What is EFRAG?

EFRAG, an acronym for European Financial Reporting Advisory Group, is an essential organisation that supports the definition of frameworks for sustainable reporting.

In an environment where EFRAG's transparency and rigour have become paramount, this actor positions itself as the privileged advisor to the European Commission.

It is part of a dynamic that combines innovation and compliance with regulatory requirements, thus offering everyone the opportunity to understand the issues related to sustainable finance.

In recent years, the evolution of the European financial world has seen new demands for transparent information emerge.

The transformation of financial practices is based primarily on the quality of reporting implemented by entities, and EFRAG continues to innovate to meet these challenges.

For industry professionals, EFRAG represents much more than just a point of contact: it defines strategic orientations that impact the entire value chain of companies.

What is the role of these organisations?

EFRAG was established to support the Commission in building a coherent framework adapted to current challenges.

Thus, its role revolves around consultation, analysis and validation of a set of recommendations.

Its intervention allows companies to align with standardised reporting practices, essential for ensuring reliable and transparent information.

In parallel, EFRAG actively participates in the evolution of the financial system by defining orientations that favour the transition to more responsible and sustainable models.

This mission translates into in-depth work on each piece of data collected, thus guaranteeing the quality of the information transmitted.

To meet the needs of financial data users, EFRAG operates in both a technical and strategic context, where the objective is to strengthen the confidence of investors and stakeholders.

What are European sustainability reporting standards: ESRS?

European sustainability reporting standards – commonly called ESRS – constitute a normative framework aimed at harmonising the reporting of companies' sustainable performance.

They offer a rigorous methodology to account for the social, environmental and economic impact of activities, while integrating the requirements of the CSRD directive.

These rules consolidate the global approach to sustainability by emphasising transparency and comparability of published information.

This approach is part of a desire to create long-term value, by associating investors' concerns and regulatory imperatives.

Each new standard is designed to respond to current challenges while preparing for the concrete application of sustainable practices within companies.

The ESRS standards are divided into four main categories that we detail below.

Cross-cutting standards

Cross-cutting standards constitute the backbone of the entire ESRS framework.

They establish general principles, such as the requirement for coherence and materiality of information to be made public.

These rules, integrated into a solid regulatory framework, facilitate the comparison and consolidation of data between different sectors of activity.

Indeed, the regulatory approach adopted integrates a precise analysis of risks and opportunities, so that each company can position itself relevantly in its sector.

This process is based on a fine analysis that allows for identifying operational and strategic challenges related to the digital transformation of sustainable reporting.

The European Commission, in collaboration with EFRAG, works to ensure that the provision of these standards is operational and pragmatic in each economic activity context.

Environmental standards

Environmental standards are an integral part of the ESRS approach and primarily aim to measure the impact of activities on the natural environment.

They specify indicators allowing for rigorous evaluation of each entity's environmental performance.

Thanks to an approach based on a detailed taxonomy, they allow for classifying activities according to their contribution to ecosystem protection.

The implementation of these standards obliges each entity to quantify its ecological footprint and determine improvement levers.

It is not just a compliance exercise, but a real work of continuous optimisation that contributes to the planet's resilience.

Each development project must now integrate measurable criteria to reduce risk and strengthen transparency in sustainable reporting.

Social standards

Social standards establish criteria aimed at guaranteeing respect for human rights and working conditions within the company.

They emphasise the importance of detailed information concerning working conditions, equal opportunities and human value chain management.

These indicators allow for evaluating employee well-being and societal commitment, essential for creating an environment of mutual trust.

By applying these standards, there is a clear improvement in the management of social dimensions, an essential axis for securing investments and reducing any risk of social conflict.

The approach is based on a principle of rigorous application of criteria, ensuring that each measure adopted contributes to a positive impact on the community.

This fundamental work constitutes a true collective and innovative work to modernise the social approach to reporting.

Governance standards

Governance standards aim to structure the management mode and transparency within organisations.

They define rules relating to the organisation of the board of directors, the distribution of responsibilities, and the quality of information communicated to stakeholders.

The objective is to guarantee effective governance by aligning reporting with the requirements of the modern financial context.

They ensure that each account and financial element is presented clearly, thus strengthening the company's credibility in the eyes of investors.

Each regulatory provision recorded is part of a continuous improvement and operational transparency approach.

By structuring governance work in this way, companies can better anticipate and manage risks related to their activity.

Why is it important to comply with ESRS standards?

Compliance with ESRS standards is not an option, but a strategic necessity in the current context.

Adopting these standards ensures total transparency in performance reporting and strengthens investor confidence.

It aims to clarify publication criteria to provide complete and reliable information on sustainability issues.

By integrating these requirements, each company benefits from a common reference framework that facilitates comparison between actors and strengthens credibility with financial markets.

Compliance with ESRS standards also reduces the risk of sanctions related to non-compliance with regulatory obligations, and allows for optimising the management of data related to overall performance.

In other words, it is a true compliance that translates into better risk anticipation and valuation of the impact of actions taken.

Which companies are concerned by ESRS standards?

ESRS standards mainly concern large companies and entities whose activity has a significant impact on society and the environment.

Indeed, the scope of application of these standards extends to structures subject to the CSRD directive which, due to their size and influence, play a central role in the global economic dynamic.

It is therefore imperative for any entity to integrate these criteria into its reporting to guarantee total transparency to investors.

Companies operating in various sectors – from industry to services – must now align their practices with all the indicators defined by ESRS.

Thus, the proper application of these standards promotes better data management and allows for precisely measuring the impact of each activity.

This effort also contributes to more harmonious risk management, by placing each action within a framework of increased and measurable responsibility.

In summary, whether through the definition of frameworks, strategic support for actors or harmonisation of reporting practices, EFRAG and ESRS standards represent today an essential lever for sustainable finance.

From the design of a robust standard to the daily management of data, each step of the process aims to transform economic activity into a true opportunity for responsible growth.

Companies and financial actors must thus prepare to meet this major challenge, aware that each effort made will contribute to building a more transparent, predictable and resilient reporting system.

This work, the result of close collaboration between stakeholders, will undoubtedly be an exemplary work reconciling service and operational excellence, in the service of a sustainable transformation.

FAQ: EFRAG definition

In this section, we answer the main questions related to EFRAG and all ESRS standards, to clarify the issues of this framework.

What is the link between EFRAG and ESRS standards?

EFRAG collaborates closely with the Commission and other stakeholders to develop and refine ESRS standards.

By playing the role of advisor, it offers an in-depth analysis that guides the implementation of these criteria in all phases of the sustainable reporting transformation project.

It is a true collective work in which technical expertise combines with understanding of the material requirements specific to the sector.

Moreover, EFRAG helps to link international requirements, such as those defined by the ISSB, and the European regulatory framework.

This collaboration ensures a standardisation of practices and better integration of environmental and sustainability criteria in reporting.

In short, the close relationship between EFRAG and ESRS standards addresses the crucial question of transforming the modern reporting system.

To recall some essential points of our approach:

• Each standard in these frameworks is developed with respect for sector requirements.
• Each energy and resource account must be analysed via a rigorous operational method.
• A value chain is created around data appreciation and optimisation of each activity with the aim of creating a positive impact on all stakeholders.

Finally, it is crucial to note that EFRAG, as an advisory body, helps all actors to concretise the application of standards by transforming each regulatory provision into concrete guidelines on the ground.

Close collaboration with the European Commission and strict respect for requirement criteria constitute the foundation of permanent work aimed at strengthening transparency and rigour in communicated information.

From a global perspective, these traditional evolutions are not just a theoretical exercise.

They are part of an ambitious project where each step of the work provides a concrete response to the operational challenges of economic actors.

Each account of energy invested, each monitoring and application action is done in strict compliance with a provision put in place to anticipate and mitigate the slightest risk.

In this context, EFRAG plays a central role in harmonising and evolving practices by integrating the notion of impact into the entire sustainable reporting system.

It actively contributes to bringing company objectives closer to society's expectations by encouraging constant improvement of the service offered to investors and stakeholders.

Each interlocutor, whether an expert in the field or a field actor, finds in this framework a relevant resource, a true project of innovation and convergence of ideas.

Moreover, the scientific and regulatory rigour applied at each step allows for greater security in the information communicated, thus ensuring that all measures taken respond to the imperatives of the present time.

To conclude, it should be remembered that the transformation of sustainable reporting is not just a regulatory obligation, but a major issue of added value.

EFRAG's experience and strategic vision, combined with the complete integration of ESRS criteria, outline the contours of a future where transparency and responsibility are absolute priorities.

Each account of energy invested in this study reflects the desire to build a collective work centred on the performance and materiality of published information.

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