Update

Sustainability

 Cannot read this email? Open in your browser.January 2023 
 

Sustainability

January

 
 
 
 

Joint statement on the CSDDD

 
 
 

We call on legislators to strengthen provisions in the Corporate Sustainability Due Diligence Directive. Read more

 
 
 
 
 

Interview with Professional Accountancy Education Europe

 
 
 

PAEE explains how to develop sustainability awareness among accountancy and auditing professionals.

 
 
 
 

Highlights

 
 
 
 

  • EFRAG enhances its sustainability reporting pillar 
  • EP Legal Affairs Committee tables over 1700 amendments on CSDDD 
  • Final EU negotiations on EU green bond proposal to continue in 2023 
  • ISSB close to finalising the first two standards

 
 
 
 
 

Feature story

 
 
 
 

ESAs publish their opinions on set 1 of Draft ESRS

The three European Supervisory Authorities (ESAs) issued their respective opinions on the first set of draft ESRS delivered by EFRAG in November 2022. As per the Corporate Sustainability Reporting Directive, these ESAs are required to provide such an opinion. 

The European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Banking Authority (EBA) overall supported the standards and concluded that they broadly comply with the criteria set by each of these ESA. However, all ESAs provide suggestions for improvement for the European Commission (EC) before the finalisation of the standards.

 
 
 
 
 

EU developments

 
 
 
 

EFRAG enhances its sustainability reporting pillar 

Kerstin Lopatta was appointed Vice-Chair of the Sustainability Reporting Board (SRB). The European Investment Bank joined as an official observer in EFRAG’s both pillars as discussions continued in December 2022. 

EFRAG is also enhancing its sustainability reporting standards technical capabilities with: 

ECON and ITRE Committees vote on reports for opinion on CSDDD 

The European Parliament‘s (EP) Economic and Monetary Affairs (ECON) and Industry, Research and Energy (ITRE) Committees adopted their opinions on the Corporate Sustainability Due Diligence Directive (CSDDD). ECON’s vote was significant since it covered the inclusion of the financial sector. This matter seems to be one of the most controversial topics in the negotiations, for which the right- and left-wing political groups shared an opposing view.  

EP Legal Affairs Committee tables over 1700 amendments on CSDDD

The EP’s Legal Affairs (JURI) Committee tabled their amendments (AMs) to MEP Lara Wolters’ (S&D/Netherlands) draft report on the CSDDD. MEPs had divergent views on several aspects, to name a few: 

  • scope: several MEPs would like to see fewer companies under the CSDDD, proposing 3000 employees as a threshold, while many others suggest a lower threshold to capture even more companies 
  • directors’ duties and responsibilities: while some MEPs are in favour of Directors having a more active role in setting up and overseeing the implementation of due diligence rules, others suggested deleting Articles 25 and 26 provisions all together 
  • financial sector: certain MEPs proposed AMs to exclude the financial sector from the CSDDD scope due to its specificities, while many others advocated for the sector’s inclusion 
  • third-party verification: several MEPs supported the opening of the market to all verification providers, and some others further suggested adopting a delegated act setting minimum standards for verification 

JURI Committee is expected to vote on the CSDDD in March.

Final EU negotiations on EU green bond proposal to continue in 2023

The EP and Council met for the fourth time to negotiate the EU green bond standard proposal on 14 December 2022. They did not reach a provisional political agreement due to divergent views on transparency requirements and flexibility pocket, among other matters, as mentioned by rapporteur MEP Paul Tang (S&D/Netherlands). The negotiations are expected to continue under the Swedish Presidency.  

EC FAQs on EU Taxonomy

The European Commission (EC) issued two sets of FAQs to help companies: 

EBA publishes its roadmap on sustainable finance

The European Banking Authority (EBA) outlined its objectives and timeline to deliver on sustainable finance. The roadmap covers eight areas: 

  • transparency and disclosures 
  • risk management and supervision 
  • prudential treatment of exposures 
  • stress-testing 
  • standards and labels 
  • greenwashing 
  • supervisory reporting 
  • environmental, social and governance risks and sustainable finance monitoring 

SMSG provides advice on greenwashing

ESMA’s Securities and Markets Stakeholder Group (SMSG) submitted its advice to ESMA on the European Supervisory Authorities’ (ESAs) Call for Evidence on greenwashing. SMSG advises, among other things, to clarify concepts and terminology and identify gaps in the current regulatory framework to fight greenwashing in the financial sector. 

 
 
 
 
 

International developments

 
 
 
 

ISSB close to finalising the first two standards 

The International Sustainability Standards Board (ISSB) met in December to redeliberate some of the proposals in the first two reporting standards. Amongst other decisions, they tentatively decided to: 

  • describe the concept of sustainability and its articulation with financial value creation 
  • advance work on natural ecosystems and just transition 
  • issue guidance and reliefs to support Scope 3 GHG emission disclosures 

The ISSB aims to make the final decisions on these two standards by their meeting in February. 

IFRS Foundation strengthens its sustainability standard setting capabilities 

The IFRS Foundation appointed new Trustees members with a broad range of accounting and sustainability expertise. Steven Maijoor, former Chair of ESMA, is one of the newly appointed Trustees. 

The IFRS Foundation established an ISSB presence in Beijing following a Memorandum of Understanding with the Ministry of Finance of China. The ISSB continued engaging with Global South jurisdictions to advance adopting IFRS Sustainability Disclosure Standards. 

The Sustainability Standards Advisory Forum (SSAF) was formed to provide the ISSB with technical advice to contribute to the ISSB’s standard-setting work development. SSAF has thirteen inaugural members representing jurisdictions and regions from around the world. The European Union is represented in the SSAF, whereas the EC serves as an official observer. 

 
 
 
 
 

National developments

 
 
 
 

UK focuses on sustainability reporting 

The UK Financial Reporting Council announced its areas of supervisory focus for 2023-2024. These include TCFD-based reporting and how adequately companies’ net-zero commitments have been addressed in financial statements. 

The UK Endorsement Board published its draft 2023/2024 Regulatory Strategy for consultation. They expect to undertake some projects related to the ISSB. As a result, all ISSB projects have been classified as “significant”.

 
 
 
 
 

News in brief

 
 
ICAEW
 
More holistic approach required on corporate sustainability reporting
 
ICAEW
 
How to get TCFD scenario analysis right
 
European Commission
 
COP15: historic global deal for nature and people
 
Joint Business Statement
 
Joint Business Statement on the due diligence proposal (CS3D)
 
European Commission
 
Carbon removals certification proposal
 
European Commission
 
Green Deal: EU agrees law to fight global deforestation and forest degradation driven by EU production and consumption
 
GRI
 
GRI and the European Sustainability Reporting Standards (ESRS)
 
TIFD
 
Task Force on Inequality-related Financial Disclosures
 
TIFD
 
TaskForce on Digital-related Financial Disclosures
 
World Economic Forum
 
Global Risks Report 2023
 
Financial Times
 
Companies parachute accountants in to fix flawed ESG data
 
 
 

Events

 
 
01/02/2023
 
The European Climate Pact: Together in Action
 

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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