EFRAG and CDP have joined forces to accelerate the adoption of the European Sustainability Reporting Standards (ESRS), which were adopted by the European Commission on July 31, 2023. In this collaboration, CDP will work on aligning its disclosure system with the ESRS, with technical expertise, guidance, and support provided by EFRAG. This partnership aims to facilitate the timely implementation of the European sustainability reporting standards, ultimately enhancing the quality of environmental reporting in the market.
With EFRAG’s assistance, CDP will begin offering webinars and detailed technical guidance materials to assist companies in reporting ESRS data points through the CDP platform. Currently, CDP is utilized by over 23,000 companies, representing a significant portion of global stock market capitalization and European market value.
Starting in January 2024, the ESRS will be applicable to approximately 50,000 businesses, and eventually, it will extend to a substantial number of non-EU-based businesses. This means that numerous companies worldwide will need to consider requesting information regarding their value chains.
The ESRS encompass a wide range of environmental aspects, including climate change (ESRS E1), pollution (E2), water and marine resources (E3), biodiversity and ecosystems (E4), and resource use and circular economy (E5). These standards mandate that companies report data on their environmental impacts, risks, and opportunities, constituting a comprehensive and ambitious effort to impose legal requirements for such reporting.
Furthermore, the ESRS align with the IFRS S2 climate-related disclosure standard developed by the International Sustainability Standard Board (ISSB) and with the Global Reporting Initiative (GRI) standards. They adopt a double materiality approach, necessitating companies to report on both how climate and environmental changes might affect their operations and value creation, as well as their impact on people and the planet.
CDP’s existing disclosure system already extensively covers areas like climate change, forests, and water security, including their impacts and risks. Data from these disclosures is widely utilized by financial institutions, policymakers, and various organizations worldwide to assess and drive corporate environmental progress.
Patrick de Cambourg, Chair of the EFRAG Sustainability Reporting Board, said: “Only with robust environmental data can financial markets and other stakeholders identify businesses with credible plans to reduce their impacts so that they thrive in a zero-emissions, nature-positive future. This means companies reporting not only how climate change may affect their value, but also how they affect the environment. The standards elaborated by EFRAG in its role as technical advisor to the European Commission will support capital markets to compare companies, reduce greenwashing and redirect capital. And our collaboration with CDP will help to accelerate these standards’ market uptake, building capacity among EU and non-EU businesses alike to use them as regulation comes in.”
Maxfield Weiss, Executive Director CDP Europe, said: “With the bar now being raised globally in respect to environmental disclosure, our collaboration with EFRAG will ensure companies preparing to report can do so through CDP. As the only independent global environmental disclosure system, CDP is proud to continue and scale up our role in making best-practice corporate reporting a norm. The ESRS are a watershed – an obligation for thousands of companies inside and outside the EU to report how they impact climate change, pollution, water and biodiversity. Their implementation through the CSRD will help ensure a level playing field for and support the companies already investing in their transition. These ambitious EU standards and CDP’s global environmental disclosure platform are essential to secure a sustainable economy that works for people and planet.”