An investor group has warned that draft European Sustainability Reporting Standards (ESRS) will undermine the SFDR – the EU’s sustainable investing rules – owing to data disclosures that could leave out valuable information.
Eurosif, a sustainability-focused investor group, said the draft requires companies to assess what information is “material” when disclosing data points and information about their operations – but this could mean companies might leave out large parts of their sustainability disclosures.
The group argued this would hinder financial institutions in complying with SFDR requirements, as they would lack full information.
Aleksandra Palinska, Eurosif’s executive director, said: “In its current shape, this draft neglects, in particular, the concerns expressed for years by investors and financial institutions, calling for improved availability of comparable and reliable corporate sustainability disclosures.”
She added: “If not amended, this draft Delegated Act will hinder the capacity of investors to make informed sustainable investment decisions and risks jeopardising EU commitments to deliver on the EU’s Green Deal and Climate Law ambitions.”
Eurosif added that without an overhaul, the current draft would undermine the effectiveness of the Corporate Sustainability Reporting Directive.
This group has called on the EC to maintain mandatory key climate disclosure indicators and topics and to reconsider the voluntary nature of certain disclosures, including why certain topics were deemed immaterial.
The criticism follows the European Parliament’s vote to extend the due diligence requirements for asset managers regarding ecological responsibility and compliance with international human rights standards at the start of June.
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