Implemented on January 1, 2024, the European Sustainability Reporting Standards (ESRS ) for climate-related financial disclosures signify a pivotal shift in integrating environmental accountability into corporate practices. However, stakeholders such as the European Sustainable Investment Forum have criticized the ESRS for allowing a company not to disclose information about climate change issues if a company determines that an issue is immaterial. This In Brief will examine the ESRS’s role in climate change action, including the evolution of sustainability reporting and materiality assessment nuances. To mitigate the non-disclosure issue, this In Brief will argue that it is necessary to interpret the ESRS to recognize climate change issues as inherently material and subject to disclosure. Further, this In Brief will discuss ways in which the ESRS’s double materiality standard offers opportunities for comprehensive materiality assessment under the U.S. Securities and Exchange Commission’s (SEC) Climate Disclosure Rule.
Using the European Sustainability Reporting Standards to Address Climate Change
