The Institute of Chartered Accountants in England and Wales (ICAEW) has called for the European Sustainability Reporting Standards (ESRS) to align with and build from the International Sustainability Standards Board’s (ISSB) standards.
With more than 6,500 ICAEW members situated in the European Economic Area and various UK companies potentially subject to these standards, the organisation emphasised the need for clarity and alignment in sustainability reporting.
ICAEW expressed its support for the ambitions of the European Green Deal and the provisions outlined in the Corporate Sustainability Reporting Directive.
However, the institute highlighted that the ESRS development in an accelerated manner led to flaws that could weaken the Green Deal objectives. The organisation expressed concerns regarding the principal purpose and objectives of ESRS, which are not easily understood.
According to ICAEW, the prescribed information often lacks value for decision-making, and there are contradictions and ambiguities within the standards.
Other concerns highlighted by the organisation include the overly detailed requirements which it says are not in line with public messaging on interoperability, and a lack of clarity over important aspects of the double materiality requirements.
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By GlobalDataThe European Financial Reporting Advisory Group’s (EFRAG) standard-setting process has been unduly rushed, leaving insufficient time to properly consider stakeholder feedback.
ICAEW’s head of corporate reporting, audit and assurance Nigel Sleigh-Johnson said full alignment with ISSB standards would remove duplication of effort in standard-setting and allow the EFRAG time to focus on addressing the most challenging provisions.
Incorporating the ISSB’s work could simplify the development of standards applicable beyond the EU, according to Sleigh-Johnson. He also emphasised the importance of aiming for equivalence rather than mere interoperability to foster stakeholder trust in global sustainability reporting.
Sleigh-Johnson said: “We therefore support calls for the European Commission to prioritise the work needed to enable equivalence to be possible.”
While acknowledging the pressure on the EFRAG to expedite the workplan, ICAEW insists on due process procedures that ensure quality and stakeholder engagement. These procedures should include a full public consultation and careful consideration of feedback, crucial for the success and credibility of the reporting standards.
