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Controversial last-minute changes by Commission undermine draft standards for corporate sustainability reporting

Last Friday, the European Commission released a draft Delegated Act on the European Sustainability Reporting Standards, which is the first part of the standards implementing the Corporate Sustainability Reporting Directive.

These standards aim to improve transparency in the reporting of sustainability impacts by companies and to promote the adoption of comparable and meaningful reporting practices for sustainability issues. As previously feared by NGOs, the Commission has made significant alterations to the draft ESRS proposed by the European Financial Reporting Advisory Group in November 2022.

"The Commission's proposal brushes aside the multi-stakeholder proposal from EFRAG, which was meticulously developed over a three-year process in close collaboration with the Commission itself. Importantly, these alterations would not alleviate the reporting burden for companies; instead, they would create inconsistencies with other EU reporting requirements, increase complexity for companies, lower EU ambition compared to global reporting standards, and open the door to greenwashing. The quality and comparability of information may no longer be ensured, which is a major concern for EU supervisors and investors," said Sebastien Godinot, Senior Economist at the WWF European Policy Office and member of the EFRAG General Assembly.

It is worth noting that the EU committed, through the Target 15 of the Global Biodiversity Framework at COP 15, to require biodiversity reporting for large businesses and financial institutions. The Commission backtracked on this issue in less than six months, despite receiving calls from 38 companies to maintain material biodiversity reporting in the ESRS. WWF offers the following recommendations to the Commission regarding the European Sustainability Reporting Standards: Eliminate the "Voluntary" loophole for reporting on biodiversity transition plans Ensure that key climate and social metrics are mandatorily reported.

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