Council reaches general approach on the CSRD proposal
The Council voted its position on the Corporate Sustainability Reporting Directive (CSRD) proposal at the Competitiveness Council on 24 February. It was agreed on the following points, amongst others:
- phased-in approach to reporting, starting with large PIEs (500 > employees) as from 1 January 2024
- adopt the first set of reporting standards by 31 October 2022; the second set and SMEs proportionate standards by 31 October 2023
- statutory auditor to conduct a limited assurance engagement
- MS options allowing a statutory auditor other than the one carrying out financial audit to express opinion on sustainability reporting
- MS option allowing an independent assurance service provider to express opinion on sustainability reporting if they are subject to equivalent requirements as set out in the Audit Directive
- the EC shall adopt reasonable assurance standards no later than 6 years after the CSRD entered into force
- MS to transpose the CSRD 18 months after its entry into force
The French Presidency will get in touch in with the EP to start negotiations as soon as possible.
Latest on the CSRD institutional debate
On 28 February, the EP Economic and Monetary Affairs (ECON) committee voted on its draft opinion (AMs 68-237, AMs 238 – 523, AMs 524 – 734) on the CSRD proposal. ECON approved the draft opinion with 29 votes in favour, 25 votes against and four abstentions. The lead JURI Committee will vote the EP’s position on 15 March.
CEAOB work programme for 2022
The Committee of the European Auditing Oversight Bodies (CEAOB) has published its 2022 work programme and the detailed plans of each of its sub-groups which, amongst other matters, refer to a follow-up on CSRD developments:
- the CEAOB will assess the implications of this project in terms of control of such reporting by independent third parties, and if deemed appropriate will provide advice to the EC
- the CEAOB will discuss challenges on assurance on sustainability information and determining those to be addressed in an assurance standard
ECON Committee considers proposed amendments to EU green bond standard
The EP’s ECON Committee considered the amendments tabled to the draft report on the European green bonds on 28 February. The proposed amendments considered the green bond standard’s voluntary nature, extending the scope to other types of bonds and green bonds external verification. The rapporteur MEP Paul Tang (S&D/Netherlands) noted that several matters have been already resolved. That includes the role of external reviewers, the European Securities and Markets Authority’s (ESMA) supervisory role or the national competent authorities’ role. Some MEPs opposed the expansion of scope to other types of bonds.
ECON committee is expected to vote on its position on 31 March.
EFRAG issues new Working Papers on EU sustainability reporting standards
The European Financial Reporting Advisory Group (EFRAG) issued new Working Papers on EU sustainability reporting standards throughout this month. These documents are made available for transparency purposes and are not subject to comments yet.
The following list is the complete set of currently public available working papers.
On conceptual guidelines for the standard setter:
On strategy, governance, impacts, risks, opportunities:
The complete set on environment topics:
On social topics:
No working papers have yet been made public on governance topics.
Eurosif joins EFRAG’s sustainability reporting pillar
On 18 February, the EFRAG General Assembly approved the admission of the European Sustainable Investment Forum (Eurosif) as a new member of EFRAG’s sustainability reporting pillar. The EFRAG sustainability reporting pillar now has thirty-one member organisations.
EFRAG advances its governance reform and the set-up of its sustainability reporting pillar
The composition of the EFRAG Administrative Board is now complete. Hans Buysse will serve as the President of the EFRAG Administrative Board, effective from the end of the mandate of Jean-Paul Gauzès. Georg Lanfermann will serve as Vice-President.
In addition, EFRAG is deliberating on the applications for the Chair and members of its Sustainability Reporting Technical Expert Group. The application deadline for these positions ended on 28 February.
EFRAG is also calling for candidates to enhance its sustainability reporting secretariat. They are currently looking for:
Final Report on Social Taxonomy
The EU Platform on Sustainable Finance published a report on social taxonomy proposing a structure for a social taxonomy within the EU legislative environment on sustainable finance and sustainable governance. The proposed structure consists of three objectives:
- decent work including for value-chain workers
- adequate living standards and wellbeing for end-users
- inclusive and sustainable communities and societies
The structure covers three stakeholder groups of workers, consumers and communities.
EC sets out strategy to promote decent work worldwide and prepares instrument for ban on forced labour products
The EC is preparing a new legislative instrument to ban products made by forced labour from entering the EU market. This instrument will cover goods produced inside and outside the EU, combining a ban with a robust enforcement framework. It will build on international standards and complement existing horizontal and sectoral EU initiatives, in particular the due diligence and transparency obligations.
ESMA’s sustainable finance roadmap 2022 -2024
ESMA identified three priorities in its sustainable finance roadmap:
- tackling greenwashing and promoting transparency
- building National Competent Authorities’ (NCA) and ESMA’s capacities
- monitoring, assessing and analysing ESG markets and risks
ESMA intends to address the above priorities with specific actions across the following sectors: investment management, investment services, issuers’ disclosure and governance, benchmarks, credit and ESG ratings, trading and post-trading and financial innovation.