Exposure drafts of the European Sustainability Reporting Standards (ESRS) proposed by the European Financial Reporting Advisory Group (EFRAG) should be “simplified” to be “operationally practical” according to Norges Bank Investment Management (NBIM).

In response to the consultation on the ESRS exposure drafts, NBIM, which is responsible for the investments of the Government Pension Fund Global (GPFG), sent a letter to the EFRAG detailing its feedback on the proposals.

“We welcome the level of ambition and the topics covered in the ESRS. We also welcome EFRAG’s efforts to reflect international standards such as the OECD Guidelines on Responsible Business Conduct or the UN Guiding Principles on Business and Human Rights in the ESRS. However, we believe the draft standards might need to be further amended and simplified to be operationally practical for reporting companies, and to ensure that the costs to preparers are proportionate to the benefits for users,” NBIM stated.

Furthermore, it noted that as it invests in companies globally, it needs corporate sustainability information to be reported in a consistent and comparable manner across markets. In the past it has supported the establishment of the International Sustainability Standards Board (ISSB) and its mission to develop a comprehensive global baseline of corporate sustainability disclosures.

“We are aware of and welcome the ongoing dialogue between EFRAG and the ISSB towards the inter-operability of their standards. This will help reduce the reporting burden for companies and ensure the comparability of disclosures for users. We support the ‘building block’ approach, whereby the IFRS Sustainability Standards would become the global reference standards for reporting financially-material sustainability information.”

NBIM believes that other standard-setters, such as EFRAG, should refer to these standards as a core, and only add topic-, region-, or viewpoint- specific requirements. Furthermore, NBIM said that EFRAG’s upcoming industry-specific standards should where possible build on the Sustainability Accounting Standards Board (SASB) industry standards.

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