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Sustainability reporting: the EU Commission gets the ESRS ready for take-off

The EU Commission has published the Delegated Act on the European Sustainability Reporting Standards (ESRS). Now the EU Parliament and Council have two to four months to lodge a claim against the entry into force of the regulations.

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Investments in renewable energies are also covered by the ESRS.

With the ESRS, the Commission defines the content of sustainability reports for companies. The publication was preceded by a four-week consultation. The German Insurance Association (GDV) participated with a statement.

The Association welcomes the new ESRS rules and recognises the Commission's efforts to create a practicable and easily applicable set of rules. This applies in particular to the materiality approach, flexibility in some voluntary publications as well as the possibilities of "phase-in". With this step, the European Union comes much closer to a sustainable financial economy.

Until the very end, the EU Commission has worked to ensure a balance between the costs of the report producers and the benefits for investors. If relevant data, for example for the Taxonomy Regulation or the Disclosure Regulation, is omitted from the reports, the company must state that they consider this information to be "not material". This is intended to ease the reporting requirements for financial market participants. Disclosure under the sustainability reporting regulations is intended, among other things, to create the basis for insurers to have comparable and reliable data on their own sustainability-related information obligations.

From GDV's perspective, it is important that sustainability reporting remains affordable overall. If the requirements become too complex, there is a risk that even a well-intentioned approach can quickly have the opposite effect. When reporting along the entire value chain, it should be noted that the widespread concepts originate from the real economy and are only indirectly applicable to the financial industry. Insurers manage investments and have insurance contracts in their portfolio. Reporting on individual investment securities or insurance contracts would be extremely complex. The resulting information would be impossible to process and of limited use to the addressees of the report. The concept of the value chain must therefore be adapted to the value creation of the insurance sector in a practical way. 

Another problem from the insurance industry's point of view is the lack of proportionality requirements. For example, a medium-sized insurer with regional business must fulfil the same reporting obligations as a global group. The association advocates that insurance companies with a manageable volume of business and only a few employees be allowed to use simplified reporting standards.

Click here for the statement on the first set of ESR standards: