European trade groups, including Efama, have called on Brussels to maintain proposed ESG reporting rules. Photo: Shutterstock

European trade groups, including Efama, have called on Brussels to maintain proposed ESG reporting rules. Photo: Shutterstock

The European Fund and Asset Management Association (Efama) has warned that watering down sustainability reporting requirements under the Non-Financial Reporting Directive (NFRD) would deprive asset managers of essential data needed for sustainable investments.

A group of trade groups and investment firms have called on the European Commission to “uphold the integrity and ambition of the first set of European Sustainability Reporting Standards (ESRS),” which aim to bolster green investing.

“Reducing the level of corporate ESG reporting requirements within the ESRS would create a misalignment with the Sustainable Finance Disclosure Regulation (SFDR),” the European Fund and Asset Management Association on Friday 7 July.

Efama was joined by the European Sustainable Investment Forum (Eurosif), Principles for Responsible Investment (PRI), Institutional Investors Group on Climate Change (IIGCC), and more than 90 investors and financial market participants.

In a joint declaration, the coalition welcomed the opportunity to provide input on the implementation of the draft delegated act. However, they expressed concern about proposals to move away from mandatory disclosure indicators, replacing them with materiality assessment.

Data gaps

“We see this as a significant rollback of ambition compared to that envisaged by the European Financial Reporting Advisory Group,” read the group’s statement.

The introduction of materiality self-assessment and increased voluntary disclosures would compromise the accuracy of sustainability reporting, hindering asset managers from obtaining the necessary ESG data for their SFDR disclosures, the organisations argued. These data gaps would further confuse end-investors and hinder the EU’s sustainable finance goals.

Reporting obligations

According to the coalition, the ESRS was designed to address data gaps across EU sustainable finance rules.

However, the proposed approach would limit investor access to consistent, comparable and reliable information necessary for informed decision-making and capital allocation aligned with sustainability goals outlined in the European Green Deal, the EU Biodiversity Strategy for 2030 and the EU Climate Law.

Additionally, it would hinder financial market participants from meeting their own mandatory reporting obligations under the SFDR, Benchmark Regulation and Pillar 3 disclosure requirements, despite the explicit provisions of the Corporate Sustainability Reporting Directive to capture this information.

Climate commitments

The coalition raised concerns about the voluntary nature of explanations regarding the determination of sustainability topics’ materiality, which puts the responsibility on corporates, supported by consultants and advisers, to decide what to report.

Efama stressed that reporting on greenhouse gas emissions, transition plans and climate targets should always be considered material and, therefore, mandatory, in line with the EU’s climate objectives and investors’ climate commitments.

“This would ensure that investors can access information from their holdings to support the alignment of their portfolios with net-zero and the Paris Agreement targets,” reasoned Efama.


To ensure investors have access to comprehensive sustainability data, the coalition presented several policy recommendations.

These include modifying the materiality assessment requirements to eliminate data gaps for SFDR obligations, aligning the reporting phase-in timelines between SFDR and CSRD to recognise their interdependence, ensuring maximum interoperability of ESRS with international ISSB and GRI reporting standards, and giving careful consideration to the requirements for reporting transition plans by providing specific guidelines.

The joint statement is available .