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Missed our webinar “High-quality ESRS implementation” ? Check out the recording and event recap here.
On 13 December, the European Parliament (EP) and the Council reached a provisional deal on the Corporate Sustainability Due Diligence Directive (CSDDD). The CSDDD sets due diligence obligations for companies regarding human rights and environmental impacts in their operations. The main elements of the agreement are the following:
As for next steps, the EP and Council must formally adopt the provisional agreement. According to our sources, the EP’s Legal Affairs (JURI) Committee is expected to vote on the deal in February.
The European Commission’s (EC) guidance covers the reporting obligations for large financial undertakings and undertakings trading on the EU markets relating to how they finance, invest, or insure taxonomy-aligned activities. It is meant to assist the impacted financial market participants in preparing their first mandatory reporting under the EU Taxonomy Disclosures Delegated Act (DA) in 2024.
The guidance:
On 11 December 2023, the EP’s JURI Committee discussed the draft report by MEP Axel Voss (EPP/Germany) on the EC’s decision to postpone the adoption of sustainability reporting standards for specific sectors and third-country companies. Some MEPs emphasised the necessity of adopting standards for high-impact sectors sooner than 2026 (the EC’s proposed new deadline). To that end, some MEPs proposed amendments suggesting a staggered approach to adopting high-impact sectors standards.
The Council reached its negotiating mandate on the EC’s proposal to regulate environmental, social and governance (ESG) rating activities. The Council, amongst other matters:
The EP also approved its negotiating mandate in December 2023. The first trilogue took place on 11 January 2024.
As from 1 January, Belgium holds the Presidency of the Council of the EU for the next six months (until July). The Presidency set out six high-level priorities focusing on:
On sustainable finance, the Presidency will:
EFRAG published its first three draft ESRS implementation guidance documents for public feedback:
Stakeholders can provide their feedback via respective surveys by 2 February 2024. Accountancy Europe will contribute to the first two draft implementation guidance documents.
EFRAG calls for field testing participants on its upcoming consultations on SMEs sustainability reporting standards:
Interested parties can apply by 31 January 2024.
The European Securities and Markets Authority’s (ESMA) draft guidelines on enforcement of sustainability information objectives are to:
Stakeholders can provide feedback until 15 March 2024.
The EU legislation establishing a European Single Access Point (ESAP) was published in the Official Journal of the EU on 20 December 2023:
Member States (MS) must transpose the Directive by 10 January 2026.
ESAP will serve as a ‘single point of access’ platform for public financial, non-financial and sustainability-related information about EU companies and financial products. It will be operated by ESMA and should be available from summer 2027.
The EC published the final DA that adjusts SME financial thresholds in the Accounting Directive to inflation in the EU’s Official Journal. This means that the DA is now in EU law and EU MS can proceed with implementation.
The DA decreases the number of companies subject to, among other obligations, mandatory reporting requirements by increasing the financial thresholds defining an SME. This will also impact the scope of the CSRD application.
The new thresholds are applicable from January 2024, but MS may choose to apply the new size thresholds retroactively from January 2023.
The International Ethics Standards Board for Accountants (IESBA) approved an Exposure Draft (ED) on Ethics and Independence Standards for sustainability reporting and assurance.
A set of draft standards contains specific ethics provisions relevant to sustainability reporting and assurance and could be used by all sustainability assurance practitioners. IESBA intends to issue the ED for public consultation in late January 2024.
The International Organization of Securities Commissions (IOSCO) shared its strategic priorities at COP28, which include:
EFRAG and TNFD’s cooperation agreement aim to enhance corporate transparency related to biodiversity and ecosystems.
As part of this collaboration, EFRAG and TNFD are working on finalising a detailed interoperability map expected early 2024.
The UK’s Financial Reporting Council (FRC) announced its areas of supervisory focus for 2024/25, including priority sectors, for corporate reporting reviews and audit quality inspections.
The areas of supervisory focus also include “climate related risks, including TCFD disclosures”.
