The European Insurance and Occupational Pensions Authority (EIOPA) has raised concerns about the proposed removal of the ‘data hierarchy’ in the European Sustainability Reporting Standards (ESRS), as part of its opinion for the European Commission (EC).

The supervisory authority was tasked by the EC in December 2025 to provide an opinion on the European Financial Reporting Advisory Group’s (EFRAG) technical advice on the amended ESRS.

EIOPA focused specifically on amendments most likely to have a “significant impact” on the occupational pensions and (re)insurance sectors.

Regarding the proposed removal of the ‘data hierarchy’, EIOPA noted that it would mean that direct data does not have to be prioritised over estimated data. This, EIOPA warned, could lead to lower quality, and “hence comparability and reliability of the disclosures for insurance undertakings and pension funds as data users”.

“This might also negatively affect the possibility of comparing financial product disclosures under the Sustainable Finance Disclosure Regulation (SFDR) and reliance on them by consumers, as the financial disclosures in the ‘financial product categories’… would still rely on data provided from the sustainability statements of investee companies, in particular on Principal Adverse Impacts identified and addressed by financial market participants,” EIOPA explained.

Furthermore, the supervisory authority stated that the cumulative effect of the permanent reliefs proposed may dissuade companies from improving their current reporting practices over time.

Separate concerns were also raised over regulatory consistency with SFDR. EIOPA noted that the EC’s proposal from November 2025 to review the SFDR removes entity-level disclosures on the PAI of investment decisions, to avoid duplication with the Corporate Sustainability Reporting Directive (CSRD).

While EIOPA welcomed the intention to consolidate entity-level disclosures under CSRD, it warned that the limited scope of mandatory reporting under CSRD would exempt most financial undertakings from reporting under both frameworks. This, it said, would shift the reporting burden from corporates to users, as asset managers, pension funds and (re)insurers would still need to collect the relevant data themselves to assess and disclose PAIs at product level under SFDR.

EIOPA added that, under the proposed SFDR revision, financial product disclosures would be anchored in PAI datapoints reported under CSRD, welcoming the fact that EFRAG has retained most of the datapoints corresponding to the SFDR PAI indicators in its revised draft ESRS.

Despite its concerns, EIOPA commended EFRAG for keeping in the ESRS the key areas of environmental, social and governance issues, which can “pose significant risks to (re)insurance undertakings and occupational pension funds”.

“The ESRS are essential for (re)insurance undertakings and occupational pension funds to identify, assess, and manage sustainability risks. By providing a standardised framework for reporting on sustainability matters, the ESRS will enhance transparency, accountability, and facilitate better risk management and investment practices in our sectors,” EIOPA stated.

---