The European Commission has issued the Delegated Act on the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) to enhance transparency in sustainability reporting by companies. However, it faces criticism for weakening key aspects of the initial proposal by the European Financial Reporting Advisory Group (EFRAG) and neglecting vital concerns.
Critics – including investor associations, environmental NGOs, and think tanks - argue that the Act fails to provide reliable and comparable sustainability data, raising fears of greenwashing as companies might downplay their environmental impacts. This has led to disappointment and diminished trust, undermining Europe's leadership in fostering a socially just and environmentally compatible economy.
During public consultations, civil society stakeholders, including BETTER FINANCE, voiced four key demands that the Commission largely disregarded. These demands encompassed requiring companies to report on biodiversity transition plans, mandating explanations for excluding certain topics as 'immaterial,' making specific disclosures mandatory for EU regulation compliance, and eliminating reporting delays for smaller companies.
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