Accountancy Europe comments on EFRAG outreach document

  • Accountancy Europe Image

26 Jan, 2021

As reported before, EFRAG conducted a series of online outreach events to gather stakeholders' view from various jurisdictions on the tentative proposals of the Project Task Force on non-financial reporting standards. An outreach document was provided to facilitate discussions at those meetings. Accountancy Europe has published a letter noting several shortcomings of the document.

Accountancy Europe agrees that some non-financial information topics such as climate change are urgent and need an urgent solution. This would include non-financial information reporting standards to enable consistent and comparable reporting on this topic. In its letter, Accountancy Europe notes that it is happy to help and collaborate with the task force, EFRAG and the European Commission to achieve progress in this area.

However, Accountancy Europe also stresses the following points:

  • A global approach with an additional building block approach is still the preferred solution. This would also be helpful in view of the urgency of the matter. "Re-inventing the wheel" is regarded as too time-consuming and unnecessary. Also, a European approach should consider the developments in the non-financial information playing field since EFRAG received the mandate.
  • Many market participants (including preparers) are already familiar with and report under international initiatives such as those of CDP, CDSB, GRI, IIRC and SASB. Introducing a new initiative would result in further fragmentation.
  • The outreach document uses new and different terminology compared to the widely used concepts in corporate reporting, non-financial information, sustainability or environmental, social and governance (ESG) terminology. This is considered confusing and unhelpful, especially as it was unclear whether this is intentional or not and what the underlying intention is and why (if there is one).
  • The proposals in the document relate to both the standard-setting process and reporting standards’ content, at times intermingling them. A clear split between standard-setting and reporting standards ́ content in the final document would simplify the tasks of a future European standard setter.
  • A conceptual framework would be key to a non-financial information principles-based reporting system. It could build on the well-known concepts of the IFRS Conceptual Framework and the concepts of the existing non-financial information frameworks and standards (e.g. CDSB, IIRC, SASB, GRI, etc.). Regional adaptations important for EU non-financial information reporting standards could be made to some items in these frameworks.
  • The outreach events to discuss the ideas in the outreach document are appreciated, however, the letter notes that clarification on the due process and the next steps for the project is needed. It is noted that it is common practice within EFRAG to open a consultation period on its preliminary proposals, receive stakeholders’ feedback and ultimately provide its final advice to the European Commission.

Please click to access the full letter on the Accountancy Europe website.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.