ERU, Alm.del - 2020-21 - Bilag 232: EMs notat samt høringssvar vedr. etablering af en fælles europæisk indgang til offentlige finansielle og ikke-finansielle virksomhedsoplysninger, fra erhvervsministeren

Erhvervsudvalget 2020-21
ERU Alm.del Bilag 232
Offentligt

12 March 2021

The Danish Government’s response to the Targeted Consultation on

the establishment of a European Single Access Point (ESAP) for finan-

cial and Non-Financial information publicly disclosed by companies

The Danish Government supports the initiative of the Commission to es-

tablish a European Single Access Point, gathering public financial and non-

financial company information from other existing systems. The Danish

Government considers this initiative a positive step, fostering digitalization

and ensuring transparency and easy access to important comparable infor-

mation for investors and other stakeholders, hence facilitating the further

development of the Capital Markets Union (CMU) and a market-based

transition to a sustainable economy.

The Danish Government supports the Commission’s efforts towards

strengthening transparency and comparability across Europe, while under-

lining that this initiative should work together with existing national sys-

tems. The aim should be to ensure wider access to the information, while

not imposing disproportionate burdens on the reporting companies, the

companies in general, or investors using the information. This is in line

with the Council conclusions on the Commission's CMU Action Plan from

December 2020.

In order to avoid imposing unnecessary administrative burdens on compa-

nies and Member States it is crucial not to require companies to report the

same information to various authorities/systems. The Commission should

therefore ensure that ESAP is compatible with national reporting systems

already in place

–

and with the European Single Electronic Format (ESEF).

Any proposal establishing a ESAP should be based on a thorough and de-

tailed impact assessment to counter challenges and risks of overlaps with

existing systems as well as privately provided services.

We therefore stress that a thorough mapping and cost-benefit analysis must

be performed to identify the nature of demand for information and provide

a quantitative basis for assessing costs and benefits of an ESAP. Only this

could allow the Commission to move swiftly forward in the areas where

there is a strong demand and need for transparency and easily accessible

ERU, Alm.del - 2020-21 - Bilag 232: EMs notat samt høringssvar vedr. etablering af en fælles europæisk indgang til offentlige finansielle og ikke-finansielle virksomhedsoplysninger, fra erhvervsministeren

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comparable data, such as for sustainability data, while waiting or even re-

fraining from including very specialised financial data only relevant to a

subset of investors.

The Danish Government suggests a step-by-step approach:

Step one

–

information already available in a machine readable format

and sustainability information:

Should focus on transparency regarding

information that is already digitally available in machine readable formats

such as XBRL. From Danish non-financial companies this would be data

reported in the annual report. It should be noted that the information from

the annual reports might not be comparable, as the member states can

choose different options for recognition and measurement. However, data

availability will be an advantage.

Furthermore, an important first focus of ESAP should be securing access

to standardized and comparable sustainability data. There is a clear and

growing market demand for such data, while availability and comparability

are lacking. The ongoing review of the non-financial reporting directive

(NFRD) and the implementation of the Disclosure and Taxonomy Regula-

tions provide good opportunities for establishing structured data to form

the first elements of ESAP. It is important that the financial and non-finan-

cial information from the annual report is aligned. As this information

could be made digitally available in a machine readable format within the

near future the Danish Government proposes to expand ESEF to include

sustainability information already in step one.

Step two

–

information that is already digitally available:

The Danish

Government suggests a focus on information already digitally available,

but not necessarily in a machine readable format, regarding financial com-

panies such as certain information under the Short Selling Regulation or

the Transparency Directive

. Certain aspects would need further harmoni-

zation in the specific acts before inclusion would be possible.

Step three

–

information where there is a potential for harmonization:

The Commission should look into possibilities to further harmonize report-

ing requirements regarding financial and non-financial information for

non-listed companies which have cross border activities or which on other

grounds have a need to present their financial statements in more countries.

It could be relevant to assess whether IFRS for SMEs could form the basis

for such a harmonization.

Finally, any possible further expansion of ESAP to specialised financial

data only relevant to a subset of stakeholders, should be based on thorough

cost-benefit and demand analyses as mentioned above.

For more detail see [annex 2 or the questionnaire]

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The scope of ESAP

In Denmark, non-financial undertakings are obliged to submit digital

(XBRL) annual financial statements to The Danish Business Authority.

The mandatory digital submission was introduced over the course of the

period 2012-14. The Danish experiences with this type of digital reporting

are very positive, and we therefore recommend including them in the first

step of ESAP. To avoid administrative burdens, this information should

still be digitally reported in the national system, and then automatically be

made public through ESAP as well. The tasks of ensuring data exchange

and interoperability should hence be placed with the authorities through

automated solutions, not the companies. However, assignment to relevant

authorities depends on the structure and goal of the ESAP as well as any

potential additional information/data requirements.

Sustainability related information, and in particular information and data

feeding into the demands of the Sustainable Financial Disclosure Regula-

tion (SFDR), would be very beneficial to include. Data provided through

this regulation could serve as another good starting point for ESAP inclu-

sion. Reporting templates under the SFDR are being standardized and data

on sustainability risks are generally scarce, but important for investor deci-

sions. However, this has to be done with respect to Officially Appointed

Mechanisms (OAMs) and while keeping the burdens of data validation at

a minimum.

In regard to sustainability data, the Danish Government would like to un-

derline the importance of giving companies access to “upstream”

sustaina-

bility data, which the reporting companies need to make reliable calcula-

tions. The Danish Government therefore stresses that similar initiatives are

needed aiming at giving better access to the data needed by non-financial

companies. One such example is data on direct and indirect emissions of

CO2 equivalents of a wide range of both energy and non-energy resource

consumption throughout value chains, i.e. allowing companies to assess

their carbon footprint in scopes 1, 2 and 3 of the Green House Gas Protocol.

We understand that this is outside the scope of ESAP, but it is an important

factor to limit the burdens for the companies. This is further elaborated in

annex 1.

As a consequence, we find that the scope should be targeted in order to

maximize benefits while avoiding unnecessary burdens. A main guiding

principle should be that quality of information must outweigh quantity, and

information overload should be avoided. Only high quality, consistent,

timely and correct information will be able to instill the necessary trust and

credibility in the system and facilitate investment decisions across the EU.

We therefore urge that any ESAP project be developed as a step-by-step

process over time allowing for identification of relevant (sectoral) infor-

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mation for inclusion. If undertaken, such a project should start with a tar-

geted, but harmonized set of information in structured machine-readable

formats across the EU, as described above.

Please see annex 2 for a more detailed argumentation regarding including

information made public under each of the acts listed in the public consul-

tation question 7 in ESAP.

Usability and accessibility

The Danish Government agrees that financial and non-financial company

information should be included in a comparable, digitally structured format

with a clear scope focusing on information relevant to a broad set of users.

The Danish Government is open to how the information might be accessi-

ble once in ESAP and it should allow for efficient data processing.

To allow for a broad set of users and ensure a user-friendly interface, the

Danish Government recommends that the portal cater to national lan-

guage regimes and that search functions will be made available in all EU

languages. Regarding reporting, ESAP should not focus on one or a few

languages but respect the carefully considered language regimes in the

sectoral legislation, and for information that today can be given in na-

tional languages, this should remain possible in the future. We wish to

underline that the subject of translation of reporting is already a source for

large expenses for many companies, to which we should not add.

Infrastructure and data governance

The Danish Government strongly believes that the infrastructure should

leverage and expand on existing national systems in Member States rather

than phasing out such systems, whether at EU or national level.. This could

be done by inter-connecting the available systems. Moreover, not every na-

tionally relevant information is relevant to a cross-border solution and the

current systems in a Member State also rely on non-standardized data for-

mats from multiple stakeholders. These differences should be taken into

consideration.

The Danish Government strongly recommends that ESAP is built on exist-

ing national reporting systems, i.e. that the ESAP is not the single or first

reporting channel but an access point where information is supplied via

existing systems.

We therefore recommend that there is no additional validation requirement

of the information going into the ESAP, as such checks are placed at the

original data entry point.

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Entities with no access to capital markets (non-listed entities), includ-

ing SMEs

The Danish Government supports the initiative of the Commission in the

European Green Deal to evaluate the Non-Financial Reporting Directive

(NFRD) and in this regard to consider expanding the scope to include more

companies, as well as facilitating voluntary reporting on sustainability as-

pects by SMEs.

The Danish Government would find it beneficial if more companies could

be encouraged to report on non-financial information voluntarily to ESAP,

while keeping in mind that resources, size and competences vary signifi-

cantly at the company level in Member States, and therefore a requirement

for SMEs to report would be disproportionate. This is not without chal-

lenges as we also support the view that if you use or opt into a regime you

should follow the same rules. We see no reason for a different approach in

the ESAP.

We do however see significant challenges if the scope were to include all

companies regardless of size or sector, whether mandatory or on a volun-

tary reporting basis, as their systems and governance structures are not

equipped to address this type of reporting and it is not proportionate to ask

them to participate considering their local and regional market orientation.

To help overcome this, the establishment of ESAP should be coherent with

the work in the current revision of the NFRD and a voluntary standard for

SMEs should be established. The voluntary standard should focus on a core

of ESG indicators, which should also, to the extent possible, be aligned

with reporting requirements in the SFDR. This would allow SMEs to create

transparency around their sustainability initiatives towards investors, hence

facilitating the process of attracting capital.

Costs and benefits

The Danish Government encourages the Commission to ensure that the es-

tablishment of a European Single Access Point is based on automatically

collected information from existing European or national systems for digi-

tal publication of financial and non-financial company information in a

comparable standardized machine-readable format.

Notwithstanding such a solution, implementation of an ESAP regulation

covering capital market participants would have considerable administra-

tive consequences imposing significant burdens to the capital market sector

since it would require resources (IT, human etc.).

Financial institutions and companies operating in the capital markets pub-

lish a considerable amount of information and there are a wide range of

databases, registers, etc. already set up to address publication requirements

and information access for the public. Therefore, ESAP should be based on

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a thorough market analysis and impact assessment to evidence several as-

pects. Firstly, presence of market failure in providing this information. Sec-

ondly, establishing the demand for information from the potential target

audience in order to ascertain the benefit of the proposal. Thirdly, the costs

and benefits of a system developed in the public sphere as opposed to a

private endeavor, considering the costs of establishing as well as operating

such a system. The Danish Government recommends the Commission to

focus the efforts in the areas where no private operators are providing a

market covering service, such as on ESG data.

When considering format and content, due consideration must be given to

ensure easily accessible information that will be used by the intended target

group and thus avoid information overload in the system. In this context

we would question the benefit of including data that is not in an EU-stand-

ardized and structured format whether initially or at a later stage.

Finally, when it comes to funding we find it important that ESAP should

be funded by EU funds. It is important that the funds come from the exist-

ing EU budget and does not lead to further contributions to the EU budget

from the Member States.

In conclusion,

the Danish Government finds the Commission’s focus on

transparency of financial and non-financial information publicly disclosed

by companies to be an important step towards facilitating a market-based

transition to sustainable finance and a more integrated CMU. This, how-

ever, must be done in a proportionate and targeted fashion, focusing in the

first place on information of relevance to a broad set of investors across the

EU and where comparable data is lacking today. Furthermore, existing sys-

tems should be used to the extent possible in order to avoid increasing ad-

ministrative burdens for companies as well as authorities.

We look forward to continuing contributing actively to the process of es-

tablishing an ESAP and are at your disposal for further elaboration.