standards would require disclosures of company greenhouse gas emissions, climate-related targets, energy consumption and mix, physical and transition risks, climate-related opportunities, and transition plans if they have one, among other obligations.
Commenting just on the cross-cutting and climate change standards, the EBA stated that they “are a good basis for the implementation of the [directive],” but also provided comments for improvement. For example, further alignment with international standards and better clarification on particular topics were encouraged.
The EBA previously commented on the standards as part of a consultation process, and noted in its opinion that many of its suggestions were incorporated by EFRAG in the proposals. These include alignment with standards announced by the Task Force on Climate-related Financial Disclosures and International Sustainability Standards Board and a greater focus on quantitative disclosures to foster comparability and usability of disclosures.
The European Commission is expected to adopt the ESRS in June after the consultation period concludes.
This page was last updated February 2, 2023
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