Insurance Europe

Insurance Europe and the European CFO Forum have published a set of joint key messages on the European Financial Reporting Advisory Group’s (EFRAG) technical advice on the first set of European Sustainability Reporting Standards (ESRS).

EFRAG’s first set of proposed standards is a considerable achievement given the ambitious timetable and the scope which covers all ESG areas. The final advice is also a considerable improvement on the initial exposure draft versions published for consultation before the summer.

The associations welcomed the fact that the disclosure requirements have been refined and have been focused on important disclosures and data points. It is also positive that the final proposed ESRS include phase-in provisions to allow time for data availability throughout value chains.

The associations also welcomed the fact that the concept of ‘rebuttable presumption’, which would have been very burdensome, was removed and replaced by a company specific materiality assessment with certain data points being mandatory, such as Sustainable Finance Disclosure Regulation (SFDR) related information. This is a better approach, so that an undertaking reports on disclosures/data points that are material (following double materiality).

However, European insurers would like to raise several points which still need consideration:

• The need for clarity on value chain definition for financial institutions during 2023 to allow companies to start implementation processes.
• The fact that interoperability with the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards (SDS) is crucial to ensure that, by complying with the ESRS, companies also comply with the IFRS SDS.
• The need for insurers that are defined as Low-Risk Profile Undertakings under Solvency II to be subject to simplified SME reporting requirements, in line with the existing Corporate Sustainability Reporting Directive provisions for small non-complex banks.
• The need for implementation guidance and support by EFRAG and the EC to companies applying the standards.