Corporate Sustainability Reporting directive (CSRD): EFRAG and the European Commission publish implementation guidance and FAQs
EFRAG, the European group mandated for preparing draft European Sustainability Reporting Standards (ESRS), and the European Commission have published three guidance documents and a number of FAQs on the implementation of the ESRS. The AMF encourages companies to use these documents to facilitate the implementation of the new reporting requirements.
Background on the new reporting requirements for companies under the CSRD
Flagship measure of the EU Green Deal related to EU's sustainable finance, the Corporate Sustainability Reporting directive (CSRD) strengthens corporate sustainability reporting requirements. In order to harmonize sustainability reporting, companies are required to apply new European Sustainability Reporting Standards (ESRS).
The CSRD applies since 1st January 2024, with gradual implementation depending on the category to which a company belongs. By January 2028, all companies listed on a European regulated market (except microenterprises), all large European companies and certain large non-European companies with a significant European footprint will be covered by the CSRD.
At the end of July 2024 a new version of the French translation of the ESRS containing numerous changes has been published in the Official Journal of the European Union (see section Read more).
Objective of EFRAG’s implementation guidance and FAQs
EFRAG has been tasked with the preparation of the drafts ESRS ahead of their adoption by the European Commission. In addition to its standard-setting work, EFRAG has also been mandated to prepare educational documentation on the ESRS to facilitate their implementation. To this end, EFRAG hosts an online platform, available to all, to receive and answer questions on the ESRS from all stakeholders.
Since January 2024, EFRAG has published a series of implementation guidance documents and numerous FAQs meant to clarify provisions set out in the ESRS. These publications are designed to support companies and do not introduce any additional requirements - as specified by EFRAG.
Content of EFRAG’s three implementation guidance documents
On 3rd June 2024, EFRAG has published three first detailed implementation guidance on the ESRS to help companies grasp the most complex aspects of the new standards (see section Read more):
- The first implementation guidance (IG1) explains how companies should conduct their materiality assessment and communicate on the process. It also outlines the various steps that an undertaking can follow to conduct its materiality assessment ;
- A second implementation guidance (IG2) sheds light on the treatment of companies’ value chains (materiality analysis, impact, risk and opportunity management, and the indicators and targets to be implemented);
- The last guidance (IG3) lists all of the ESRS datapoints in the form of an Excel spreadsheet.
In May 2024, EFRAG and ISSB (IFRS Foundation International Standards) also published an interoperability map that allow companies to compare the ESRS with the ISSB standards on sustainability reporting. This guidance demonstrate the interoperability between the two sets of standards, particularly with respect to climate reporting.
Content of the FAQS published by EFRAG
Between January and June 2024, EFRAG has published four sets of questions and answers covering nearly a hundred implementation questions about ESRS. These FAQS deal with:
- Questions about the general requirements of ESRS: concepts and cross-cutting issues such as the structure of the report, minimum reporting requirements on sustainability policies and actions, transitional measures ;
- Technical issues specific to several themes: climate, pollution, biodiversity, clean workforce, value chain workers, and business conduct.
These first four FAQ publications (January, February, May and June 2024) have been compiled by EFRAG in a single document (see section Read more).
Content of the FAQs published by the European Commission
On 7 August 2024, the European Commission published a FAQ clarifying the interpretation of certain provisions relating to sustainability reporting, introduced by the CSRD, with the aim of facilitating their implementation by companies.
This FAQ also clarifies certain provisions of the Sustainable Finance Disclosure Regulation (SFDR). Lastly, a number of questions and answers for which the Commission's legal interpretation was deemed necessary concern ESRS and provide a useful complement to EFRAG's publications.
Read more on EFRAG’s guides and FAQs
Read more on the European Commission FAQs on the CSRD, ESRS and SFDR
On the same topic
Head of publications: The Executive Director of AMF Communication Directorate. Contact: Communication Directorate – Autorité des marches financiers 17 place de la Bourse – 75082 Paris cedex 02