Sustainable finance committee calls for solid framework for corporate reporting standards

Germany’s sustainable finance committee, the body advising the government on its sustainable-finance strategy, is urging the government in an open letter to build a solid architecture and well-interconnected standards for corporate sustainability reporting at European and global level.

In the letter, the committee asked the European Commission, the European Financial Reporting Advisory Group’s (EFRAG) Sustainability Reporting Board, the Global Reporting Initiative (GRI), and the International Sustainability Standards Board (ISSB) to cooperate closely to set common reporting standards.

The committee also stressed the need to align standards and regulatory frameworks to national jurisdictions and to improve transparency.

To align standards, the German sustainable finance committee is proposing that the principles of the European Sustainability Reporting Standards (ESRS), and on disclosures relating to the impact of business activities on climate change – which were put out for consultation by EFRAG until August to support the Corporate Sustainability Reporting Directive (CSRD) – are in line with the ISSB’s general sustainability-related disclosures (S1) and climate-related disclosures (S2).

EFRAG is expected to deliver its final draft of the ESRS to the Commission in November, according to European Securities and Markets Authority (ESMA).

In August, ESMA underlined that the draft ESRS was a “key element” for the CSRD and its goals of guiding sustainability reporting that is relevant, reliable, comparable and understandable.

The Commission should start a process to make sure the SFDR, CSRD, taxonomy, and Corporate Sustainability Due Diligence Directive (CSDDD) are linked up and work well together, the committee added in the open letter.

Moreover, in the letter, the advisory body is asking the ISSB to consider the ESRS with regard to governance and environmental aspects beyond climate and social matters, for a sustainability-reporting global baseline that focuses on relevant information for investors.

The German sustainable finance committee “fully supports” the work of the ISSB to design a global baseline for sustainability reporting, and the cooperation between the ISSB and the GRI on the impact of corporate businesses on the environment and the society, it said.

The committee also addressed the letter to the German federal government, the European parliament, and the Council of the European Union.

The German government is “not doing enough to push to align reporting standards” at meetings between the Council, G7, and G20, it said.

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