ESMA, EBA, ECB and EIOPA express opinions on the revised draft ESRSs

The European Securities and Markets Authority (ESMA) has issued its opinion on EFRAG’s draft revised European Sustainability Reporting Standards (ESRS), strongly supporting the European Commission’s (EC) objective to simplify reporting and reduce burdens on issuers. ESMA welcomes the proposed improvements in readability, language and format of the standards, and volume of requirements, noting that they better focus reporting on material issues. However, it identifies technical gaps that could weaken investor protection and financial stability and recommends targeted adjustments. These include setting time limits on permanent reliefs, refining transition plan requirements, strengthening reporting on the sustainability competences of administrative, management and supervisory bodies, improving transparency on sustainability-related financial resources, and adjusting from reporting sustainability risks and opportunities for subsidiaries excluded from consolidated financial statements due to immateriality. 

The European Banking Authority (EBA) welcomes the simplification and streamlining achieved by EFRAG in the revised ESRS and supports the general objective of reducing reporting costs for institutions.  Despite simplification, the EBA stresses that institutions must continue to analyse sustainability‑related risks and recommends introducing time limits for several alleviations to ensure they remain transitional. The EBA noted that untimed or broad reliefs could undermine interoperability with international sustainability standards, increasing complexity for cross‑border institutions. 

The European Central Bank (ECB) staff acknowledge a very significant simplification of the ESRS and improvements in structure and usability, including clearer separation between disclosure and application requirements. 

Key weaknesses identified:

• Permanent reliefs and phase‑in provisions will reduce transparency and comparability of information relevant for financial stability and risk management. 
• ECB staff note that some proposed reliefs go beyond the International Sustainability Standards Board (ISSB) standards, creating interoperability gaps and potentially weakening global comparability. 
• The sector-agnostic ESRSs are not tailored to disclosures by the financial sector and ECB staff proposes clarifying the application of the standards by the financial sector.

The European Insurance and Occupational Pensions Authority (EIOPA) supports the simplification efforts and recognises EFRAG’s work in reducing reporting burdens while keeping sustainability reporting meaningful.  EIOPA is concerned that the current proposals allow indefinite waivers where data collection involves ‘undue cost or effort’ and recommends a three‑year time limit for such waivers in own operations. To reduce burden and improve consistency, EIOPA supports allowing insurance and reinsurance entities to leverage existing prudential risk‑management processes when performing financial materiality assessments.

The opinion of ESMA is available via the press release. 

The opinion of EBA is available at the link.

The opinion of ECB is available at the link.

The opinion of EIOPA is available at the link.