Europaudvalget 2022-23 (2. samling)
EUU Alm.del Bilag 626
Offentligt
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Template for comments on draft ESRS Delegated Act
The draft delegated on European Sustainability Reporting Standards (ESRS) comprises: the main text of the legal act; twelve draft standards
(annex I); and a glossary of abbreviations and defined terms (annex II).
The twelve draft standards in Annex I are:
Group
Cross-cutting
Cross-cutting
Environment
Environment
Environment
Environment
Environment
Social
Social
Social
Social
Governance
Number
ESRS1
ESRS2
ESRS E1
ESRS E2
ESRS E3
ESRS E4
ESRS E5
ESRS S1
ESRS S2
ESRS S3
ESRS S4
ESRS G1
Subject
General Requirements
General Disclosures
Climate
Pollution
Water and marine resources
Biodiversity and ecosystems
Resource use and circular economy
Own workforce
Workers in the value chain
Affected communities
Consumers and end users
Business conduct
Each standard is divided into numbered paragraphs. Each standard
also has an appendix A containing “application requirements” which are
numbered as AR 1, AR 2 etc. Some standards also contain additional appendices.
To facilitate analysis of comments, respondents are kindly requested to use the simple template below when sending their comments.
EUU, Alm.del - 2022-23 (2. samling) - Bilag 626: Notat samt høringssvar vedr. Kommissionens høring om kommende bæredygtighedsstandarder under CSRD
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Name of respondent/responding organisation: The Danish Government
1.
General comments
The Danish Government would like to thank the Commission for its extensive work regarding the amendment of
EFRAG’s
draft proposal on
European Sustainability Reporting Standards. We commend the Commission for the changes made to the standards and consider these as
significant improvements with regards to proportionality and value-creation.
The Danish Government supports an ambitious approach to sustainability reporting as an effective tool to ensure transparency and
comparability of undertakings' sustainability and thereby support the transition to a sustainable economy.
As pointed out by Minister Bødskov during the Competitiveness Council meeting in May 2023, the Danish Government finds in necessary
to continue working with supportive measures that can help undertakings to digitize, standardize and automate their reporting, for example
by structuring data in standardized data formats and ensuring a European open data exchange infrastructure. Please find attached a technical
paper with more elaborate ideas and proposals on how to move forward on this. We hope these can serve as basis for further discussion
between the Commission and other Member States.
Furthermore, Denmark proposes that reporting requirements are compatible with the needs for information from the financial market
participants in relation to the reporting requirements under other EU financial legislation, e.g., Sustainable Finance Disclosure Regulation
(SFDR).
2.
Specific comments on the main text of the draft delegated act
Regarding the modifications made to the role of the materiality assessment, we emphasize the importance that the amendments should be in
alignment with the information required from the financial market participants.
The Danish Government supports the approach to the materiality assessment proposed by the Commission in the revised standards, as
minimizing irrelevant reporting obligations promotes the aim of balanced and reliable reporting. However, we would like to highlight a
potential challenge arising from the proposed amendments to the role of the materiality assessment process.
EUU, Alm.del - 2022-23 (2. samling) - Bilag 626: Notat samt høringssvar vedr. Kommissionens høring om kommende bæredygtighedsstandarder under CSRD
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As opposed to the materiality assessment following
EFRAG’s draft proposal
on the standards, according to which all the reporting
undertakings were obliged to disclose the negative impact of their activities on approximately 45 principle adverse impact indicators (PAI-
indicators), the revised approach to the materiality assessment may cause significant challenges for the financial market participants to fulfil
their obligations with respect to the Sustainable Finance Disclosure Regulation (SFDR).
Financial market participants are required to disclose certain PAI-indicators as well as to include aggregated information, in relation to all
PAI-indicators, on all undertakings in the portfolio of a financial product and therefore, the financial market participants may face challenges
when assessing their sustainability performance under the SFDR, if needed information from an undertaking reporting under CSRD may be
missing due to the information being assessed as not material by the reporting undertaking.
Thus, the proposed role of the materiality assessment process may reduce the data quality and comprehensiveness of the sustainability
reporting under SFDR. In this regard, it may be considered whether reintroducing PAI-indicators as mandatory disclosure requirements for
undertakings reporting under CSRD.
The Danish Government notices that ESRS includes references to external standards, protocols, guidelines etc. that are part of the legal
binding requirements for undertakings in the delegated act. This includes e.g., the GHG protocol, ISO 14064-1:2018 and the UN Guiding
Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises. Since these external standards etc. form
part of the legal binding requirements for undertakings in the delegated act, the Danish Government expects the Commission to provide for
translations of such external standards and guidelines to ensure that undertakings can familiarize themselves with the rules in their own
language.
We are pleased that the Commission decided to include phase-ins for certain reporting requirements. However, we request a clarification
regarding the threshold of 750 employees. It is not clear whether the undertaking is to make the assessment of the number of employees at
the start of a new financial year or on the balance sheet date. If the assessment is to be made on the balance sheet date, this could be
problematic for the undertakings that exceed the threshold during the financial year, as they would be required to report on sustainability
information for the part of the financial year when they have not been above the threshold. This would pose significant challenges for these
undertakings regarding data collection on those sustainability matters.
Additionally, the Danish Government would like to highlight that it is of great importance that the standards do not entail high administrative
burdens on the reporting undertakings. The Commission could e.g. consider to clarify that the Disclosure Requirement GOV–4 -
Statement
on due diligence
in ESRS 2, paragraph 33, applies
to all the standards in general: “This disclosure requirement does not
oblige any specific
behavioral requirements with regard to due diligence
actions
and does not extend or modify the role of
administrative, management and
EUU, Alm.del - 2022-23 (2. samling) - Bilag 626: Notat samt høringssvar vedr. Kommissionens høring om kommende bæredygtighedsstandarder under CSRD
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supervisory bodies
as mandated by other legislation or regulation”.
This would help to clarify that e.g. “Disclosure Requirement SBM-2 –
Interests and views of stakeholders” means that stakeholders have the right to define a “undertaking’s strategy and business model(s)”.
In addition, some disclosure requirements have a widened scope compared to CSRD. For example, Disclosure Requirement GOV–3
Integration of sustainability-related performance in incentive schemes
in ESRS 2, applies to both listed and non-listed undertakings, whereas
the requirements in the remuneration policy in Shareholder Rights Directive II only applies to listed companies. As the mandate in the CSRD
only related
to “information about the
existence
of incentive schemes”,
this disclosure requirement should not introduce new requirements
for undertakings that are not within the scope the Shareholder Rights Directive II.
Finally, the Danish Government is pleased with the amendments made regarding the phase-ins of certain reporting requirements, and overall
welcomes
the Commission’s
ESRS draft proposal.
3.
Specific comments on Annex I
Standard
Paragraph or AR
number or
appendix
AR 44(b) and AR
47(e)
Comment
ESRS E1
ESRS E1
ESRS E1
AR 51
Paragraph 35(b)
ESRS E1
Paragraph 57(b)
The term “Suitable emission factors” is up for interpretation and creates questions of how a suitable emission
factor is defined. It could be considered adding a small clarification stating that the chosen emission factors should
seek to improve data quality and that engaging with suppliers to retrieve high quality supplier specific emissions
will provide the most suitable emission factors. CSRD should seek to avoid ambiguity and unclear wording to
minimize the burdens for the undertakings.
It could be considered to highlight the GHG protocols 15 categories as examples as well as the ISO-standard.
The sentence: “The undertaking shall specify, in case of combined
GHG emission reduction targets,
which GHG
emission Scopes (1, 2 and/or 3) are covered by the target, the share related to each respective GHG emission
Scope and which GHGs are covered.” indicates that scope 3 does not have to be included in the reduction target.
We suggest a clarification by deleting “or”
or clarifying that reduction targets could be set for example scope 1 + 2
and individually for scope 3.
The phrase
“intends to finance” has been added to this paragraph
after the revision of the standards, which opens
for the opportunity for undertakings to receive good will for intentions, and not actions.
EUU, Alm.del - 2022-23 (2. samling) - Bilag 626: Notat samt høringssvar vedr. Kommissionens høring om kommende bæredygtighedsstandarder under CSRD
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ESRS E1
ESRS E1
Paragraph 58(b)
AR 5
ESRS E1
ESRS E2
AR 47 (c)
Paragraph 32-35
and AR 33-35
Paragraph 26
(E2) and
paragraph 38
(E5)
ESRS E2 and
E5
In connection to the comment related to paragraph 57(b), it could be considered to reintroduce the phrase
”Cancelled in the reporting period” and remove the phrase “intends to purchase”.
AR 5 has been deleted in the revised standards. Keeping AR 5 from the previous version of the standards could
ensure transparency about investments in the oil and gas industry, however, if AR 5 has intentionally been deleted,
the numbers should be corrected.
There is mistake in reference to the ISO-Standard: EN ISO 14064-1:2018
Regarding substances of concern or substances of very high concern, there is no threshold regarding when the
substances are not considered material. There should be clear guidance on how the undertakings are to make this
assessment. Such guidance has been requested by several stakeholders.
Paragraph 26 (E2) concerns the disclosure of pollutants emitted through the undertaking’s own operations.
Paragraph 38 (E5) includes specifications regarding the disclosure of the composition of waste. However, we
cannot see any disclosure requirement which directly requires the undertakings to disclose the composition of the
waste. We suggest this is clarified.
4.
Specific comments on Annex II
Defined term
Comment