European Commission: firms must now learn to report to general standards

We bring you an update on the development of ESG reporting standards directly from Brussels.

The European Commission is due to finally adopt the European Sustainability Reporting Standards in June, to which companies across sectors will report. A draft of the general standards was finalised last November by EFRAG, the organisation tasked with preparing them. Earlier this year, it was also due to prepare sectoral standards for companies in sectors with the biggest sustainability impacts, such as the petrochemical and agricultural industries. However, the European Commission said that companies need to first familiarise themselves with the general standards and get guidance from EFRAG on how best to apply them. The approval of the first set of sectoral standards will therefore be postponed until 2025.

"We know that EU standards for sustainability reporting will be a challenge for companies. That is why we are asking EFRAG to provide additional guidance to companies on the application of the general standards," said EU Commissioner Mairead McGuinness, adding that EFRAG's work on guidance should take priority over sectoral standards.

Although official guidance from EFRAG has not yet been produced, a first comprehensive overview of what the general standards contain and how to work with them already exists. This is the ESG Reporting Guidelines, prepared by experts from Frank Bold in cooperation with Deloitte for the Prague Stock Exchange and the European Bank for Reconstruction and Development.

Why sector standards are needed

According to Filip Gregor, a member of the EFRAG Sustainability Reporting Board and head of Frank Bold Advisory, the upcoming sector standards are intended to clarify reporting rather than make it more complicated. "The sector standards are not intended to add additional reporting obligations for companies beyond the general standards. They are intended to clarify what is important to companies in specific sectors and guide them to the data they need to track in their industries," Gregor explains.

Originally, the first set of sectoral standards, for example for transport, agriculture or the petrochemical industry, were to be adopted in 2024, but now they will be adopted a year later, together with standards for road transport, food and textiles.

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