EFRAG publishes two reports on development of EU sustainability reporting standards

Source: EFRAG, 8 March 2021

EFRAG published today two reports submitted to the European Commission setting out recommendations on the development of EU sustainability reporting standards. The reports were prepared in line with European Commission mandates received by EFRAG and EFRAG Board President Jean-Paul Gauzès on 25 June 2020. The first mandate was a request for technical advice mandating EFRAG to undertake preparatory work for possible EU sustainability reporting standards in a revised EU Non-Financial Reporting Directive. The second mandate was an invitation to EFRAG Board President Jean-Paul Gauzès, to provide recommendations on the possible need for changes to the governance and funding of EFRAG if it were to become the EU sustainability reporting standard setter.

The report of the multistakeholder Project Task Force on preparatory work for the elaboration of possible EU non-financial reporting standards established by EFRAG (the ‘Task Force’), was submitted after five months of very intensive work, proposing a roadmap for the development of a comprehensive set of EU sustainability reporting standards. The Chair of the Task Force, Patrick de Cambourg, President of the French accounting standard setter (Autorité des normes comptables), commented: ‘This report is the outcome of the collective and intensive work of the Task Force which has required constant dedication and commitment from its members, representatives and seconded support staff. The Task Force also carefully considered input from global initiatives, as well as the feedback received from outreach events organised by EFRAG across the EU with a large number of panelists and unprecedented participation from all EU horizons. The detailed report taken as a whole reflects a large consensus. The proposals in the report do not constitute a first attempt at standard-setting, but rather describe the scope and structure of future sustainability reporting standards that contribute to the achievement of the EU’s policy objectives. Meeting the technical challenges of EU sustainability reporting standard-setting also has implications in terms of governance and resources which are not in the Task Force’s remit, but which are critical success-factors, addressed in the report of Jean-Paul Gauzès.’

Jean-Paul Gauzès’ report proposes reforms to EFRAG’s governance structure and funding, to ensure that future EU sustainability reporting standards are developed using an inclusive and rigorous process. For his recommendations, Jean-Paul Gauzès considered feedback from two public consultations and input from extensive outreach. Jean-Paul Gauzès commented: ‘The confidence of the European Commission in its requests to EFRAG and myself in my personal capacity, for the development of corporate sustainability reporting, were a great honour. The roadmap proposed by the Task Force for the development of EU sustainability reporting standards provides a clear vision for the future in this area. My proposals address how to develop sustainability reporting standards that fully reflect the public interest. My recommendations also address how national and European authorities will be involved, while ensuring that the process also draws upon the expertise of the private sector and civil society.’