Key messages to EFRAG’s consultation on European Sustainability Reporting Standards’ exposure drafts

Eurelectric – the European sector association representing the electricity industry - fully supports the overall aim of the CSRD, to enable companies to better report reliable and comparable sustainability information to financial market participants, with the establishment of a set of common sustainability reporting standards to help achieve this.

The European Sustainability Reporting Standards should aim at helping companies provide information that is proportionate, understandable, verifiable and comparable. Excessive reporting obligations discourage investment, including investment to reach sustainability objectives.

In this paper, we highlight European power sector’s main feedback points on the exposure drafts that we believe are important for the future reporting of sustainability information by our members. 

Our feedback below is based on the following understanding/assumptions:

• All disclosure requirements, deemed to be material by a company (using the concept of double materiality), shall be presented in the ‘Management Report’, which is to be understood as the Management Review section of the Annual Report.
• Reporting sustainability information in a separate report will no longer fulfil requirements due to the draft CSRD amending Article 19a of Directive 2013/34/EU.

General comment

The framework is comprehensive and rather complex in its structure.. The level of detail stipulated by the disclosure requirements will not allow stakeholders to get a high-level overview of the business and its performance. This would go against the efforts made by companies in recent years to improve the readability and usability of the annual reports with a strong focus on key users’ needs. We call on EFRAG to ensure that the European Sustainability Reporting Standards help companies provide information that is proportionate, understandable, verifiable and comparable and ensure a reasonable administrative burden not to discourage investment. Below, you will find concrete proposals from our side to simplify and streamline the framework,  while also giving the reporting companies some discretion over what information is prominently featured in presenting the situation of the company.

As another general reflection, many terms in the framework are used interchangeable leaving doubts about their precise meaning and definition.  A longer phase-in period is therefore foreseen either de facto or as an anchored way forward, cf. also specific comment below.

Furthermore, we suggest not to encourage organizations to approximate data. Asking organizations to approximate missing information in cases where data is unavailable for the upstream and downstream value chain goes against the objective of faithful representation and comparability.