January 2024


  • Council reaches its position on ESG ratings proposal
  • Belgian Presidency aims to conclude files on sustainable finance during its mandate
  • EFRAG consults on ESRS implementation guidance
  • ESMA consults on draft guidelines on enforcement of sustainability Information
  • IOSCO lays out its strategic priorities

Feature story

EP and Council stroke deal on CSDDD

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:

  • the scope’s threshold was set to 500 employees and a net worldwide turnover of €150 million euros
  • financial sector’s downstream chain is excluded from the scope with a review clause for a potential future inclusion
  • strengthened provisions on large companies’ obligations to put in place a climate transition plan
  • full harmonisation of Articles 6, 7 & 8
  • monetary penalties in case of violation should be at least 5% of the companies’ net turnover
  • civil liability arises for damage caused by a company through intent or negligence
  • compliance with CSDDD could be included as a criterion for the award of public contracts and concessions

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.

EU developments

EC provides additional guidance on EU Taxonomy Disclosures

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:

  • clarifies scope of entities subject to reporting obligations
  • clarifies the taxonomy assessment of specific exposures such as retail clients, local authorities, individual undertakings and groups
  • considers the rules relating to verification and evidence of compliance with the EU Taxonomy

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JURI Committee debates EC’s decision to postpone sector specific reporting standards

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.


Council reaches its position on ESG ratings proposal

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:

  • clarified the scope and applicable exemptions, also the territorial scope of the regulation, outlining what constitutes ‘operating in the EU’
  • clarified that ESG ratings encompass environmental, social and human rights or governance factors in line with the Corporate Sustainability Reporting Directive (CSRD)
  • introduced a lighter, temporary and optional registration regime of three years for existing small ESG rating providers and new small market entrants
  • introduced a possibility not to separate business and its activities as long as there is a clear distinction between activities, and providers put in place measures to avoid conflicts of interests; this derogation would not apply to consulting and auditing activities when they are provided to rated entities

The EP also approved its negotiating mandate in December 2023. The first trilogue took place on 11 January 2024.

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Belgian Presidency aims to conclude files on sustainable finance during its mandate

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:

  • defending rule of law, democracy and unity
  • strengthening EU’s competitiveness
  • pursuing a green and just transition
  • reinforcing the EU’s social and health agenda
  • protecting people and borders, and
  • promoting a global EU

On sustainable finance, the Presidency will:

  • support efforts to enhance the workability of the EU’s sustainable finance framework and ensure accessibility and consistency in its implementation
  • aim to finalise work on the ESG ratings Regulation

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EFRAG consults on ESRS implementation guidance

EFRAG published its first three draft ESRS implementation guidance documents for public feedback:

  • Draft EFRAG IG 1: Materiality assessment implementation guidance
  • Draft EFRAG IG 2: Value chain implementation guidance
  • Draft EFRAG IG 3: Detailed ESRS datapoints implementation guidance, with the accompanying explanatory note

Stakeholders can provide their feedback via respective surveys by 2 February 2024. Accountancy Europe will contribute to the first two draft implementation guidance documents.

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EFRAG advances work on SME standards

EFRAG calls for field testing participants on its upcoming consultations on SMEs sustainability reporting standards:

  • European sustainability reporting standard for listed SMEs
  • voluntary sustainability reporting standard for non-listed SMEs

Interested parties can apply by 31 January 2024.

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ESMA consults on draft guidelines on enforcement of sustainability information

The European Securities and Markets Authority’s (ESMA) draft guidelines on enforcement of sustainability information objectives are to:

  • ensure that national competent authorities carry out their supervision of listed companies’ sustainability information in a converged manner
  • establish consistent and robust approaches to the supervision of listed companies’ sustainability and financial information to facilitate connectivity

Stakeholders can provide feedback until 15 March 2024.

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ESAP legislation published on Official Journal

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.


Delegated Act on SME thresholds becomes EU law

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.

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International developments

IESBA exposure draft on International Ethics Standards for Sustainability reporting and assurance

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.

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IOSCO lays out its strategic priorities

The International Organization of Securities Commissions (IOSCO) shared its strategic priorities at COP28, which include:

  • capacity building efforts in relation to the IFRS Sustainability Disclosure Standards
  • further work on a global assurance framework for sustainability-related corporate reporting
  • transition plans and financial integrity in voluntary carbon markets

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EFRAG and TNFD sign cooperation agreement

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.

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National developments

FRC announces areas of supervisory focus for 2024/25

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”.

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Other news


This curated content was brought to you by Vita Ramanauskaité, Accountancy Europe Manager, Head of Sustainability, since 2015. You can send her tips by email, follow her on Twitter and connect with her on LinkedIn.