What investors want changed in ESRS: trade secrets exemptions, ISSB alignment, and where the gaps are

Investor feedback on the European Sustainability Reporting Standards has surfaced two distinct pressure points: concern that the trade secrets exemption built into ESRS allows companies to withhold material data, and a lack of consensus on whether the EU standards should be formally aligned with those of the International Sustainability Standards Board. The feedback, reported by Responsible Investor, also addressed exemptions related to investment assets and a range of other reporting reliefs that market participants believe could create inconsistency across disclosures.

Norges Bank Investment Management, the manager of Norway's $2 trillion oil fund, has come out clearly on the alignment question. NBIM is calling on the EU to allow companies to satisfy both ESRS and ISSB requirements through a single report, arguing that duplicating disclosures across two frameworks imposes unnecessary costs on both issuers and investors who must then reconcile the outputs.

For in house ESG managers and CFOs preparing their first CSRD filings, the investor debate matters because it signals what financial stakeholders will actually scrutinise. If large institutional investors believe trade secrets exemptions are being used to obscure rather than protect genuinely sensitive information, audit committees and sustainability teams should expect pointed questions during stakeholder engagement cycles. The exemptions in question apply across multiple ESRS standards, meaning the issue is not confined to a single disclosure area.

The split among investors on ISSB alignment also creates a practical uncertainty for groups that operate across jurisdictions and must currently plan for two separate reporting tracks. EFRAG has previously indicated that it is monitoring interoperability, but no formal decision on a unified reporting pathway has been confirmed. Companies with operations in markets where ISSB aligned disclosure is becoming mandatory face the real prospect of preparing materially different sustainability reports for different audiences.

What comes next will depend in part on how EFRAG processes this market feedback and whether the European Commission treats investor concerns as grounds for adjustment during the ongoing CSRD review period. Observers will watch closely for any signal that the trade secrets exemption is narrowed or that formal equivalence guidance between ESRS and ISSB is issued. Until that clarity arrives, compliance teams should document their own rationale for any exemption they invoke, treating the audit trail as a first line of defence against investor challenge.