Europe’s three main financial supervisors have submitted analysis and recommendations pertaining to the planned European Single Access Point (ESAP), and principal adverse impact (PAI) disclosures under the sustainable finance disclosure regulation (SFDR).
The ESAP is intended as a single online repository of data, similar to the EDGAR portal in the US but with the addition of standardised sustainability data, for example as delivered under the EU’s Corporate Sustainability Reporting Directive (CSRD).
On Tuesday evening the European financial supervisory authorities (ESAs) – the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority – announced that they had published a final report on the draft implementing technical standards (ITS) regarding certain tasks of the collection bodies and functionalities of the ESAP.
The legislation governing the ESAP specifies that information is first submitted to “collection bodies”, such as offices and agencies of the EU, and then made available to the ESAP.
The ESAs said the standards they had developed “are the first milestone for the successful establishment of a fully operational ESAP”.
“The requirements are designed to enable future users will be able to access and use financial and sustainability information effectively and effortlessly in a centralised ESAP platform,” they said.
The recommended rules on the functionalities of the ESAP specify the requirements for making information easily accessible to users. They define, among other things, how reporting entities should be categorised by industry and size, which identifier should be used, what types of information should be made available on the ESAP, and the characteristics of the public application Programming interface (API) available to data users.
The ESAs said the ESAP is expected to start collecting information in July 2026, with the publication of information to start no later than July 2027. Sustainability data under CSRD is to be submitted from January 2028.
Speaking to IPE for an upcoming special ESG report, Maurits Heldring, senior adviser for responsible investment at PGGM, said: “Conceptually the ESAP is a brilliant idea, but I think it’s going too slowly.”
PAI disclosure progress
The ESAs this week also published their third annual report on PAI disclosures under the SFDR, this time including coverage of disclosures made under an SFDR reporting template. The main provisions of the SFDR became applicable in 2021 but more detailed requirements became applicable in 2023, with the first PAI statements due by the end of June 2023.
According to the ESAs, financial institutions have improved the accessibility of PAI disclosures and there have also been improvements in the quality of information disclosed. Additional efforts to achieve full compliance are still needed, however, they said.
Pension funds are not required to report on PAI because they have fewer than 500 employees, but some do so voluntarily and EIOPA has encouraged more such reporting. According to the ESAs’ survey of national supervisors, the large financial market participants that are subject to mandatory disclosures are typically banks.
The report includes recommendations for national supervisors to drive harmonised supervision, and for the European Commission, which is weighing potential changes to the SFDR framework.
The ESAs have asked the Commission to reduce the frequency of their assessment of the PAI disclosures under the SFDR, from annual to every two or three years.
“The ESAs believe these reports are valuable, but a less frequent reporting timeline would allow the ESAs and [national supervisors] to focus more resources on delivering a more meaningful analysis of the PAI disclosures and to draw lessons from previous exercises,” they said.
The ESAs have already previously suggested to the Commission that it could consider other ways of introducing proportionality for financial market participants, as the threshold of more than 500 employees “may not be a meaningful way to measure the extent to which investments may have principal adverse impacts on sustainability factors”.
A more suitable approach could involve establishing a threshold based on the size of financial market participants’ investments, the ESAs have said.
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