Are you passionate about sustainability? Read the job vacancy and become part of our vibrant team in Brussels!
Find out the key questions that boards should ask to lead the sustainability transition
Accountancy Europe welcomes the adoption of the delegated act with the first set of 12 European Sustainability Reporting Standards (ESRS) that still have to be published in the European Union’s (EU) Official Journal. The ESRS will enter into effect on 1 January 2024 and will be applied by the first companies in the Corporate Sustainability Reporting Directive’s (CSRD) scope.
Accountancy Europe has contributed to all the steps of the development of the ESRS from the initial thinking of the EFRAG’s project task force, to the Exposure Drafts and ultimately the draft delegated act. We have always striven for clear and robust ESRS to support high-quality implementation and provide transparent information to catalyse transiting toward more sustainable business models.
We will continue our work on sustainability reporting standards as we support both European and international standards. We will soon contribute to the upcoming EFRAG draft Materiality Assessment Implementation Guidance and the draft Value Chain Implementation Guidance, two key ESRS concepts.
The European Commission (EC) published the call for evidence on the rationalisation of reporting requirements on 17 October. Stakeholders can provide feedback until 28 November.
The EC calls on stakeholders to help identify areas where the EU reporting requirements could be:
As a follow-up, the EC will organise workshops with relevant stakeholders to further identify reporting optimisation opportunities in specific areas of the EU legislation.
The EC adopted the DA to adjust SME thresholds in the EU Accounting Directive for inflation on 17 October. The EP and Council now have two months to reject it. If they do not, it will automatically enter into force.
The final DA contains only very little changes compared to the draft DA that was flagged in the October Sustainability Update. However, it clarifies the timeline for the new thresholds’ application. Member States are to apply these new thresholds at the latest from financial year 2024, with the possibility to opt for early application for financial year 2023.
The EC issued a decision to amend the set deadlines for sustainability reporting standards adoption in the Corporate Sustainability Reporting Directive (CSRD):
This will allow companies to focus on the first ESRS set implementation and ensure that EFRAG has enough time to work on the sectoral ESRS.
The decision will enter into force on the 20th day following its publication in the EU Official Journal.
EFRAG’s ESRS Q&A Platform will collect and answer technical implementation questions on ESRS. As the EC’s technical advisor, EFRAG will provide non-authoritative responses.
Before the end of the year, EFRAG will open for consultation:
In addition, EFRAG published its first draft of the datapoints in set 1 ESRS for the Sustainability Reporting Board’s meeting on 25 October.
On 23 October, the Council adopted the EU green bond standard regulation, with Austria, Germany and Luxembourg abstaining.
This follows the EP’s endorsement of the political agreement on the file, reached earlier this year.
To recall, the EU green bond standard is meant for companies and public entities that wish to raise funds on capital markets to finance green investments while meeting sustainability requirements. The regulation also sets up a registration system and supervisory framework for external reviewers of EU green bonds.
The regulation will be published in the EU’s Official Journal before entering into force 20 days later.
The EC and the EU Platform on Sustainable Finance launched a Stakeholder Request Mechanism on the EU Taxonomy activities. This online tool enables stakeholders to suggest new activities to be added to the EU Taxonomy and/or to propose changes to existing ones. The initial input deadline is 15 December 2023. Following this, the tool will continue to operate, and a second-round comment deadline will be announced.
ESMA issued its annual public statement outlining its enforcement priorities for 2023. Priorities related to sustainability statements: are as follows:
ESMA will also start monitoring progress towards ESRS reporting, particularly for the listed companies which are the first in scope.
ESMA issued the results of a fact-finding exercise on corporate reporting practices under the EU Taxonomy Regulation, aiming to evaluate the following aspects:
The Council approved conclusions that will serve as the EU’s negotiating position for the United Nations Climate Change Conference (COP 28). In its conclusions, the Council:
The International Audit and Assurance Standards Board (IAASB) issued Frequently Asked Questions (FAQs) on the application of materiality by the entity and the assurance practitioner. These FAQs aim to help stakeholders to navigate the recently proposed International Standard on Sustainability Assurance (ISSA) 5000 and address such questions as:
Brazil will incorporate the International Sustainability Standards Board’s (ISSB) IFRS Sustainability Disclosure Standards into its regulatory framework. The responsible public authorities will set out a roadmap to start with a voluntary use in 2024 and move to mandatory use on 1 January 2026.
The ISSB consulted stakeholders on their agenda priorities for the next two years. Preliminary insights into received feedback indicate common themes:
This is fully aligned with Accountancy Europe’s contribution.
Also, the IFRS Foundation is considering updates to its Due Process Handbook to better support the ISSB sector-related standard activities and to formalise the cooperation between the two boards.
The ISSB also published documents detailing the revision of the SASB standards.
The ISSB will publish its own interoperability table between its first IFRS sustainability standards and the ESRS as an educational material.
The ISSB will also consider the following preliminary items to be issued as educational materials:
The UK Endorsement Board (UKEB), Canadian Accounting Standards Board, Malaysian Accounting Standards Board and External Reporting Board jointly wrote to the ISSB to reiterate their shared suggestions in view of the ISSB’s Agenda Consultation. They:
ECIIA
Position paper - The role of Internal Audit in ESG in industrial and commercial companies
EFRAG
EFRAG Publishes its Briefing Summary on Climate-related Risks in the Financial Statements
Forbes
SEC Climate Disclosure Rule Most Likely Not Final Until 2024, Effective 2026
FRC
Materiality
IFAC
Achieving Investor-Grade GHG Reporting: Climate Week NYC 2023 Recording & Resources
NGOs
NGOs launch 2024 EU elections manifesto calling for bold action on sustainable finance
