26 January 2023
The European Banking Authority (EBA) published today an Opinion on the draft European Sustainability Reporting Standards (ESRS) developed by the European Financial Reporting Advisory Group (EFRAG). In this Opinion, addressed to the European Commission, the EBA acknowledges that, overall, the draft ESRS are consistent with international standards and any other relevant EU Regulation. In addition, the EBA very much welcomes the level of alignment with the Pillar 3 disclosure requirements reached at this stage. The EBA also highlights a few aspects that should deserve further consideration by the European Commission.
In particular, the EBA acknowledges the significant improvement of the draft ESRS prepared by EFRAG compared to the versions put out for consultation. Overall, the EBA welcomes the consistency of ESRS with international standards and relevant EU Regulation, and a better alignment with the disclosure requirements under the EBA Pillar 3 framework. As regards proportionality, the EBA believes that the draft standards offer a well-balanced approach with the relevant phasing-in provisions in place. A few aspects should deserve further consideration by the European Commission, including the timetable for the development of the sector-specific standards for credit institutions.
The European Commission also requested an Opinion from the European Securities and Markets Authority (ESMA) and the European Insurance and Occupational Pensions Authority (EIOPA). The ESMA communication is available here and the EIOPA communication is available here.
This Opinion is based on Article 16a(4) of Regulation (EU) No 1093/2010 (‘EBA Regulation’), which mandates the EBA to issue opinions in its area of competence as requested by the European Commission. In addition, Article 49(3b) of Directive 2013/34/EU (Accounting Directive), as amended by the Corporate Sustainability Reporting Directive (CSRD), lays down the conditions for the adoption by the European Commission of the delegated acts on the European Sustainability Reporting Standards (ESRS), including the need to request an opinion to the EBA.
The draft ESRS set out the rules and requirements for companies to report on sustainability-related aspects under the Corporate Sustainable Reporting Directive (CSRD). On 28 July 2022, the EBA submitted its comment letter to EFRAG on exposure drafts ESRS 1, ESRS 2 and ESRS E1. Following this public consultation, the first set of standards was submitted by EFRAG to the European Commission last November, in line with the Commission’s mandate. Following this submission, the European Commission requested the opinion of the EBA on the technical advice provided by EFRAG, as required by the CSRD.