Implementation guidance for the ESRS materiality assessment


The Association of German Public Insurers (VöV) welcomes EFRAG’s consultation on the draft Implementation Guidance on the Materiality Assessment (IGMA) in the context of the Corporate Sustainability Reporting Directive (CSRD). As Germany’s second largest primary insurance provider with a strong regional presence, the group is strongly committed to the goals of a more sustainable economy. The public insurers are signatories of the Principles for Responsible Investment (PRI) and take environmental, social and governance principles into account in their business decisions. With their expertise, public insurers have contributed significantly to the development of sustainability reporting by giving their advice on the CSRD and the and the European Sustainability Reporting Standards (ESRS).

General Comments
Public insurers see the IGMA from the perspective of the initiative of the European Commission to lower the reporting obligations for companies by 25 per cent. With this in mind, the public insurers are in favour of a well-structured IGMA that facilitates the interpretation of the ESRS without assuming requirements going beyond the provisions of the ESRS and CSRD. Recital 43 of the CSRD states: "Sustainability reporting standards should be proportionate and should not impose an unnecessary administrative burden on companies that are required to use them." Public insurers fully support EFRAG’s commitment to a proportionate and pragmatic approach as mentioned prominently in paragraph 5 of the executive summary of the IGMA: "The ESRS do not prescribe a particular process or sequence of steps to be followed in performing the materiality assessment, so this is left to the judgement of the entity. Whatever process is used, it should reflect the facts and circumstances of the organisation." In the following, we suggest several changes to the IGMA to better reflect this overarching and important principle.

Comments on specific chapters of the IGMA

Comments on chapter 3: How is the materiality assessment performed?
We suggest clarifying the approach stipulated in Figure 4. The implicitly assumed scalability of the factors scale, scope and irremediable character is methodologically and practically untenable. EFRAG should therefore emphasise more clearly in the MAIG that this representation is only one of many possibilities. For potential impacts (section 3.6.2, para 119), EFRAG suggests “to simplify its representation, the three factors within severity would be combined altogether”. This approach should be pursued for actual impacts (section 3.6.1, para 117) as well.

  • Public insurers therefore suggest adding the following clarification to para 117: “To simplify its representation, the three factors within severity can be combined altogether”.

Comments on chapter 5.3 FAQs on the materiality assessment process
FAQ 12 states: “The ESRS do not prescribe specific documentation, but it is reasonable to expect a certain level of documentation to be needed for internal purposes. Such documentation could inform those in charge of the governance over the process of sustainability reporting (see ESRS 2 GOV- 5), to prepare the ESRS 2 IRO-1 disclosures and help assurance providers to perform their work.”

  • In line with the flexibility and proportionality granted in the CSRD and ESRS, we suggest a wording that reflects these overarching principles and replace the before mentioned quote in para 176 by: “The ESRS do not prescribe specific documentation. In some cases, it might be reasonable to expect a certain level of documentation to be needed for internal purposes. Such documentation could inform those in charge of the governance over the process of sustainability reporting (see ESRS 2 GOV- 5), to prepare the ESRS 2 IRO-1 disclosures.”

Comments on chapter 5.7: FAQs on Art. 8 EU Taxonomy
FAQ 25 states: „If an undertaking engages in activities that are eligible for the EU Taxonomy, this indicates that it impacts the environmental objective for which the Taxonomy defines substantial contribution (SC).“ Public insurers acknowledge the potential link between the EU Taxonomy and materiality. As for insurance undertakings, nearly all lines of business of non-life insurance are Taxonomy-eligible. However, the materiality analyses performed by public insurers did not conclude that they necessarily have material impacts. Furthermore, the Taxonomy is only one process that may inform the materiality assessment. Risk management within Solvency II, investment decision processes, the Sustainable Finance Disclosure Regulation and other process might be used in the materiality assessment as well.

  • German public insurers suggest adding a clarification “that despite a possible link between the two concepts, Taxonomy-eligibility is no precedent for materiality within the meaning of the ESRS. Reporting Taxonomy-eligible activities by an undertaking does neither oblige it to assess them as material nor to explain why they are not.”
  • Furthermore, public insurers propose altering this FAQ in the sense that the Taxonomy is only one process amongst many that may inform the materiality assessment.

The public insurers support EFRAG in creating an efficient and proportionate sustainability reporting framework and look forward to further dialogue on sustainable finance.

Contact Persons

Dr Wolfgang Eichert
Head of EU Representative Office

T+32 476 83 09 71

Dr Christian Schwirten
Head of Department Political Affairs

T+49 30 22 605 49-22


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