On 7 December 2022, EFRAG - the European Financial Reporting Advisory Group - organized a conference in Brussels on the theme “where is corporate reporting heading”. Attended by more than 320 people live and 1200 online, this event leaned on valuable insights on corporate reporting and challenges and opportunities lying ahead, especially with the fresh adoption of the Corporate Sustainability Reporting Directive (CSRD), in November 2022 which will make businesses more publicly accountable by obliging them to regularly disclose information on their societal and environmental impact.
The event featured an introductory session by Member of European Parliament (MEP) Pascal Durand, who has been the rapporteur on the CSRD and insisted on several point, outlining that the first set of EFRAG standards had been sent to the European Commission and will soon be adopted as delegated acts. He also insisted on the need for ESG standards to be audited with same rigor and transparency as financial norms, by independent certified service providers. And he encouraged the Commission to regulate activities of agencies doing ESG ratings asap.
The first panel discussion had several speakers, including Sven Gentner from Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) and Emmanuel Faber, chair of the International Sustainability Standards Board (ISSB) and former Danone CEO. All speakers insisted on the practicalities and business orientations that standards need to have, and on the need to align EFRAG, ISSB and Global Reporting Initiative (GRI) basis. The CSRD specificity with double materiality is groundbreaking and will be followed through in standardisation approach. There were also recommendations to create a strong framework to move from sustainability to value-creation (for investors) into a structured narrative on how sustainability informs on the creation of value for investors.
Commissioner McGuiness also made an intervention, in which she spoke about the importance of corporate reporting which is at the heart of the financial system. Simple information is key but today financial information is increasingly complemented by sustainability as we need sustainable and profitable companies. She also stated that delegated acts will come by first half of next year and that disclosures are very important, but once should not only claim to look good, but you also need to prove it. On SMEs, she confirmed that there will be SME-specific standards and that nevertheless all companies have a duty of care to their value chain too. She also said there will be some proposals on other aspects of the Capital Markets Union to be followed in 2023, among which the revision of insolvency proceedings.
If you would like to access the conference recording, you can click here.
Source: FEBIS - EFRAG Conference