ESAs respond to the Trustees' sustainability consultation

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  • ESMA (European Securities and Markets Authority) (dark gray) Image

17 Dec 2020

The Chairs of the three European Supervisory Authorities (ESAs), EBA, EIOPA and ESMA, have submitted a joint comment letter on the IFRS Foundation Trustees’ consultation paper on sustainability reporting published in September 2020. The European Securities and Markets Authority (ESMA) has also submitted an additional separate comment letter.

In their response to the consultation, the Chairs of the ESAs agree that improving data availability and public disclosure by corporates is a key element to foster sustainable growth, and strongly support the development of globally accepted non-financial reporting standards to facilitate the disclosure of meaningful and comparable metrics on environmental, social and governance aspects. They also support that international standards should build on existing jurisdictional and international initiatives, including those of the European Union. The comment letter notes:

Whilst the ESAs are fully committed to support the European Commission in the further development of the Taxonomy Regulation and the Non-Financial Reporting Directive for the European Union, the ESAs strongly support the development of globally accepted non-financial reporting standards.

The ESAs also note it is important that the standards to be developed cater for jurisdictions at different stages of development in the area of sustainable finance. ESMA's letter adds that this could be achieved by developing a common basis consisting of a globally accepted set of standards that, if necessary, could be complemented at the level of individual jurisdictions to fulfil any additional jurisdiction-specific obligations.

ESMA also points out that there are three principles to take into account when establishing a standard-setter in this area: independent governance, public-sector oversight and ability of the disclosure standards to promote investor protection. The comment letter notes:

ESMA believes that the IFRS Foundation is well placed to implement a standard-setting solution for non-financial reporting that is in line with the above-mentioned principles. ESMA notes that the IFRS Foundation could also leverage on its role in financial reporting to help build the much-needed connectivity between financial and non-financial reporting.

Please click to access the full comment letters below:

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