The recommendation is available on the website of each of the organizations that are signatories to it, as well as on the MATERIALITY website. The authors of the document focus on issuing a single recommendation, which can be summarised as follows: „If you are a large company not subject to the CSRD, but you plan to prepare an ESG report on a voluntary basis – do it in accordance with the simplified ESRS.”
The authors present a number of arguments as to why the simplified ESRS are appropriate for large companies:
- they are transparent, well-structured, written in plain language and contain a significantly reduced number of data points, as well as a number of exemptions and transitional provisions
- they are consistent with globally recognised standards such as IFRS S1+S2 and GRI
- they are most closely aligned with European law, which allows companies to use in their reports much of the information and data they already collect and provide under other regulations
- they allow the report to be subject to assurance by a statutory auditor, for example in accordance with the Polish standard KSUA3002PL
The signatories also emphasise that, although VSME is a good and important initiative, it was designed for micro, small and medium-sized enterprises and is simply not suitable for reporting by large companies, as it is unable to reflect the complexity and specific characteristics of larger organisations.
The recommendation is a clear signal of what financial institutions expect from large companies: reporting in accordance with the standards designed for them. By preparing a report in line with the simplified ESRS, a company will provide banks or investors with the information they need.
Particular attention should be paid to one element included in the recommendation. It explicitly states that the principle of fair presentation contained in the standards is intended to ensure that reports prepared in accordance with the ESRS present a true and fair view of the company. In my opinion, fair presentation is the greatest achievement of the process of simplifying the standards. Given the significant reduction in the number of data points, it will allow companies much greater flexibility in shaping their reports while retaining all material information.
Today, i.e. with reports for 2025 prepared under the old rules, many companies complain about the rigidity of the standards. A compliance-based approach, which stems from the recommendations of some advisers and auditors, means that companies often complete a long checklist of data points rather than creating a narrative about the company and how it manages sustainability. Fair presentation means that in the future the report will focus on what is material.
I hope that, when deciding on the choice of reporting standard, companies will take into account the recommendation issued by the six organisations. If we decide to report on a voluntary basis, it is worth doing it properly, in line with the expectations of report users 😊
P.S. In MATERIALITY ACADEMY we have a new course! Artur Gazda In it, Artur Gazda explains what due diligence processes involve. This is an absolute foundation, regardless of whether you are preparing for the CSDDD, seeking to meet the requirements set by your corporate clients, or simply aiming to manage sustainability issues effectively. 😊
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