ESRS draft submitted to EU Commission: EFRAG and GRI Standards to be interoperable

The first set of the 12 draft standards consist of:

• Cross-cutting standards
• Topical standards         
  • Environment          
  • Social    
  • Governance

Within the next few months, EFRAG is working on set 2 of draft ESRS, which will be sector-specific standards and will include standards for SMEs:

• 5 sectors also covered by GRI: agriculture, coal mining, mining, oil + gas (upstream), oil + gas (mid-to downstream)
• 5 high-impact sectors: energy production, road transport, motor vehicle production, food/beverages, textiles.

Changes to the final drafts:

• Reduction of disclosure requirements: As a result of the comments received during the public consultation and weighing of costs and benefits, the final drafts have been amended to exclude some of the mandatory disclosure and of quantitative and qualitative data points.
• The number of Disclosure Requirements has been reduced from 136 to 84 and the number of quantitative and qualitative datapoints has been reduced from 2.161 to 1.144.
• Phase-In of standards: The first group of companies will have to apply the standards for reports published in 2025 (financial year 2024), the second group (listed SMEs) will have to report for reports published in 2026 (financial year 2025).
• Reduction of standards: In addition to a reduction in disclosure requirements, the number of industry-independent standards was also reduced so that the first set now consists of two cross-cutting standards and ten topic-specific standards.

GRI and EFRAG:

According to GRI, the ESRS represent an important step toward the implementation of the Corporate Sustainability Reporting Directive (CSRD) and holding companies responsible for their environmental impact in the EU.

As part of the ESRS development, GRI has actively engaged with EFRAG, the SRB, and Technical Expert Group from the initial phase. This work focused on ensuring optimal interoperability between the global GRI Standards and the European ESRS, including double materiality assessment.

In November 2022 the CSRD was approved by the necessary EU Legislators, member states now have 18 months to transpose the Directive into local law. In July 2021, EFRAG and GRI signed a cooperation agreement that merged the technical expert groups of the two organizations and committed to sharing information and aligning standard-setting activities.