AFM reageert op consultatie wetsvoorstel ter implementatie duurzaamheidsrapporteringrichtlijn CSRD

The Dutch Financial Markets Authority (AFM) has provided feedback on the proposed law for implementing the Corporate Sustainability Reporting Directive (CSRD), emphasizing the need for administrative law powers and clear regulations for sustainability reporting and assurance. The CSRD will impact various aspects of the reporting chain, and the AFM advocates for several adjustments and additions to the proposed law to address these issues.
Starting from the 2024 fiscal year, stricter transparency rules will apply to ESG information in the annual reports of the largest publicly traded companies, in accordance with the CSRD. The group of companies required to report on this will gradually expand.
The bill mainly focuses on implementing amendments to the Audit Directive and Transparency Directive, without addressing sustainability reporting directly.
According to the CSRD, sustainability reporting will also be expanded and standardized, including not only qualitative descriptions but also quantitative data. The CSRD also mandates that an external auditor or assurance provider provides a limited level of assurance on the non-financial information prepared in this context, which the AFM oversees. AFM wants the legal basis for financial and sustainability reporting oversight to shift from civil law to administrative law to enhance its ability to supervise compliance effectively.
They emphasize the need for AFM to have sufficient authority to request information and documentation from issuing institutions and third parties, especially concerning sustainability reporting. AFM suggests including references to sustainability reporting standards in the Dutch Financial Supervision Act (Wtfv) to avoid legal disputes about their applicability; and also to change the name to „Wet toezicht jaarverslaggeving“ (Yearly Reporting Supervision Act) to reflect the increased importance of non-financial reporting under CSRD.
Furthermore, the AFM supports the use of the member state option to allow different external auditors for sustainability assurance. It advocates for the use of accredited independent assurance services providers (IASPs) for sustainability assurance.
The AFM calls for a notification or registration process for audit firms offering sustainability assurance and seeks clarification on the automatic inclusion of endorsements for auditors in registers. The bill and Explanatory Memorandum lack clarity regarding the process of selecting and appointing individuals or organizations for sustainability assurance, which should be clearly defined in the legislation, especially if third parties or IASPs are allowed to perform this role. The AFM is deciding whether accountants meeting sustainability reporting assurance standards should be automatically endorsed in registers, and the bill suggests adding such endorsements. For audit firms, it’s unclear whether external auditors authorized for sustainability assurance should be automatically endorsed or based on firm notification.
The bill lacks a requirement for audit firms to register with the AFM for offering sustainability assurance. This absence may force all audit firms, whether interested or not, to prepare for sustainability assurance due to proposed amendments. It is suggested that only interested firms should meet the additional requirements**, with the AFM register clearly indicating authorized firms for sustainability assurance, aligning with the memorandum’s suggestions.
Moreover, the AFM questions the rationale for allowing specific non-audit services in addition to sustainability assurance for public-interest entities (PIEs) and suggests implementing a complete ban on such services, similar to the ban in place for statutory audits. They argue that a total ban would better ensure the independence of audit firms in their work for PIEs.