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Building block 6: Disclosure channel
Standard Evaluation
SEC
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IFRS S1 & S2 (by ISSB)
ESRS (by EFRAG) The assurance requirements demand large accelerated filers to include an attestation report for scopes 1 and 2 GHG emission disclosures. The assurance requirements are phased in with limited assurance in the second and third year after the initial compliance, and reasonable assurance as of year four. We recommend the SEC to stick to the proposed timeline for phased-in limited and reasonable assurance.
The ISSB provides general guidelines, which include audit and oversight of disclosures from third parties. Specific regulations on assurance will likely be regulated by the respective jurisdictions adopting the standards. We recommend the ISSB to provide clear recommendations to jurisdictions regarding which disclosure requirements should be verified under a limited or reasonable assurance approach.
The ESRS target a similar level for sustainability reporting assurance as financial reporting in the long run, but currently limited assurance is expected within three years after implementation and reasonable assurance after six years. We welcome the aim to achieve a similar assurance level for sustainability disclosures as for financial information. We recommend EFRAG to stick to the proposed timeline for phased-in limited and reasonable assurance.
Recommendation
Definition: ESG disclosures can be published in different channels or mediums, e.g., as part of the annual report, in a separate sustainability report, or on a firms’ website.
Overall recommendation: Current developments in sustainability disclosure increasingly strive for disclosures through single access points. These can reduce information costs, which provide a considerable component of information asymmetry. We thus welcome the standards’ requirements for publication in publicly accessible databases instead of solely in annual or sustainability reports. These efforts can centralize information flows and foster digital tagging.
Design choice: The disclosure channel(s) need to facilitate increased data availability, traceability and accessibility.
Standard Evaluation Recommendation
