EFRAG consults on due process for sustainability standards work
The European Financial Reporting Advisory Group (EFRAG) is seeking input on its public consultation paper on ‘Due Process Procedures for EU Sustainability Reporting Standard-Setting,’ with comments due by 15 September 2021.
The adoption of shared European sustainability reporting standards is part of the EU’s proposed Corporate Sustainability Reporting Directive (CSRD), and as such EFRAG has been invited to start interim work on drafting these standards, even prior to the relevant legislation being finalised. In the meantime, this consultation will establish the target process for these endeavours as EFRAG expands its remit beyond its traditional role associated with the review and adoption of IFRS standards for the EU.
As the paper states, “a robust yet agile and adaptable due process is necessary to meet urgent standard-setting needs within a rapidly moving landscape.” The proposals cover principles, oversight and agenda setting, as well as substantial detail on the process of standards setting itself. They affirm that it will be digital from the outset, noting that companies will need to tag reported data according to a “digital categorisation system” {Ed — in other words, an XBRL taxonomy} to be developed together with the sustainability reporting standards. Promisingly, it specifies that the digital implications are to be considered when developing and drafting new or amended standards.
The paper also lays out a work plan and timeline for EFRAG, with the first set of draft standards now due to be finalised by October 2022.
We would certainly encourage all interested stakeholders to send in their views to the consultation, and we are sure that our readers will have many constructive things to say on the digital-first approach.
