ESMA publishes opinion on proposed European reporting standards

The European Securities and Markets Authority (ESMA), Europe’s financial supervisor, has published an opinion in response to proposed European reporting standards. The European Commission had invited ESMA to submit an opinion on the first set of European Sustainability Reporting Standards (ESRS). The standards were developed by the European Financial Reporting Advisory Group (EFRAG). According to ESMA, the standards are “broadly” capable of serving the twin objectives of investor protection and financial stability. However, to move from “broadly” capable to “fully” capable, ESMA has proposed a set of recommendations. These cover topics such as alignment between multiple legislations, definition clarifications and guidance on materiality assessment. ESMA chair Verena Ross said: “The development by EFRAG of the first draft set of ESRS is a major achievement. These standards will increase the consistency and quality of information flowing through the sustainable investment value chain. They will also enable broader accountability of European businesses for their sustainability commitments and impacts vis-à-vis retail investors”.