EU legislation gives mandate to put the spotlight on oil, gas and mining companies in future European Sustainability Reporting Standards
Publish What You Pay reaction to the deal on the final text of the EU Corporate Sustainability Reporting Directive (CSRD)
Publish What You Pay (PWYP), the global movement for open and accountable extractive industries, welcomes the guarantee and prioritisation of the development of specific disclosure standards for “high-risk sectors”, including oil, gas and mineral extraction, enshrined in the new European Union (EU) Corporate Sustainability Reporting Directive (CSRD).
The three institutions of the European Union have finalised the provisional agreement on the CSRD, ensuring that information that must be disclosed is “proportionate to the scale of the risks and impacts related to sustainability matters” of each sector, acknowledging that some are more risky than others.
Attention now turns to the European Financial Reporting Advisory Group (EFRAG) who must now ensure that this mandate is reflected in the European Sustainability Reporting Standards (ESRS) required by the CSRD. For the oil, gas and mining sectors, enabling investors, citizens and policy makers to fully understand the nature of risks and impacts associated with their business activities, means that many disclosures will have to be made at project-level. Fortunately, this level of disclosure is already required by chapter 10 of the accounting directive.
In reaction to the deal on the CSRD Elisa Peter, PWYP’s Executive Director, said :
“We welcome the attention given to high risk sectors by the legislators. A just energy transition will not be possible without full transparency from oil, gas and mining companies on their extraction projects. The sustainability disclosure rules that will now be developed to implement yesterday’s deal are of vital importance to people, the climate, the environment and good governance in the countries where the oil, gas and minerals are extracted.”
The European Financial Reporting Advisory Group (EFRAG) has been tasked with drafting European Sustainability Reporting Standards (ESRS) which will implement the CSRD and lay out the disclosure obligations of companies. Draft cross-cutting disclosure standards have already been published by EFRAG; a public consultation on these standards runs until 8 August. The text of the CSRD agreed by the legislators on 21 June now provides a strong mandate to EFRAG to take into account the exceptional sustainability risks of extractive companies as it sets out to develop a second set of sector-specific sustainability disclosure standards.
Chapter 10 of the EU Accounting Directive of 2013 and Article 6 of the EU Transparency Directive of 2004 require oil, gas and mining companies to disclose their payments to governments for each extraction project. These transparency requirements were introduced to empower civil society actors of resource rich countries to hold their governments and companies to account.
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