Update

Sustainability

 Cannot read this email? Open in your browser.November 2021 
 

Sustainability

November

 
 
 
 

Feedback statement on the EC’s green bonds proposal

 
 
 

Check Accountancy Europe's statement on the European Commission’s proposal of an EU standard for green bonds.

 
 
 
 
 

Recap: Accountancy Europe and WBA joint expert meeting

 
 
 

Have a look at what was discussed during our expert meeting on sustainability reporting standards with the World Benchmarking Alliance.

 
 
 
 

Highlights

 
 
 
 

  • European Commission and ESMA publish their work programmes for 2022
  • IFRS Foundation establishes the International Sustainability Standards Board
  • Sustainable Corporate Governance proposal expected in December

 
 
 
 
 

Feature story

 
 
 
 

Accountancy Europe publishes FAQ on sustainability information assurance

In the proposal for the Corporate Sustainability Reporting Directive (CSRD) adopted to strengthen sustainability reporting, the European Commission (EC) introduces an EU-wide requirement for limited assurance on sustainability information.

This FAQ provides answers to recurring questions on sustainability information assurance, specifically on:

  • limited and reasonable assurance engagements
  • assurance requirements and the EU regulatory framework
  • technical aspects of professional assurance standards

The questions and answers aim to inform stakeholders about assurance on sustainability information. Read more 

 
 
 
 
 

EU Developments

 
 
 
 

European Commission unveils policy priorities for 2022

The EC published its Work Programme for 2022, reiterating its commitment to continue with the implementation of the European Green Deal. Amongst other points, the EC underlined that green bonds play a key role in driving the decarbonisation of the European economy. Read more

ESMA’s priorities for 2022

The European Securities and Markets Authority (ESMA) published its 2022 work programme. ESMA lists sustainable finance as a cross-cutting theme to help achieve its objectives of enhancing investors’ protection and promoting stable and orderly financial markets. For that purpose, ESMA will develop rules on environmental, social, governance (ESG) disclosures and risk identification methodology for ESG, contribute to the work on sustainability reporting, and cooperate with national authorities to prevent the risk of greenwashing. ESMA will continue ensuring that ESG factors are considered in the EU single rulebook. Read more

ESMA’s enforcement priorities for 2021 annual financial reports

ESMA’s enforcement priorities for 2021 annual financial report include:

  • climate-related matters, both as a priority related to IFRS financial statements and as a priority related to non-financial statements
  • taxonomy-related disclosures, as a priority related to non-financial statements.

Read more

ECA concludes that more EU action is needed to direct capital to sustainable investments

The European Court of Auditors (ECA) published a report on Sustainable Finance. The report signals that more consistent EU action is needed for capital to flow. ECA recommends that the EC:

  • completes the Action Plan on sustainable finance (AP SF) measures and clarifies compliance and audit arrangements
  • better contributes to sustainable finance by pricing greenhouse gas emissions
  • reports on climate and environment related results of InvestEU
  • increases efforts to generate a sustainable project pipeline
  • applies the “do no significant harm principle” and the EU Taxonomy criteria consistently across the EU budget
  • monitors and reports on the results of the AP SF and any future strategies

Read more

European Parliament’s Greens share its view over Fitfor55 package

The European Parliament’s (EP) political group of Greens sent an open letter urging the EC to consider the following proposals in the context of the Fitfor55 package:

  • ensure a massive acceleration of capacity build-up of renewable energy in Europe
  • end the fossil fuel era; make “the energy efficiency first” principle a reality
  • ensure 100% emissions-free car reality by 2030
  • get rid of unnecessary CO2 certificates in the ETS
  • rapid phase out of free allowances in the ETS
  • earlier taxation of aviation and maritime sectors to ensure a level-playing field
  • change the production of food; eliminate waste of resources

Read more

Council of the EU approves conclusions on climate finance

The Council of the European Union published its conclusions on climate finance ahead of the COP26 in Glasgow. The document reaffirmed the EU’s commitment for implementation of the Paris Agreement goals. In particular, the Council welcomed the progress made on the Taxonomy, sustainability-related disclosures, green bonds, and corporate sustainability reporting. International partners were also encouraged to join the International Platform on Sustainable Finance. Read more

EP’s inputs for COP26

During its plenary, the EP approved a motion for a resolution indicating the main input for the COP26 meeting in Glasgow. The MEPs are asking for climate neutral economies for all the G20 countries. Specifically, they ask for at least 100 billion dollars invested in climate finance for developing countries, and a five-year timeframe to accelerate the pace of climate action. In the motion, MEPs also underlined the importance of further development and promotion of climate and sustainability-related financial disclosures by financial institutions and companies. Read more

ECB climate stress test

The European Central Bank (ECB) made a climate stress test on four million companies and 1600 banks in the euro area. The results showed that:

  • firms and banks benefit from adopting green policies early on to foster the transition to a net zero economy
  • the impact of climate risk is concentrated in certain regions and sectors

Read more

Objections to the Taxonomy Delegated Acts

In its plenary, the EP voted on two motions for a resolution (ID Group and ECR Group) objecting the Taxonomy Climate Delegated Act (DA). The DA specifies the criteria for economic activities to qualify as contributing substantially to climate change mitigation and adaption, and whether they cause significant harm to other environmental objectives. Around the same time, the Economic and Monetary Affairs (ECON) and the Environment, Public Health and Food Safety (ENVI) committees held a joint vote on a motion for a resolution objecting the EU Taxonomy Disclosure DA supplementing Article 8 on disclosure obligations. The majority of MEPs in the plenary and the committees voted against the objections.

NGOs continue advocating over Taxonomy

Several NGOs signed an open letter to the EC asking for the exclusion of fossil gas from the Taxonomy. The NGOs fear that including those in the Taxonomy will undermine the credibility of the tool and it will represent a step backwards for the sustainable transition of EU economy. Read more

EC’s first green bond

The EC issued 12 billion euros of green bonds within the framework of NextGen EU. According to the EC, this is expected to fund the sustainable economic recovery from COVID-19 through green projects and investments. The NextGen EU green bond programme foresees to issue 250 billion euros in green bonds by the end of 2026. Read more

EFRAG to establish Expert Working Groups on standard setting

Eleven Expert Working Groups (EWG) composed of sustainability experts are expected to provide input for the development of draft European sustainability reporting standards. The decision on the EWGs composition is expected by the end of October 2021. Read more

Trade Unions convey to the EC that further delaying the Sustainable Corporate Governance initiative is unacceptable

Representatives of the European Trade Union Confederation (ETUC) and several other major trade union organisations (EPSU, EFFAT, IndustriAll Europe and UNI Europa) met with the cabinet of Commissioner Thierry Breton on 30 September to express their concerns about the delay in EU action on Sustainable Corporate Governance.

They are particularly worried about the postponement of the legislative proposal that was expected to be presented in June. They made clear that further delaying the initiative is unacceptable. They called on the EC to introduce mandatory due diligence, accompanied by dissuasive sanctions. Read more

EC Sustainable Corporate Governance proposals expected in December

After a considerable delay, the EC is now expected to launch its proposals on 8 December. The proposals will look into: i) the rules for supply chain due diligence, and ii) directors’ sustainability duties. In an effort to strengthen the momentum for reforms, Justice Commissioner Didier Reynders stated in a public event that the proposals are expected to be as ambitious as the EC intended initially.

 
 
 
 
 

International Developments

 
 
 
 

IFRS Foundation establishes the International Sustainability Standards Board

The IFRS Foundation made 3 important announcements in COP26:

  1. the establishment of the International Sustainability Standards Board (ISSB) to develop a comprehensive global baseline of sustainability disclosure standards to meet investors’ information needs
  2. the consolidation in the ISSB of two important organisations: Climate Disclosures Standards Board and Value Reporting Foundation (VRF) by June 2022
  3. the publication of two prototype standards: one on Climate and the other on General Requirements

The ISSB will have a global presence. The seat of the Board and the office of the Chair will be in Frankfurt. Key functions supporting the Board will be in Montreal. Offices in San Francisco, where the VRF is located, and London, where the IFRS Foundation is located, will provide technical support and platforms for market engagement and deeper cooperation with regional stakeholder. There are ongoing discussions for offices from Beijing and Tokyo to cover the ISSB’s footprint in the Asia Oceania region.

IFRS’ TRWG shares its purpose and progress

The IFRS’ Technical Readiness Working Group (TRWG) was created to do preparatory work for the proposed International Sustainability Standards Board (ISSB).

The purpose of the TRWG is to give the ISSB a running start to develop sustainability reporting standards that meet investors’ needs and focus on the enterprise value. Read more

Andreas Barckow addresses sustainability in his first speech as IASB Chair

In his inaugural speech, Andreas Barckow, IASB Chair, noted the need to ensure connectivity between financial and sustainability reporting, and accordingly between IASB and ISSB. Read more

SEC’s Sample Letter to Companies Regarding Climate Change Disclosures

The US SEC’s “Dear Issuer” letter provides some examples on the comments that the Division may issue for companies regarding their climate-related disclosure or the absence of such disclosure. Read more

 
 
 
 
 

National Developments

 
 
 
 

Danish pension and insurance industry committed to climate neutrality

The Danish insurance and pension industry adopted common measurement points for CO2 emissions from investment assets, damage prevention, active ownership and the use of paper in everyday life. Read more

ACCA’s survey over the future of accountancy profession

ACCA conducted a survey over the future of accountancy profession involving 2000 finance professionals. It emerged that the profession will be key for the transition towards sustainable business models by helping -amongst others- organisations create, protect and report sustainable value. Read more

The FRC published FAQs on ISSB

The FRC’s FAQs aim to inform UK company stakeholders of developments in sustainability standard setting by the International Financial Reporting Standards Foundation (IFRS Foundation). Read more

The FRC Lab published a report to help companies prepare for mandatory TCFD reporting

The FRC Lab report includes the status of current reporting against the TCFD framework in the UK, as well as practical advice and examples that better address aspects of TCFD reporting. Read more

 
 
 
 
 

Other news

 
 
World Economic Forum
 
57 organisations release an open letter for EU to act on ESG
 
Enhesa
 
6 steps to successful sustainability reporting
 
Investment Week
 
PRI welcomes new European sustainability proposal
 
Euractiv
 
Germany’s SPD pushes for inclusion of gas in EU green finance taxonomy
 
CDSB
 
CDSB Framework application guidance for climate-related disclosures
 
CDSB
 
The Water Guidance
 
IVSC
 
Perspective paper: Time to get tangible about intangible assets
 
RFI
 
France leads charge to label nuclear power as 'green' under EU taxonomy rules
 
EFRAG
 
Podcast - Good practices in reporting the business model, sustainability risks and opportunities
 
European Parliament
 
The role of non-financial performance indicators and integrated reporting in achieving sustainable value creation
 
Reuters
 
Investors tell Big-4 auditors they risk AGM rebellion over climate accounting
 
Financial Times
 
US holds back on support for global sustainability standards
 
 
 

Podcasts

 
 
Jona Basha
 
There’s no creation like co-creation: sustainability reporting standards
 
Nadja Picard
 
Reporting Beyond the Financials: Sustainability on the Books
 
 
 

Events

 
 
31/10 - 12/11
 
UN Climate Change Conference of the Parties (COP26)
 
01/11 - 12/11
 
European Union Side Events (COP26)
 
23/11
 
How to make the EU Taxonomy an international tool? - ERCST
 
30/11 - 01/12
 
Sustainable Future Summit 2021 – Politico
 

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.

 
Subscribe / Unsubscribe / Manage your subscriptions



Sign up for our newsletter

* indicates required
Would you like to subscribe to our newsletter?
On which topics would you like to receive news?