Study to Support the Effective Implementation of the European Sustainability Reporting Standards

The key objective of this project is to investigate the European Sustainability Reporting Standard (ESRS) interoperability with key global standards and sufficient capacity (building efforts) of corporates and governments in the Global South, and to set out a strategy to address these implementation challenges. This strategy should in particular contribute to:

1. further alignment between the ESRS and other relevant sustainability standards around the world, without losing their effectiveness, and
2. capacity building efforts for real economy corporates and financial institutions in the Global South, to comply with ESRS, where they are impacted by them as part of supply chains.

This project is part and parcel of our vision of “making sustainable finance work in practice”. As we are moving to the implementation phase of the ESRS, we have to ensure they are effective in an international landscape. A lack of alignment between international disclosure regimes with varying coverage of key disclosure criteria complicates reporting for companies (those with or in complex value chains) and hampers financial actors’ ability to consider sustainability risks and impacts systematically on their financial decisions. Not addressing implementation challenges of ‘policy takers’ will exacerbate these problems, further aggravate adverse impacts on affected stakeholders and makes it impossible to collect and connect the necessary data points between impact and company behavior, across value chains.

1. An effective and aligned international disclosure landscape: While substantial work has been done, in particular on interoperability, it is yet unclear what the outcome will be and how effective these are in practice.
2. Capacity building in the Global South: While the EU Commission announced work focused on capacity building, the funding for this is limited and it is unclear how this will support affected corporates (and in particular SMEs and smallholders) in the Global South.

This is a scoping study, which we conduct by a combination of desk research, interviews, workshops, and leading to a final report. We are looking in particular into:

1. areas of concern on how the standards will interact with each other from an implementation perspective,
2. how the standards are likely to or even already impact corporates outside the EU and identify any challenges to reporting (in alignment with these standards) as well as any unintended adverse impacts of the standards, and
3. gaps and possible solutions, and the scope for further work on both themes.

If you are interested in participating through one of our interviews or workshops, please reach out to Max.