EU begins consultation on sustainability reporting for captives

The European Union has begun a consultation with small and medium sized entities - including European captive insurers and reinsurers - on their sustainability reporting. 

The European Financial Reporting Advisory Group said it had been mandated to develop the standard for SMEs that are public-interest entities, including captive insurers and reinsurers. 

A similar exposure draft (ED) is also being carried out for non-listed SMEs. 

EFRAG said the reporting standard would be issued as delegated act effective on January 1, 2026 with an additional two-year opt out. 

It said the purpose of the consultation was to set reporting requirements that were proportionate and relevant to the scale and complexity of the activities and to the capacities and characteristics of listed medium and small enterprises (LSMEs). 

"This is expected to support LSMEs in getting better access to finance and avoid discrimination against them on the part of financial market participants, as it will enable availability of standardised sustainability information," the EFRAG statement said. 

It added: "The current public consultation is designed to receive feedback from constituents on key aspects of the EDs, including (i) the proposed architecture; (ii) the implementation of the CSRD requirements (for ESRS LSME ED), including the role of the LSME ED in setting the value chain cap for information to be reported by large undertakings; (iii) the relevance of the proposed disclosures; (iv) the simplifications achieved; and (v) the market acceptance (for the VSME ED). The questionnaires aim to capture users' and preparers' perspectives. Feedback from all interested constituents is welcome."

More information on the study and how to participate can be found at this link: https://www.efrag.org/News/Public-479/EFRAGs-public-consultation-on-two-Exposure-Drafts-on-sustainability-r?AspxAutoDetectCookieSupport=1

Chiara Del Prete, the EFRAG SR TEG chair, said: "These two EDs respond to an effort to develop a set of sustainability information that is at the same time proportionate to SMEs and able to support the provision of the information that we already see – and more and more expect to see – requested by business counterparties. 

"For the success of our voluntary standard for non-listed SMEs, market acceptance will be key. We expect this consultation to help us in the finalisation of standards that will be able to meet the expectations of all interested parties."

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