EFRAG Governance Reform

On 21 April 2021, the European Commission adopted a legislative proposal for a Corporate Sustainability Reporting Directive (CSRD) which would require companies within its scope to report in compliance with European sustainability reporting standards adopted by the European Commission as delegated acts. Under the proposed CSRD, EFRAG would be the technical advisor to the EC developing draft EU Sustainability Reporting  Standards (ESRS)  and conducting impact analyses, using proper due process, public oversight and transparency, and the expertise of relevant stakeholders.

In a letter dated 12 May 2021, Commissioner McGuinness invited EFRAG to launch as soon as possible the necessary technical work to develop draft EU sustainability reporting standards consistent with requirements set out in the European Commission's proposal in parallel with the legislative process.  The Commissioner also asked EFRAG to move ahead with governance reforms as quickly as possible while respecting all legal requirements, based on the recommendations contained in the report of Jean-Paul Gauzès on his ad personam mandate.

Recent Developments 

EFRAG has already carried out extensive work on key changes to its governance and funding and on standard-setting matters related to sustainability reporting.

In June 2021, a  public consultation  was launched  on proposed Due Process Procedures for the preparation of draft ESRS.  In November 2021,  EFRAG published aggregation of the comments received in a summary report together with messages from the EFRAG Board President,  addressing  the due process during the interim work, the transition to the new governance structure, the due process of EFRAG's financial reporting pillar and the cooperation with global  sustainability reporting standard setters and initiatives.

On 16 November 2021, EFRAG launched  a call for expressions of interest for EFRAG membership in order to have a balanced representation for all stakeholders with an interest in corporate reporting in its new sustainability reporting pillar.  EFRAG is looking to broaden its existing European Stakeholders Organisations Chapter and National Organisations Chapters and to populate its new Civil Society Chapter reflecting EFRAG's public-private partnership model. Admissions to the EFRAG membership are possible at all moments. The earlier organisations join the more they can participate in the governance reform in process.

On 3 December 2021, EFRAG issued a briefing note providing further details and clarifications on conditions for EFRAG full membership and contributing in other ways to EFRAG activities.  The briefing note followed the publication, in November 2021, of a call for expressions of interest in EFRAG's membership inviting organisations, including civil society, to join its new sustainability reporting pillar. EFRAG also noted the  establishment of the "Friends of EFRAG- sustainability reporting": individual entities can join to give their individual support to EFRAG's mission and support EFRAG's activities, involving an annual contribution of minimum 5000 euro.

On 15 December 2021, EFRAG issued a news item announcing the calls for applications for the Chairs of the EFRAG Financial Reporting and Sustainability Reporting Boards issued by the European Commission. The calls for applications set  out the requirements for the positions and describes the application and selection procedures. Applications should be submitted by 1 February 2022.

On 21 December, EFRAG issued a news item to inform interested stakeholders that  its next General Assembly meeting in which new member organisations can be admitted would take place on 21 January 2022. Expressions of interest received until 14 January 2022 would be considered although application may also be submitted at a later stage.

On 23 December, the EFRAG General Assembly Nominating Committee launched a call for applications for the position of the President of EFRAG Administrative Board. The call for applicaitons sets out the requirements for the position, describes the nomination and selection procedure. Only EFRAG Member Organisations can nominate candidates. The President of the EFRAG Administrative Board will be formally appointed by the EFRAG General Assembly following the call for candidates amongst the EFRAG Member Organisations, upon recommendation of the EFRAG GA NC and after informal consultation with the European Commission.

In January 2022, the EFRAG General Assembly  approved the revised EFRAG Statutes and EFRAG Internal Rules (here), integrating the new Sustainability Reporting Pillar in EFRAG’s organisational structure. 

In February 2022, EFRAG completed the composition of its Administrative Board with the appointment of Hans Buysse as its President (effective as of the end of the mandate of EFRAG Board President Jean-Paul Gauzes; Georg Lanfermann as its Vice-President (effective 15 February) and Marilyn Waite as the member representing the Civil Society Organisations.

In March 2022, the EFRAG General Assembly appointed the members of the EFRAG Sustainability Reporting Board.