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🗞️ Driving the news: The European Financial Reporting Advisory Group (EFRAG) has announced plans to align the language of the European Sustainability Reporting Standards (ESRS) with that of the International Sustainability Standards Board (ISSB) as closely as possible, particularly concerning overlapping disclosure requirements
• This initiative aims to simplify sustainability reporting and enhance interoperability between the two frameworks
🔭 The context: The ESRS, developed under the EU's Corporate Sustainability Reporting Directive (CSRD), and the ISSB's standards both seek to improve corporate sustainability disclosures
• However, differences in terminology and requirements have posed challenges for companies operating under both frameworks
• EFRAG's move follows collaborative efforts, including joint guidance issued with the ISSB, to minimize redundancies and streamline reporting obligations
🌍 Why it matters for the planet: Aligning ESRS and ISSB standards can reduce the reporting burden on companies, leading to more consistent and comparable sustainability data
• This consistency is crucial for investors, regulators, and other stakeholders to assess corporate environmental impacts accurately and make informed decisions to advance global sustainability goals
⏭️ What's next: EFRAG will continue its consultation process, gathering feedback from stakeholders to refine the alignment between ESRS and ISSB standards
• The focus will be on harmonizing terminology and disclosure requirements to facilitate easier compliance for companies and enhance the quality of sustainability reporting across jurisdictions
💬 One quote: "Regardless of whether it starts with ESRS or ISSB Standards, an entity can comply with the climate requirements of both sets of standards by following the content of this interoperability guidance," stated the joint guidance approved by EFRAG and the ISSB
📈 One stat: The current ESRS framework includes over 780 mandatory data points, with more than 600 subject to materiality assessments
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