On 11 September 2020, CDP-CDSB-GRI-IIRC-SASB issued a long-awaited statement of intent to work together towards a comprehensive corporate reporting system. Previously, these bodies had confirmed their collaboration exclusively in Accountancy Europe’s Follow-up paper: Interconnected Standard Setting for Corporate Reporting.
The joint statement maps their respective standards and frameworks towards a comprehensive corporate reporting system. The latter includes financial accounting standard-setters and acknowledges the needs of investors and broader stakeholders.
Accountancy Europe welcomed the collaboration of the 5 bodies as a step forward to consolidating sustainability frameworks and standards.
Shortly thereafter, on 30 September 2020, the IFRS Foundation published a consultation paper to assess the possibility of setting-up a sustainability standards board alongside the International Accounting Standards Board (IASB) under the same three-tier governance structure. The consultation is open for comments until 31 December 2020.
Accountancy Europe is delighted the IFRS Foundation refers extensively to Cogito paper Interconnected Standard Setting for Corporate Reporting.
On the same day, CDP-CDSB-GRI-IIRC-SASB sent an open letter to the International Organization of Securities Commissions (IOSCO), inviting IOSCO to accelerate towards a comprehensive corporate reporting system. They acknowledged their joint statements and the IFRS Foundation consultation as the two pieces of this system change
On 8 October, Accountancy Europe provided its input on the Commission’s roadmap outlining its planning on Sustainable Corporate Governance.
The Commission is expected to come forward with a legislative proposal on supply due diligence beginning of 2021. The Commission will also launch a public consultation before end of the year which will include questions on sustainable corporate governance on a horizontal cross sectoral basis.
On 1 October, the Commission launched the new Platform on Sustainable Finance (full list of members).
The Platform on Sustainable Finance was established as an advisory body to the Commission (as per the EU Taxonomy Regulation requirement).
Members of the Platform will have to:
The mandate is two years. The Platform will primarily focus on the technical screening criteria and the EU Taxonomy Regulation and advising on further measures to improve data availability and quality. It is possible that the Platform will also look into, insofar appropriate, how sustainability standards can support the application of the technical screening criteria.
On 28 September, the European Parliament’s Committee on Legal Affairs discussed the two own-initiative draft reports on sustainable corporate governance and due diligence.
MEP Lara Wolters (Dutch Socialist), in her draft report on corporate due diligence and corporate accountability calls for mandatory due diligence.
MEP Pascal Durand (French Liberal) set out a series of recommendations for revising the NFRD and directors’ duties in his draft own-initiative report for the EP JURI Committee on sustainable corporate governance. Amongst others, the rapporteur considers that the statements should be subject to a mandatory audit.
On 17 September, the Commission presented an impact assessment plan (communication) to increase the EU’s greenhouse gas emission reductions target for 2030 to at least 50% and towards 55% compared with 1990 levels in a responsible way. To deliver these additional greenhouse gas emissions reductions, the Commission will, by June 2021, review and propose to revise where necessary, all relevant climate-related policy instruments. This will comprise the Emissions Trading System, including as well: possible extension of European emissions trading to new sectors, Member States’ targets to reduce emissions in sectors outside the Emissions Trading System, the regulation on land use, land use change and forestry. The Commission will propose to amend the Climate Law Regulation accordingly.
On 4 September, the EFRAG Lab Steering Group appointed members of the European Lab Task Force on preparatory work for the elaboration of possible EU non-financial reporting standards. Shortly after, the Project Task Force kicked off its work in a first plenary meeting. The work is based on a three-phase approach: 1) assessment 2) proposal 3) outreach.
The Project Task Force is expected to deliver its interim report by end October and a final report by 31 January 2021. Accountancy Europe is being represented at the Project Task Force. Read more
The Commission is working on a number of delegated acts expected to complement the EU Taxonomy Regulation. Over the summer, the Commission issued a roadmap on taxonomy-related disclosures. The roadmap looks into what requirements companies will have to follow in order to publish information on how their activities are associated with the EU taxonomy. Accountancy Europe has submitted its feedback on this roadmap.
The upcoming delegated act will propose methodologies and indicators to help entities determine the extent to which their economic activities can be considered environmentally sustainable according to the EU taxonomy. The delegated act will be adopted by June 2021.
On 28 September, the Chair of the IASB, Hans Hoogervorst, addressed sustainability reporting and the potential role therein of the IFRS Foundation. He also referred to how current IFRS Standards could capture climate change. Read more
On 9 October, IFRS Foundation Trustee Teresa Ko delivered a speech on sustainability reporting developments and called on as many stakeholders as possible to respond to the IFRS Foundation consultation paper on sustainability reporting. Read more
On 30 September, Erik Thedéen Chair of IOSCO’s Task Force on Sustainable Finance delivered a speech at the Bloomberg’s conference on Driving Global Standards on Sustainable Finance. He highlighted three areas that need further improvement based on the IOSCO’s report from spring 2020: 1) reliability of ESG data and disclosures 2) risk of greenwashing (based on observations of misleading disclosures, incorrect product labelling and concerns with the reliability of ratings) 3) management of material ESG-related risks. Read more
On 22 September, the World Economic Forum (WEF) International Business Council published a white paper on common metrics and consistent reporting of sustainable value creation. The report is a follow-up to the draft consultation which was launched in January 2020. The report presents conclusions of the consultation aiming at defining common metrics for sustainable value creation. Read more
On 11 September, the International Federation of Accountants (IFAC) issued a roadmap Enhancing Corporate Reporting: the way forward. IFAC calls for a global approach, covering in its roadmap a possible structure and a building blocks approach. Later same month, IFAC also voiced its support to the IFRS Foundation Trustees and its recently issued consultation on sustainability reporting. IFAC notes that this marks a critical step on the path towards a global solution to sustainability reporting.
On 9 September, the UN PRI issued a report offering insights from the first comprehensive set of case studies on the use of the EU taxonomy. The investors assess taxonomy alignment before the final details of the regulation are in place and before widespread corporate reporting against the taxonomy is available. The results were encouraging even though many challenges remain. The case studies demonstrate that the taxonomy framework can be operationalised. The report also provides recommendations to policy makers and supervisors expected to oversee the implementation and development on the taxonomy. Read moreThis 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.
