FESE position on ESRS Draft Delegated Regulation

FESE fully supports the EU Green Deal, the broader Sustainable Finance agenda and the allocation of capital towards a more sustainable and competitive European economy. FESE welcomes the European Commission's work on the draft Delegated Regulation simplifying the European Sustainability Reporting Standards (ESRS). An effective, proportionate and globally aligned sustainability reporting framework is critical for the competitiveness and efficiency of EU capital markets. While FESE supports the objective of simplifying the ESRS, the current draft misses an important opportunity to significantly reduce administrative burdens for issuers and enhance the attractiveness of EU public markets.

Achieving acceptance of ESRS by ISSB

FESE welcomes the steps taken by the Commission to improve compatibility between ESRS and the ISSB standards. However, FESE considers that further collaboration is needed to achieve acceptance of ESRS reports as sufficient for complying with IFRS sustainability reporting requirements, particularly for companies with an international footprint.

Misalignment between ISSB and ESRS creates a complex and fragmented reporting landscape, leading to duplicative and burdensome requirements for companies subject to both frameworks. Moving from interoperability towards acceptance would allow companies to report only once to meet both frameworks, reducing complexity and fragmentation while improving usability for investors and other stakeholders. FESE therefore considers that reporting under the ESRS should be deemed sufficient to meet IFRS requirements. FESE encourages the European Commission and the ISSB to continue their dialogue with a view to IFRS acceptance as soon as possible, including mechanisms that enable subsidiary exemptions for European preparers in IFRS jurisdictions outside the EU.

Conclusion

FESE believes that exercising global leadership in sustainable finance requires collaboration. With targeted but critical amendments, the Commission can deliver on its Simplification Agenda, reduce significant reporting burdens for issuers and enhance the attractiveness of EU capital markets. This approach would anchor the EU's high-ambition, double materiality framework to the global baseline, positioning it as a comprehensive leadership model rather than an isolated regional standard.