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EBA Response to EFRAG and ISSB Disclosure Standards

On 28 July 2022, the European Banking Authority (EBA) published its comment to the European Financial Reporting Advisory Group’s (EFRAG) Exposure Drafts of the European Sustainability Reporting Standards (ESRS) and the Exposure Drafts of the International Sustainability Board’s (ISSB) International Financial Reporting Standards (IFRS).

First and foremost, EBA recommends to both, ISSB and EFRAG to align their approaches to develop a comprehensive global baseline of sustainability disclosures for the capital markets. The ultimate goal is to align between EFRAG, ISSB, and other standard setters and ensure consistency with banks' Pillar III disclosure requirements.


Regarding the General Requirements Disclosure of Sustainability-related Financial Information (IFRS S1), EBA agrees with the objective to disclose sustainability related financial information that is useful when assessing enterprise value. However, EBA suggests clarifying the definition, application and materiality in general, especially regarding financial materiality, location of information, disclosure of the sustainability-related impacts and definition of the value chain.

Talking about the Climate-related Disclosures (IFRS S2), EBA recommends enhancement and clarification, for example disclosing the GHG emission reduction targets separately from the use of carbon offsets and requiring entities to disclose on offsets which are certified should be structured in a clear way.


Concerning the General Principles and the General strategy, governance, and materiality assessment (ESRS 1 & 2), EBA highlights the consistency with the ISSB’s IFRS S1, but suggests even further alignment. In terms of the cross-cutting standards architecture, EBA observes that both standard setters used the Task Force on Climate Related Financial Disclosures’ (TCFD) structure. However, the EFRAG modified the TCFD structure to a more complex framework which might complicate comparability, so EBA suggests minimizing those differences.

EBA welcomes the proposed double materiality approach but recommends further guidance regarding disclosure of prioritization of the negative impacts on the environment. Additionally, EBA believes that the proposed rebuttable presumption may undermine a proper materiality assessment. It further expressed concerns including the collection and verifiability of information along the value chain, the scope 1, 2 and 3 emissions calculations, physical risk disclosures and the Green House Gas (GHG) intensity metric for the transition plan.

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