The Accounting Standards Authority publishes a first guide to the application of ESRS standards

The Accounting Standards Authority publishes a first guide to the application of ESRS standards
The Accounting Standards Authority publishes a first guide to the application of ESRS standards

The first European state to transpose the CSRD directive, France is at the forefront on sustainability issues. A position confirmed by the publication by the Accounting Standards Authority of the guide “Deploying ESRS: A management tool for the transition”.

ESRS standards, pillar of sustainability reporting

ESRS (European Sustainability Reporting Standards) is a set of standards designed to standardize the way European companies report on their impact on sustainable development, covering environmental, social and governance (ESG) aspects.

Developed by the European Financial Reporting Advisory Group (EFRAG) and adopted by the European Commission, they constitute the basis of the Corporate Sustainability Reporting Directive (CSRD). The 12 ESRS standards are divided into several “blocks”:

  • general application standards (ESRS 1 and 2);
  • environmental component (ESRS E1 to E5);
  • social component (ESRS S1 to S4);
  • governance component (G) (ESRS G1).

Published in the Official Journal of the European Union in December 2023, the application of these standards can, however, raise many practical questions. The Accounting Standards Authority has therefore decided to take up this subject, which falls within its new scope of competence (see our article “The scope of the Accounting Standards Authority extended to sustainability information”).

A co-construction process in conjunction with the main stakeholders

The development of the guide published by the ANC demonstrates a collaborative process, involving a wide range of stakeholders. The ANC Sustainability Standards Commission consulted in particular the French Association of Private Enterprises (AFEP), the Confederation of Small and Medium Enterprises (CPME), the National Company of Auditors (CNCC), the Movement of Enterprises de France (MEDEF), and Middle Next, highlighting the commitment of companies and auditors to this approach.

Although it has no legal value, this document is therefore positioned as a valuable reference for organizations wishing to comply with the requirements of the CSRD.

4 standards commented on in this first version

By offering a summary in French of the key aspects of these standards, this guide greatly facilitates their appropriation by French economic actors.

Concretely, the ANC primarily targets French companies already engaged in establishing sustainability reporting. However, she indicates that she is already planning an adaptation to support new companies entering this system in a more educational way.

Structured in the form of detailed question and answer sheets by ESRS, the initial version only covers 4 standards at this stage:

  • ESRS 1 – “General principles”;
  • ESRS 2 – “General information to be provided”;
  • ESRS E1 – “Climate change”;
  • ESRS S1 – “Company personnel”.

However, the ANC announces that updates will be published over time. Without waiting for these future updates, this document already constitutes a solid starting point for companies wishing to become compliant.

ESRS standards as a management tool?

The guide places particular emphasis on the importance of materiality analysis, cornerstone of ESRS reporting, which makes it possible to identify the most significant sustainability issues for each company. In this domain, the ANC notably proposes methodological elements which are not mentioned in the ESRS standards, and which can prove valuable for the companies concerned:

  1. Understanding of the context: activities and business relationships, regulatory context and peer benchmarks, understanding of affected stakeholders;
  2. Identification of the list of potential ESG issues: list of ESRS 1 AR16 sustainability issues, bibliographic sources and result;
  3. Selection of material ESG issues: assessment of impact materiality, assessment of financial materiality, summary of the 2 assessments.

Furthermore, he emphasizes the need for proportionate reporting, taking into account the size and specificities of each organization, as well as the relevance of integrating stakeholder concerns in this process.

The ANC also insists on the idea that the corpus of ESRS standards should not be understood as a regulatory constraint, but rather as a new tool for steering the trajectory towards sustainable business models, which each company must adopt. These standards in fact impose obligations in terms of transparency without prescribing specific obligations in terms of behavior.

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