Sue Lloyd, vice-president of the International Sustainability Standards Board (ISSB), said on Wednesday 26 November during a conversation organised by the Bruegel think-tank, that the ‘Omnibus’ simplification of the Corporate Sustainability Reporting Directive (CSRD) would enable better alignment with the ‘IFRS S1&2’ international standards.
“It won’t be full alignment, unfortunately. For those who are using ESRS standards and using the ISSB standards, it will still be the case that you need to be careful on the choices that you make where there’s different alternatives that you can use and careful on how you present the information in order to be able to comply both with the European requirements and with the ISSB standards”, she stressed.
However, even if this alignment and interoperability of data does not happen automatically, it will be possible. “The good news is that through the omnibus process we have brought things closer”, she welcomed (see EUROPE 13757/32).
She explained that the ISSB had included a number of areas in its standards in which it had provided relief, in order to ensure that European companies did not have to search exhaustively for information. The ISSB also made provisions for them to be able to use simple processes to start with, and then to improve thanks to the concept of reasonable and justifiable information, without having to incur excessive costs and effort. Much of this has been incorporated into the European Sustainability Reporting Standards (ESRS).
The ISSB has worked as well on the anticipated financial effects and on the precision of the language used in sustainability reports. The aim was to harmonise the terms used as far as possible. “The idea is that our companies might be permitted to have the choice to use ISSB standards as a base for reporting in Europe with additional disclosures that are identified by Europe to bring the sort of additional information beyond the investor needs”, said Ms Lloyd.
The ISSB is continuing to discuss this “ passport” idea with the European Commission. “That’s much simpler than having two books open at the same time and trying to navigate between the different disclosure requirements”, stressed the vice-president. In her view, this option would make it possible to distinguish between European companies, which perhaps need to focus solely on the publication required by the European CSRD, and investors, banks and others, who have a more global vision. (Original version in French by Anne Damiani)