The ESRS standards were issued by the European Commission on July 31 as a delegated regulation. The so-called. scrutiny period, during which the European Parliament and the Council may raise objections. If they do not (which is very likely), the regulation will be published in the Official Journal of the EU and will enter into force. On August 2, the EC published the text of the regulation and the standards contained in its annex in all language versions in which EU legislation is published.
I am not afraid to use strong language when assessing the quality of this translation: it is very poor. Reading it, one gets the impression that its authors are not familiar with the living Polish language, and in particular, are unfamiliar with the terminology used by experts dealing with sustainable development issues. How else can one explain the use of the word „możliwości” (possibilities) instead of „szans” (opportunities)? In the sustainability industry in Poland, the phrase „ryzyka i szanse” (risks and opportunities) has long been accepted to describe what in English is referred to as „risks and opportunities.”.
The authors of the translation confuse the concepts, causing unnecessary confusion among readers of the Polish version of the standards. The name disclosure requirement E1-1 Plan de transición para la mitigación del cambio climático has been translated as Transition plan for climate change mitigation. However, already climate-related transition risk that climate transition risk. Why transition once is transformation, and once transitionAccording to the intention of the authors of the standards (both EFRAG and the Commission), the point is the same. However, specialists preparing reports for Polish companies will have to engage in philosophical debates in an attempt to identify and understand these non-existent differences.
Worse still, in the Polish version of the standards, some passages have been translated in such a way that they change the content of the requirements that companies are to apply. For example, ESRS 2, in disclosure requirement SBM-1 concerning the business model and strategy, contains paragraph 42, which in the English version requires The undertaking shall disclose a description of its business model and value chain, including: (a) its inputs and its approach to gathering, developing, and securing those inputs. The Polish version states that the company should disclose your input data and your approach to collecting, processing, and securing that data. This is not about any data! „Inputs” are all the inputs that are necessary in a given business model for a company to operate, including raw materials, materials, components, labor, capital, and any other factors necessary for the organization to function. When studying the English version, this is obvious, because the next point requires disclosure. (b) its outputs and outcomes in terms of current and expected benefits for customers, investors, and stakeholders, i.e. output (everything that the company has produced in the form of products and services) and results achieved. In IT terminology, „inputs” refers to input data, and this is probably the path the translator followed. Unfortunately, this path was wrong, and the effects of this mistake will be felt by all Polish companies trying to properly prepare a sustainability report.
We are therefore dealing with a situation in which the regulator has ordered all companies covered by the regulations to disclose specific information. However, an incorrect translation into Polish has meant that companies using this version of the standards will disclose something else. How will auditors approach this discrepancy? Some auditors will learn ESRS based on the Polish language version, but many will take advantage of training conducted in English as part of international networks in which large audit firms operate. How will discussions between company representatives and auditors proceed when each party uses the same standards published in the Official Journal of the EU, but containing completely different requirements? How will international investors, who are convinced that the reports should contain different information, react to the reports of Polish companies (prepared in accordance with the Polish version of the standards)?
The above example is just one of many cases in which an incorrect translation distorted the essence of the requirement that a company preparing a report should meet. I hope that the content of the standards to be published in the Official Journal of the EU will be free of such errors. However, this hope is very fragile. The Commission did not use the list of several dozen key terms in Polish that should be included in the translation, which was submitted to it at the beginning of 2023 by the Polish Association of Listed Companies and compiled by a group of Polish experts. I have not heard, even informally, of any involvement of public institutions that should ensure the proper quality of the Polish version of the standards.
It is high time that the Ministry of Finance, the Financial Supervision Authority, and perhaps other Polish institutions ensured that the translation was correct. It is high time that the European Commission undertook the correct translation of the ESRS into Polish, as this is one of its responsibilities. If this does not happen in the coming weeks, we will face many years of interpretation problems, and along the way, many companies will make serious mistakes in their reporting in good faith.
Polish
English