Insurance Europe and the European Insurance CFO Forum respond to the EFRAG consultation on the Exposure Drafts of the European Sustainability Reporting Standards

Insurance Europe and the European Insurance CFO Forum have responded to EFRAG's consultation on the revised Exposure Drafts of the European Sustainability Reporting Standards (ESRS). In a joint letter, they welcomed the simplification achieved so far, but warned that the standards remain too complex and burdensome.

While the reduction in datapoints is positive, they stressed this does not automatically reduce implementation effort. To make the simplification effective in practice, several issues must still be addressed:

• Fair presentation: Support for EFRAG's clarification that the ESRS follow a fair presentation principle, but with a call to confirm it as an overarching principle that prioritises relevance and proportionality over box-ticking.
• Double materiality assessment (DMA): Support for the simplification of the DMA, the strengthened information filter, and the option to disclose at topical or IRO level. However, the DMA remains overly complex and the proposed changes are unlikely to significantly reduce reporting burden. The materiality filter should explicitly apply across all standards to reinforce a principles-based approach.
• Anticipated financial effects: A recommendation to require only qualitative disclosures (Option 2), as this offers a more realistic balance given the legal, practical and audit challenges of forward-looking disclosures, while allowing time for reliable data and methodologies to develop.
• GHG targets: Support for exempting financial institutions from disclosing absolute GHG reduction targets when only intensity targets are set, as intensity targets better reflect their role in financing transition.
• Alignment with the GHG Protocol: A call for full optionality in GHG accounting, allowing either financial or operational control, to reduce complexity and align with the global baseline.

These points underline the need for a framework that is both workable in practice and consistent with global standards.

Read the full consultation response and the joint letter.