As the negotiations between the European Parliament and the Council of the EU (trilogue) on the ‘Corporate Sustainability Reporting Directive’ (CSRD) started on Monday 28 March, several experts on Wednesday 30 March expressed their disagreement with the European Parliament’s position at a webinar organised by Accountancy Europe and the Association of Chartered Certified Accountants (ACCA).
In fact, MEPs feel that because of their size, small and medium-sized enterprises (SMEs) should adhere to reporting standards on a voluntary basis and are urging Member States to support them through certified labels or financial support (see EUROPE 12911/17). Their aim is to avoid them being overburdened with administration.
“The scope should be defined with the objective of meeting the goal; I don’t think that administrative burden should be the driver here personally”, said seminar leader Olivier Boutellis-Taft, Chief Executive Officer of Accountancy Europe. This is a position shared by the other participants.
According to Stanislas Pottier, Senior Advisor toAmundi’s general management, if SMEs are excluded from the directive, they will be excluded from green finance. He therefore called for “simple and manageable” regulation.
For Anne-Hélène Monsellato, Independent Director of EcoDa and Chair of the Audit and Risk Committee Euronav and Genfit, the criteria should be defined on the basis of the environmental impact of companies rather than on a financial basis. For example, energy-intensive start-ups should not be excluded from the regulation simply because of their size.
The panellists have agreed on a gradual implementation.
Another point of disagreement between the participants and the European Parliament is the splitting between financial and non-financial reporting. Although Erik Van Der Plaats, senior expert at the European Commission’s Financial Stability service, acknowledged that “the splitting proposed by the European Parliament is to achieve less of a market concentration”, he questioned the effectiveness of this tool.
Rami Feghali, Vice Chair of the Sustainability Policy Group at Accountancy Europe, called the provision “counterproductive” and warned of the costs it would generate for companies.
Developments on the US side
The trilogue negotiations over the CSRD directive will continue on Thursday 7 April.
At the same time, two initiatives have been taken in the US and at global level that will have an impact on sustainability reporting. On the one hand, the IFRS Foundation, which established the accounting framework for listed companies, has partnered with the Global Reporting Initiative (GRI), which is an independent international standard-setting body for sustainability performance and disclosure of organisations. Both organisations want to develop a comprehensive and compatible set of information regarding sustainability.
On the other hand, the US Securities and Exchange Commission (SEC) has proposed moving from a voluntary to mandatory disclosure of climate-related risks for all listed companies.
This is good news for professionals in the sector. Mike Suffield, director at the Association of Chartered Certified Accountants (ACCA), the global professional accountancy body, said in a statement: “We hope that this will contribute to promote clarity and compatibility in the sustainability disclosure landscape [...]. This should also be a further enabler of the co-construction exercise with EFRAG on the drafting of the EU sustainability Reporting Standards (ESRS)”.
The European Financial Reporting Advisory Group (EFRAG) is responsible for contributing to the development of European non-financial reporting standards (see EUROPE 12759/11). (Original version in French by Anne Damiani)