Insurance Europe Calls for Further Simplification of EU Sustainability Reporting Standards
Insurance Europe, alongside the European Insurance CFO Forum, has issued a response to the European Financial Reporting Advisory Group’s (EFRAG) consultation regarding revisions to the European Sustainability Reporting standards (ESRS). While acknowledging the progress made in streamlining the standards, the organizations cautioned that notable complexity and burden remain for reporting entities.
The joint submission welcomes the reduction in required data points, but emphasizes that fewer datapoints don’t automatically translate to easier implementation. To truly achieve a practical and effective framework, several key areas require further attention.
Insurance Europe advocates for a clear prioritization of relevance and proportionality within the ESRS’s “fair presentation” principle, urging EFRAG to formally establish it as an overarching guideline. Regarding the Double Materiality Assessment (DMA), the organizations support recent simplifications, including the strengthened details filter and the option for topical or Industry-Related Obligations (IRO) level disclosure. However, they maintain the DMA remains overly intricate and unlikely to substantially lessen the reporting load. They propose explicitly applying the materiality filter across all standards to reinforce a principles-based approach.
Specifically, Insurance Europe recommends that requirements for disclosing anticipated financial effects be limited to qualitative disclosures (Option 2). This approach, they argue, balances the inherent legal, practical, and audit difficulties of forward-looking statements with the need to allow time for the development of robust data and methodologies.
For financial institutions, the response supports exempting them from disclosing absolute GHG reduction targets if they are only setting intensity targets, recognizing that intensity targets more accurately reflect the sector’s role in financing the transition to a sustainable economy. Insurance Europe calls for complete versatility in GHG accounting methodologies, allowing companies to choose between financial or operational control to reduce complexity and align with the globally recognized GHG Protocol.
These recommendations underscore the need for a sustainability reporting framework that is both practical to implement and consistent with international standards.
The full consultation response from Insurance Europe and the CFO Forum can be found here, and a related joint letter is available here.
