Update

Sustainable Finance

 Cannot read this email? Open in your browser.November - December 2020 
 

Sustainable Finance Update

November - December

 
 
 
 

Webinar recap

 
 
 

See everything that happened at our path to high-quality non-financial information assurance webinar .

 
 
 
 
 

EFRAG’s consultation response

 
 
 

We contributed our views on the ad personam mandate of EFRAG Board President Jean Paul Gauzès on non-financial reporting standard setting.

 
 
 
 

Feature story

 
 
 
 

IIRC and SASB intention to merge in a major step towards simplifying the corporate reporting system

The International Integrated Reporting Council (IIRC) and the Sustainability Accounting Standards Board (SASB) announced their intention to merge into a unified organisation, the Value Reporting Foundation. This will provide investors and corporates with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards to drive global sustainability performance. The merger will advance the work of CDP, CDSB, GRI, IIRC and SASB in the “Statement of Intent to Work Together Towards Comprehensive Corporate Reporting”, which outlines a vision for a comprehensive corporate reporting system.

Following the IIRC-SASB announcement, CDSB’s Managing Director noted that CDSB will enter into exploratory discussions to integrate within the Value Reporting Foundation in the coming months. Read more

 
 
 
 
 

EU Developments

 
 
 
 

Steven Maijoor speaks about paradoxes of sustainability reporting

Steven Maijoor, Chair of ESMA, highlighted three paradoxes of sustainability reporting at a webinar organised by the French Ministry of the Economy, Finance and Recovery. In his speech, Mr Maijoor noted: i) the need to ensure that reporting standards are, at the same time, international and jurisdiction-specific standards ii) the importance of robust but flexible reporting requirements to prevent greenwashing but also to allow companies to tell their own story iii) difficulty to establish proportionate but complete reporting where he suggested that size may not be a good proxy for ESG reporting and therefore supporting simplified standards for SMEs.Read more

EP Legal Affairs Committee adopted its non-binding position on Sustainable Corporate Governance

On the 16 November, the Legal Affairs Committee adopted a report on Sustainable Corporate Governance prepared by Pascal Durand (Renew Europe, France). The report makes a series of recommendations for the revision of the Non-Financial Reporting Directive, including that the scope of the Directive should be extended to cover all listed and non-listed large EU undertakings. The report also notes that NFI statements should be subject to a mandatory audit.

As regards directors’ duties, the report highlights the need for concrete obligations and incentives to act and not only to report information. It hence calls for a framework defining company boards’ duties in terms of sustainability. Read more

Council reiterates its commitment to green transition

The Council issued a statement to reiterate its commitment to green and sustainable economic transition. The Covid-19 recovery measures should focus on the “do no harm” principle to rebuild EU economy and create new opportunities for development. At least 37% of the Recovery and Resilience Facility in the NextGenerationEU Fund will be devoted to climate-related objectives. Furthermore, the EIB is also committed to increase its share of finance for climate action and environmental sustainability to 50% by 2025. Read more

European Commission soon to adopt the delegated regulation for the EU Taxonomy

The Commission is expected to adopt the delegated regulation on climate change mitigation and adaptation to supplement the EU Taxonomy Regulation by end 2020. The Commission is currently consulting on its draft delegated act with a deadline for feedback by 18 December. Read more

Japan joins the International Platform on Sustainable Finance

During the EU-Japan Joint Financial Regulatory Forum on 24 November, the Commission welcomed Japan as a member of the International Platform on Sustainable Finance. The Commission and Japan will co-chair the working group on disclosures, which is one of the focus areas within the International Platform on Sustainable Finance IPSF. Read more

ECB Financial Stability Review: green financial market is growing rapidly

In the Financial Stability Review of November 2020, the ECB reported about the state of play of ESG funds and green bonds. It emerged that: green financial market is growing rapidly at a global level (170% since 2015); investors in the Euro area have pivoted towards ESG funds since the Coronavirus started; almost all sectors increased their holdings of green bonds in Q1 of 2020; banks increased their role in green financing. The ECB notes that financial markets can help to support the transition to a more sustainable economy and reduce vulnerability to climate-related risks. Read more

EIOPA consults on key performance indicators on sustainability for non-financial reporting

EIOPA published a consultation on: i) the relevant ratios to be mandatorily disclosed by insurers and reinsurers falling within the scope of the Non-Financial Reporting Directive and ii) on the methodologies to build those ratios. The authority considers whether the mandatory ratios of non-financial undertakings, as set out in the Taxonomy Regulation, are relevant and appropriate to depict insurance and reinsurance activities or whether they need to be ‘translated’ to the most appropriate and comparable key performance indicators for insurance and reinsurance businesses. The deadline for feedback is 12 January. Read more

A new EU-US agenda for global change

In December, the EC and the High Representative put forward a proposal for a new transatlantic agenda for global cooperation. Among the main points on the new agenda, the EU commits to: establish a comprehensive transatlantic green cooperation: a joint trade and climate initiative, measures to avoid carbon leakage, a green technology alliance, a global regulatory framework for sustainable finance, joint leadership in the fight against deforestation, and stepping up ocean protection. Read more

EFRAG Project Task Force on possible EU NFI standards reports on preliminary assessment points

The EFRAG Project Task Force on preparatory work for the elaboration of possible EU non-financial reporting standards (PTF-NFRS) published a progress report for the activities up to 31 October 2020. The progress report provides a view of the PTF-NFRS organisation and the preliminary high-level assessment points emerging from the assessment phase of the project, which is still under finalisation.

The PTF-NFRS will continue with the next phases of its work, involving the development of proposals and outreach activities to stakeholders, aiming to conclude its work by the end of January 2021.Read more

EFRAG Board President Jean-Paul Gauzès consults on preliminary proposals on the ad-personam mandate​

Following the views gathered in the first phase, EFRAG Board President Jean-Paul Gauzès issued a consultation document on the ad-personam mandate including potential need for changes to the governance and funding of EFRAG. The consultation is open for comments until 6 January 2021. Read more

Jean-Paul Gauzès submitted his progress report​ on his ad-personam mandate on potential changes to the governance and funding of EFRAG if it were to undertake NFI standard setting. The report included preliminary proposals for the future governance of EFRAG. Read more​

 
 
 
 
 

International Developments

 
 
 
 

IOSCO’s 45th Annual Meeting

In November, IOSCO held its annual meeting. IOSCO’s Board agreed that the IOSCO’s Sustainable Finance Task Force should: explore pathways to mandatory disclosure beyond comply or explain requirements; engage with the IFRS Foundation to ensure that any proposals stemming from the consultation paper meet securities regulators’ expectations in terms of content and governance; advance discussions regarding the establishment of an assurance framework for sustainability disclosures. Read more

IFRS Foundation’s educational material on IFRS and climate-change

The IFRS Foundation published educational material to highlight how existing requirements in IFRS Standards require companies to consider climate-related matters when their effect is material to the financial statements. Read more

 
 
 
 
 

National Developments

 
 
 
 

IDW (institute of Public Auditors in Germany) views on the future of corporate reporting and assurance

IDW issued its position paper on future of non-financial reporting and assurance. The paper looks into three main matters: standardisation of non-financial reporting, development towards integrated corporate reporting and assurance over non-financial reporting. Read more

ACCA issues a practical guide to natural capital management

ACCA issued the first part of a series of practical guides on natural capital management to help professional accountants to change business for the benefit of the planet, by providing simple and practical explanations about the process. It includes case studies, alongside links to other helpful external resources from organisations such as the Capitals Coalition and the Convention on Biological Diversity. Read more

 
 
 
 
 

Other news

 
 
Euractiv
 
Finance: becoming green while in the red
 
Euractiv
 
EU green finance rules at risk of deviating from science
 
Finextra
 
OCBC develops sustainable finance framework
 
Euractiv
 
EU proposes ‘transatlantic green trade agenda’ in the wake of Biden’s election
 
The Guardian
 
Auditors slam EU for ‘marine protected areas’ that fail to protect ocean
 

This curated content was brought to you by Vita Ramanauskaité, Accountancy Europe senior policy advisor since 2015. You can send her tips by email, follow her on Twitter and connect with her on LinkedIn.

 
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