EFRAG’s Pivotal meeting of the 23rd of August and its Implications

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On 23rd August, EFRAG’s SRB convened, playing a pivotal role in mapping the course for sustainability reporting in Europe. Central to the discussions were the draft guidelines on Value Chain and Materiality Assessment and the importance of interoperability with other standards. Let's unpack these updates and understand their broader implications.

Downloads

EFRAG’ SRB August 23rd Meeting- Comprehensive Document Directory.pdf

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A Closer Look at the Meeting's Objective and Content:

1. The Central Objective of the Meeting: The primary goal of the gathering was to solicit feedback from EFRAG SRB members on the draft guidelines, ensuring they were refined before undergoing further review by EFRAG’s Sustainability Reporting Technical Expert Group (SR TEG). Below you can find a downloadable document wherein we have cataloged a comprehensive list of documents arising from the EFRAG's meeting. This includes the recording link, guidelines and interoperability statements. Download

2. Interoperability between ESRS and GRI Standards: The EFRAG-GRI interoperability statement has been discussed and it will be soon approved by EFRAG. This document indicates a significant achievement in ensuring that ESRS-compliant entities can report being GRI-referenced (not in accordance) and those reporting under the GRI standards will be well-positioned to comply with ESRS. This convergence between ESRS and GRI promises streamlined reporting, with the interoperability statement published by both organizations on the 4th of September (see news here)

3. Interoperability between ESRS and ISSB standards: Beyond avoiding double reporting, the aligned financial materiality definitions between IFRS and ESRS are a significant stride. Moreover, a mapping table working document has been shared, highlighting the integration of data points and information from IFRS 1 and IFRS 2 into ESRS 1 and ESRS 2. This alignment assures companies of a consistent interpretation, enhancing their reporting clarity.

4. Value Chain and Materiality Assessment implementation guidelines: It's crucial to emphasize that these are draft guidelines, poised for change, but serving as foundational material for now. They don't amend the ESRS Standards but rather support their practical application. The strong linkage between Value Chain and Materiality signifies the holistic approach to sustainability reporting. Additionally, during the meeting, it was mentioned that the Value Chain draft will see a refinement concerning its relationship with SMEs and their upcoming Standards.

Understanding the Broader Picture:

The draft documents, although subject to further changes, provide a foundational roadmap for implementing the ESRS Standards. With October 21st as the end date for discussions at the European Parliament and Council regarding the Delegated Acts, and the possibility of an extension until December 2023, there's a palpable urgency in finalizing these guidelines. The ongoing feedback collection, discussions, and emphasis on the practical application of these Standards signify the commitment to accelerating sustainability across Europe.

What These Updates Mean for Organizations:

With draft guidelines that might evolve and the emphasis on their role as support material, organizations are encouraged to use them as touchpoints, not absolute mandates. Their close association underlines the need for organizations to consider them in tandem, ensuring a comprehensive understanding of the ESRS Standards.

Stay Adaptable: Given the draft nature of the Value Chain and Materiality guidelines, it's essential for companies to remain adaptable and watchful for subsequent iterations.

Leverage Interoperability: By capitalizing on the emerging convergence between standards, companies can simplify and enrich their reporting processes.

Engage with Draft Guidelines Holistically: Recognizing the intertwined nature of Value Chain and Materiality guidelines will enable a more rounded and informed reporting approach.

For tailored insights on navigating these guidelines and if your organization requires support on its double materiality journey, reach out to Johana Schlotter, at Johana@finchandbeak.com or call +31 6 28 02 18 80 to discuss how Finch & Beak can support you in meeting your ambitions, through our services:

CSRD-Readiness Assessment.

Materiality Assessments including double materiality and value chain analysis.

Impact Measurement and Valuation.

Activation of Materiality through business case development.