On July 5 the European Securities and Markets Authority, ESMA, issued a document on the first application of the ESRS.<\/p>\n
Here are some key extracts:<\/p>\n
\u2705 In ESMA\u2019s view, the sustainability statements that will be published in 2025 will constitute an important milestone in the learning curve of all stakeholders in the sustainability reporting ecosystem.<\/p>\n
\u2705 Acknowledging this learning curve does not relieve issuers from the responsibility to ensure compliance with ESRS.<\/p>\n
\u2b55 ESMA notes that for undertakings with experience in sustainability reporting under previous requirements, it is necessary to carefully assess whether the existing processes, systems and controls are still fit-for-purpose.<\/p>\n
\u2b55 ESMA stresses that it will be particularly important to carefully assess whether their historical approach to the presentation of sustainability information is consistent with the CSRD and ESRS and, if not, to make adjustments accordingly.<\/p>\n
\u2b55 ESMA stresses the importance that, from the first application of the ESRS, the reporting process is conceived in a way that caters for digitisation of the sustainability statement in a way that is aligned with the granularity of the ESRS requirements.<\/p>\n
\u2b55 ESMA notes that following the structure of the ESRS would make digital tagging easier in the future.<\/p>\n
\u2705 ESMA notes that, as a general rule, the ESRS do not envisage cases in which the lack of data justifies the omission of disclosure of material information.<\/p>\n
\u2705 In acknowledgement of the considerable changes for the sustainability reporting practices entailed by these new requirements and with a view to supporting their implementation, ESMA wishes to:<\/p>\n
\u27a1 point to elements of guidance by the European Commission and EFRAG<\/p>\n
\u27a1 highlight the following key areas of attention which, in ESMA’s view, are of particular relevance in the preparation of ESRS sustainability statements:<\/p>\n
\u2714 establishing governance arrangements and internal controls that can promote high-quality sustainability reporting<\/p>\n
\u2714 properly designing and conducting the double materiality assessment and being transparent about it<\/p>\n
\u2714 being transparent about the use of transitional reliefs<\/p>\n
\u2714 preparing a clearly structured and digitisation-ready sustainability statement<\/p>\n
\u2714 creating connectivity between financial and sustainability information.<\/p>\n
\u2705 ESMA underlines, in particular, the responsibility of top management and supervisory bodies of issuers, as well as the importance of the oversight role of the audit committee and other relevant committees, to:<\/p>\n
\u27a1 ensure the overall internal consistency of the sustainability statement and its consistency with the other parts of the annual financial report;<\/p>\n
\u27a1 implement and supervise internal controls; and ultimately<\/p>\n
\u27a1 contribute to a high-quality sustainability statement.<\/p>\n