European and global sustainability reporting standards take shape
Standards for future sustainability reporting are being developed at the European and global level. The German Insurance Association (GDV) has submitted comments on the respective drafts.
Binding standards are the prerequisite for functioning capital and investment markets with which sustainability goals can be pursued. The European Financial Reporting Advisory Group (EFRAG) issued an initial set of draft European sustainability reporting standards (so-called core European Sustainability Reporting Standards (ESRS)) under the Corporate Sustainability Reporting Directive (CSRD) for consultation on 29 April 2022. To this end, the association has conveyed its key concerns:
- Cross-sector disclosure requirements should be limited to information that is truly relevant across sectors. The designs are too comprehensive, detailed and have a very complex structure.
- Clear definition of the value chain for undertakings in the financial sector and clarification of the practical implementation of related disclosure requirements. There should be no general requirement to look through investment objects or policyholders. This requirement is unaffected by the already existing reporting obligations on, among other things, greenhouse gas emissions under the Disclosure Regulation. Partly due to the lack of clarification on practical implementation, the concept of dual materiality is hardly feasible.
- The classification of materiality should be solely up to businesses. The rebuttable presumption of materiality is not appropriate in view of the far-reaching and comprehensive disclosure requirements envisaged. In the statement, the Association makes constructive suggestions for improvement.
- Close cooperation with the International Sustainability Standards Board (ISSB) is extremely important (see below).
Global rules need to be designed without contradictions.
On 31 March 2022, the ISSB issued two draft global sustainability reporting standards for consultation.
The Association commented on this in its statement:
- German insurers support the ISSB's "global baseline" in order to achieve a common understanding of sustainability reporting on a global level.
- In the further development of the ISSB and EFRAG standards, a joint approach, or at least an intensive exchange between the ISSB and EFRAG, is required to achieve clear and consistent guidance on basic reporting concepts.
- Common understanding of the fundamental concepts at the global and EU level must be achieved, particularly on the materiality principle and on value chain reporting and time horizons.