The European Financial Reporting Advisory Group (EFRAG) was established in 2001 by the European Commission. The group has two pillars—one focused on financial reporting and the other on sustainability reporting. In its financial reporting activities, EFRAG ensures that the European view is represented in the International Accounting Standards Board’s (IASB) standard-setting process and provides advice to the European Commission on the International Financial Reporting Standards (IFRS).
Since being mandated by the European Commission to develop European Sustainability Reporting Standards as part of the Commission’s 2021 Corporate Sustainability Reporting Directive (CSRD) proposal, EFRAG modified its governance structure to create the EFRAG Sustainability Reporting Board, which sits alongside the EFRAG Financial Reporting Board and is divided into three chapters (European Stakeholders, National Organizations, and Civil Society Organizations). The Sustainability Reporting Board is responsible for all sustainability reporting positions of EFRAG and oversees and authorizes EFRAG’s draft and final sustainability reporting due process documents.
In March 2022, EFRAG released working papers or draft sustainability reporting standards. A first set of finalized standards is expected before the end of 2022, and additional sector-specific standards, and small and medium enterprise (SME) reporting standards by mid-2023. When the final EFRAG standards (the European Sustainability Reporting Standards) are released, they will be enforceable by the European Commission and affect all 28 countries in Europe.