Monday, July 21, 2025

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European consultation launched on corporate sustainability reporting

The European Financial Reporting Advisory Group (EFRAG) has been instructed to develop a suitability reporting standard for SMEs that are public-interest entities, including captive insurance companies.

A similar exposure draft (ED) is also being carried out for non-listed SMEs. The EFRAG is carrying out the work as part of its mandate to provide technical advice to the European Commission on European Sustainability Reporting Standards (ESRS).

The consultation period will run until 21 May 2024, and EFRAG is inviting all stakeholders to provide comments through the online consultation questionnaires.

Interested parties are also invited to participate in the field test that will be run in parallel to the public consultation.

The purpose of the ESRS is to set reporting requirements that are proportionate and relevant to the scale and complexity of the activities and to the capacities and characteristics of captives.

The aim is to support captives in getting better access to finance and avoid discrimination against them on the part of financial market participants, as it will enable availability of standardised sustainability information.

The ESRS will be issued as a delegated act and will be effective from n 1 January 2026 with an additional two-year opt out.

“SMEs are a crucial part of the European economy,” said EFRAG SRB chair, Patrick de Cambourg.

“After the completion of the ESRS for large undertakings, EFRAG releases today these two proposed standards to support SMEs in being part of the transition to a more sustainable economy, getting appropriate access to finance and reducing the burden of dealing with uncoordinated data-requests while preparing decisions-useful information for all.”