Norway’s Norges Bank Investment Management (NBIM) has submitted its feedback to the European Commission’s (EC) consultation on the European Sustainability Reporting Standards (ESRS).

It stated that it supported the work of the EC and European Financial Reporting Advisory Group (EFRAG) in promoting better and more harmonised reporting, noting that it saw the relevance of the double materiality approach of the standards.

NBIM welcomed the amendments made by the EC to ensure the standards are operationally practical for reporting companies, and stated it felt the commission had taken a balanced approach in the simplification of the standards and the reduction in some of the proposed reporting requirements.

While it also welcomed the central role of the materiality assessment process, it suggested that the EC reconsidered maintaining the requirement for companies to disclose why they concluded that the topic is not material.

“Implementation guidance for reporting entities on how to conduct materiality assessments would also be helpful, and alignment with the forthcoming guidance on materiality assessment by the International Sustainability Standards Board (ISSB) as far as financial materiality is concerned would be beneficial,” NBIM stated.

Furthermore, the investment manager argued that the disclosures in the climate standard should remain mandatory irrespective of the materiality assessment, particularly information on key climate indicators and related targets, and corporate transition plans.

While it welcomed the alignment of most climate-related definitions, NBIM encouraged the EC to further align the definition of carbon credits, and the ISSB and EC to make the interoperability mapping table publicly available.

“To enhance the visibility of the global baseline provided by the ISSB standards, we also suggest the commission requires reporting entities to clearly identify the sections of their sustainability reports which incorporate the disclosures foreseen by IFRS S1 and S2,” NBIM continued.

“This would help global investors when assessing the sustainability disclosures of portfolio companies based in different jurisdictions.

“Furthermore, we highlight the importance of the forthcoming sustainability reporting standards for third country undertakings that the commission shall adopt by June 2024.

“To facilitate interoperability and prevent double reporting, these standards should be as aligned as possible with ISSB standards, at least as far as information on financial materiality is concerned.

“Regarding metrics, we highlight the distinction suggested by the Taskforce on Nature-Related Financial Disclosures between core disclosure metrics and additional disclosure metrics.

“Regarding social standards, we suggest the commission reconsiders the decision to make voluntary some disclosures and metrics regarding non-employees, notably the information concerning the breakdown of non-employees by category and type of work performed.”

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