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CSRD Hub Newsletter #4

May 2024


Welcome to the latest edition of the CSRD HUB Newsletter.


In this issue, we will look at some of the most noteworthy news, developments and EFRAG updates of the past month in sustainability reporting. 

The market is picking apart the first ESRS-ish sustainability statements, which have been published ahead of schedule. In total, we know of  about 20 such reports, and there are probably  more to come. Although most of these statements are not yet fully ESRS compliant - nor are they required to be - and vary in quality,  all early adopters deserve praise for publishing their sustainability statement a year early.


All of us benefit from learning from these companies, who were not afraid to make mistakes. These attempts at ESRS reporting should help others learn both best practices and how to avoid making similar mistakes in the future.


Early adopters include Allianz, of course, as well as ABN AMRO Bank, AkzoNobel, Arla Foods, Bakkafrost, BW Offshore, Enel Group, Givaudan, H+H International, Lamor, Lundbeck, Metsä Group, Netcompany, Norsk Hydro,  Ørsted, Philips, Scan Global Logistics, Škoda Auto, Stora Enso UCB,  Trelleborg Group.



Many of us continue to fine tune our data and reporting to be ready for the first full ESRS reports due just 6-8 months from now. Of course there are the dry runs, audits, updated controls, and good dose of collaboration and encouragement to support the dozens of data owners who are forging new ground. But how to report this information is also critical, and we continue to look and be inspired by a lot of different approaches that companies are taking.


We’ve been talking to a lot of leaders about double materiality as of late, so one area that is top of mind for us is how companies can best present their materiality outcomes, in particular the IROs, which is new territory for many.


We love a good matrix and any number of other visuals (tornado diagrams, you bet!). But what we find particularly useful as users of sustainability statements are clear and detailed tables that link IROs to the value chain, time horizons, and other critical information. Other visuals often lack the details required.


A few table-based presentations we like: ASML (page 72-73), Wolters-Kluwer (page 95), BW Offshore (page 41).


There is no prescribed format, but keep in mind that SBM-3 is looking for individual IROs, so a table may be right for you, too!




IFRS Foundation and EFRAG published interoperability guidance


The IFRS Foundation and EFRAG published guidance to illustrate the high level of alignment achieved between the International Sustainability Standards Board's IFRS Sustainability Disclosure Standards and the European Sustainability Reporting Standards (ESRS) and how a company can apply both sets of standards, including detailed analysis of the alignment in climate-related disclosures. 


  • the definition of financial materiality in ESRS is aligned with the definition of materiality in IFRS S1 General Requirements for Disclosure of Sustainability‑related Financial Information; 

  • the two sets of standards include common defined terms

  • there is a high degree of alignment of the climate‑related disclosures in the two sets of standards and, in particular, almost all the disclosures in ISSB Standards related to climate are included in ESRS.





EFRAG updates its Implementation Guidances


EFRAG published its first three draft ESRS Implementation Guidance documents on December 22, 2023, with a deadline for public feedback of February 2, 2024. The documents are non-authoritative and support the implementation of ESRS.


The EFRAG Secretariat has analysed and summarised the responses received in the course of the public consultation and amended the three guidances for the approval of the TEG and the SRB. 


- the draft Materiality Assessment Implementation Guidance

- the draft Value Chain Implementation Guidance

- the draft List of ESRS Data PointsImplementation  Guidance


A note on CSDDD in the updated draft Value Chain Guidance


A CSDDD-related note appears in the revised draft of Value Chain guidance. 


As stated in ESRS 1 paragraph 58: “ESRS do not impose any conduct requirements in relation to due diligence; nor do they extend or modify the role of the administrative management or supervisory bodies of the undertaking with regard to the conduct of due diligence.” 


ESRS requires transparency around the reporting undertaking’s due diligence processes but does not assume any compliance with CSDDD or other behavioural frameworks. 


Consistent with the text of ESRS in the Delegated Act, guidance does not reflect the agreed position of the colegislators with respect to CSDDD, for the following reasons: 


a) The legislative process has not yet been completed

b) the disclosure obligations of CSRD are independent of the future CSDDD obligations. 


In practice, CSDDD compliance may be conducive to better CSRD/ESRS reporting. However, even if value chain due diligence obligations do not exist for certain companies under the CSDDD, this does not modify the definition of the value chain for reporting purposes, i.e. the transparency obligations under ESRS. 





The main changes in the Draft EFRAG IG 3: ESRS datapoints 


The EFRAG Secretariat analysed responses received during the public consultation on the Draft EFRAG IG 3: List of ESRS datapoints. Following the strategic direction provided by EFRAG SRB, the Secretariat amended the draft guidance according to the feedback received. EFRAG SR TEG approved the amended IG on April 11.


These are the main improvements:


(a) Implementation of hyperlinks between each datapoint (DP) in the list and the corresponding paragraph in the legal text;


To avoid too long DP names, the EFRAG Secretariat implemented hyperlinks between each DP and the corresponding paragraph in the ESRS. Thus, the short label could be maintained, while users requiring more information about specific DPs can use the hyperlink to directly jump to the legal text.


(b) Creation of a new column identifying conditional and alternative DPs;


The EFRAG Secretariat added a new column to the excel workbook to identify conditional and alternative DPs. In this new column, DPs only applicable in certain circumstances are marked with “conditional”, and alternative DPs are marked as “alternative”.


When, for example, disclosing the number of employees in ESRS S1 50 a, undertakings may choose to report it at the end of the reporting period or as an average over the reporting period.


(c) Inclusion of more specific references to the phase-in provisions, including the year in which a DP becomes mandatory;


The EFRAG Secretariat reviewed the phase-in column and included the length of the phase-in period for each DP and provided more specific references to the scope of the phasing-in provision.


(d) Inclusion of a unique identifier for each DP, in order to facilitate the references to specific DPs;


As the references to the row numbers may not be the same after adding or removing DPs, the EFRAG Secretariat added a new column with a unique identifier for each DP.


(e) Other miscellaneous changes to better align the list of datapoints to the ESRS.


This list does not represent the digital ESRS XBRL taxonomy and cannot be used as basis for the preparation of the machine-readable sustainability reporting The structure of the data in the Draft EFRAG IG 3 and of the future ESRS XBRLTaxonomy may differ for technical reasons.


EFRAG Watch 


In April, the EFRAG held the following sustainability reporting  meetings 


  1.  EFRAG Sustainability Reporting Technical Expert Group webcast meeting

    1. April 11

  • EFRAG SR TEG to recommend the updated MAIG, VCIG, IG3 DP  to the SRB for publication.  

  • to review and approve the latest batch of categorised questions approved by the SRB and  a batch of draft explanations provided by EFRAG Secretariat for questions categorized as ‘explanations’ by SRB (paper 07-03). 

    1. April 22

  • the aim of the public session is to provide EFRAG SR TEG with a summary of the comments received in the course of the public consultation on the ESRS Set 1 Draft XBRL Taxonomy. 

  • there was a closed session, too

  1. April 25

  • proposed changes to SEC 1 sector classification based on Sector Community feedback

  • to agree with the creation of a new ESRS sector Bioenergy

  • EFRAG Secretariat seeks comments and feedback from the EFRAG SR TEG members on the revised approach to draft an answer to ID177 which requests a mapping between AR16 matters and disclosure requirements. Following due consideration, Secretariat proposes to reclassify this ID as an explanation rather than a narrow scope Implementation Guidance.

  • to review and approve a batch of draft explanations provided by EFRAG Secretariat for questions categorized as ‘explanations’ by SRB, and which were deferred during the last SR TEG meeting (paper 06-02). 

  1. EFRAG Sustainability Reporting Board Meeting (April 24) objectives: 

  •  ESRS-ISSB joint interoperabilty map

  • to approve the amended and improved [Draft] EFRAG IG 3: List of ESRS datapoints

  • to approve the new batch of categorizations sent to SRB (paper 06-02) and  the batch of explanations (paper 06-03)

  • educational session on Oil and Gas

  1. Webcasts and outreach events

  1. April 3: EFRAG invited stakeholders (preparers, analysts, data providers, software vendors, investors, financial institutions, experts, etc) to a hybrid outreach event on the ESRS Set 1 Draft XBRL Taxonomy, 

  2. April 12: Q&A session XBRL Taxonomy





European Parliament approved CSDDD on April 24


The European Parliament approved with 374 votes against 235 and 19 abstentions the new “due diligence” directive, agreed on with the Council, requiring firms and their upstream and downstream partners, to prevent, end or mitigate their adverse impact on human rights and the environment. Such impact will include slavery, child labour, labour exploitation, biodiversity loss, pollution or destruction of natural heritage.


The rules will apply to 

  • EU companies and parent companies with over 1000 employees and a worldwide turnover higher than 450 million euro. 

  • companies with franchising or licensing agreements in the EU ensuring a common corporate identity with worldwide turnover higher than 80 million euro if at least 22.5 million euro was generated by royalties. 

  • non-EU companies, parent companies and companies with franchising or licensing agreements in the EU reaching the same turnover thresholds in the EU. 


These firms will have to integrate due diligence into their policies, make related investments, seek contractual assurances from their partners, improve their business plan or provide support to small and medium-sized business partners to ensure they comply with new obligations. Companies will also have to adopt a transition plan to make their business model compatible with the Paris Agreement global warming limit of 1.5°C.


Member states will be required to provide companies with detailed online information on their due diligence obligations via practical portals containing the Commission’s guidance. They will also create or designate a supervisory authority to investigate and impose penalties on non-complying firms. These will include “naming and shaming” and fines of up to 5% of companies’ net worldwide turnover. The Commission will establish the European Network of Supervisory Authorities to support cooperation and enable exchange of best practices. Companies will be liable for damages caused by breaching their due diligence obligations and will have to fully compensate their victims.


Next steps


The directive now also needs to be formally endorsed by the Council, signed and published in the EU Official Journal. It will enter into force twenty days later. Member states will have two years to transpose the new rules into their national laws.




ISSB to commence research projects about risks and opportunities related to nature and human capital


Tthe International Sustainability Standards Board (ISSB) will commence projects to research disclosure about risks and opportunities associated with:


  • biodiversity, ecosystems and ecosystem services; and

  • human capital.


The research projects will focus on the common information needs of investors in assessing whether and how these risks and opportunities could reasonably be expected to affect a company’s prospects.


As with the approach to the ISSB’s inaugural Standards, the ISSB will look at how it might build from relevant pre-existing initiatives. This includes those already under its purview—the SASB Standards and CDSB guidance—and, additionally, relevant aspects of the work of the Task Force on Nature-related Financial Disclosures (TNFD).




GRI and TNFD to strengthen collaboration


The Global Reporting Initiative (GRI) and the Taskforce on Nature-related Financial Disclosures (TNFD) are deepening their collaboration to support the corporate reporting needs of market participants globally.


The TNFD and GRI  announced plans for further implementation and capability building support:


  • A TNFD-GRI interoperability mapping document will be published in Q2 2024, providing a detailed overview of alignment between the TNFD disclosure recommendations and metrics and the GRI Standards, including GRI 101: Biodiversity 2024.

  • Illustrative joint case studies and guidelines on the links between nature related dependencies, impacts, risks and opportunities. This will support the use of the TNFD’s LEAP assessment, which already incorporates the approaches to materiality guidance from GRI (for impact) and the IFRS (for risks and opportunities).    



Employees at SBTi called for their CEO to resign over controversial carbon-offsetting plans


Staff at one of the world’s leading climate-certification organisations have called for the CEO and board members to resign after they announced plans to allow companies to meet their climate targets with carbon offsets.


They fear that companies will use the offsets for greenwashing, while avoiding making the necessary cuts in greenhouse gas emissions – without which the world faces climate catastrophe.


The UN-backed Science Based Targets initiative (SBTi), which certifies whether a company is on track to help limit global heating to under 1.5C, has validated hundreds of net zero plans from companies including J Sainsbury plc, John Lewis and Maersk. Until now, the SBTi has ruled out the use of carbon offsets, instead emphasising the importance of deep greenhouse gas emissions cuts.





This newsletter is for the CSRD hub users. The users can reach out to Earth Academy support for details on any news mentioned.

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