Adoption of the Final Delegated Act on the First Set of European Sustainability Reporting Standards (“ESRSs”)
The MFSA issued a circular to inform the industry on the significant development that has taken place for the European Union, the adoption of the Final Delegated Act on the First Set of European Sustainability Reporting Standards (ESRSs).
The Final Delegated Act on the First Set of ESRSs sets out the specific requirements for companies falling within the scope of the Non-Financial Reporting Directive (NFRD). The NFRD applies to large public-interest entities with more than 500 employees, including listed companies, banks, insurance companies, and other entities deemed significant for their impact on society and the environment. The ESRSs aim to enhance the quality, consistency, and comparability of sustainability reporting by specifying the disclosure requirements and reporting principles.
Scope and Objectives
The scope of the ESRSs covers a wide range of sustainability topics, including climate change, biodiversity, pollution, human rights, and employee welfare. The objectives of the ESRSs are to enable companies to disclose relevant and decision-useful sustainability information, facilitate the integration of sustainability factors into investment decisions, and promote corporate accountability and transparency.
Key Reporting Requirements
The Final Delegated Act defines specific reporting requirements for companies, including the disclosure of non-financial and diversity information. Companies are required to provide a comprehensive and balanced overview of their sustainability performance, risks, and impacts. The Act also emphasizes the need for forward-looking information, focusing on the company’s strategy, targets, and actions to address sustainability challenges.
The adoption of the Final Delegated Act on the First Set of ESRSs represents a significant milestone towards achieving greater transparency and consistency in sustainability reporting within the EU. By providing a standardized framework for reporting on environmental, social, and governance performance, the ESRSs enable companies to communicate their sustainability efforts effectively. The Act also promotes the integration of sustainability into business operations, facilitates informed investor decision-making, and ensures regulatory compliance. As businesses adapt to the new reporting requirements, the ESRSs have the potential to drive positive change, contributing to a more sustainable and resilient future.
Read the MFSA circular here.