Knock-on Effects?
The IFRS Foundation’s ITCG, or IFRS Taxonomy Consultative Group met this week and at the top of the agenda was a run down on ESMA’s consultation on the digitisation of sustainability and further financial disclosures.
The ESMA presentation provided a summary of the paper that is currently out for consultation. With last week’s Omnibus amendment proposals now in hand, the EU’s securities regulator now has some decisions to make.
The Omnibus package made it very clear that digital reporting requirements will be required of companies making sustainability disclosures, but that this will not be required until the necessary RTS, or Regulatory Technical Standards have been finalised by ESMA. At the same time, the Omnibus changes look set to significantly reduce the number of private companies that have to provide sustainability reports, and to push out timelines with additional staging and timing concessions. In addition, the underlying standards, the ESRSs, might be substantially pared back.
Given that companies will have a lot more time to prepare, and will have to disclose significantly less, does it still make sense for ESMA to provide further staging, in terms of content and timing in its RTS? ESMA’s representative at the ITCG was very clear that they don’t yet know the answer to that question. Fair enough! Given that the Omnibus only landed last week and that there is a significant amount of uncertainty about the final shape of reforms, as well as the timing of their completion, ESMA should take its time to consider all of the options.
At XBRL International we will be urging ESMA to take a substantially simpler approach to its final RTS in our response to the current consultation, mirroring the legacy paper disclosure requirements in terms of digital disclosure requirements. Why? It’s 2025.
The whole of this week’s ITCG meeting was useful and relevant. Watch the replay here (free signup required).
