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The Corporate Sustainability Due Diligence Directive (CSDDD) is racing against time as the Council failed to endorse the provisional agreement. On 8 March, the Belgian Presidency postponed again the approval of the CSDDD compromise agreement. The Council proposed several changes to the provisional agreement in an effort to get on board as many Member States (MS) as possible. Some of the changes included:
On 28 February, rapporteur MEP Lara Wolters held a press conference where she expressed her disappointment in the indecisiveness of the Council. The European Parliament (EP) will also debate the CSDDD state of play at its plenary session on 12 March.
As for next steps, reportedly the Council will make the last attempt to adopt the text on 13 March. If the Council succeeds to approve, the EP would need to agree on the new position and vote to approve the final text before the EU elections scheduled for June 6-9.
The European Commission’s (EC) Annual Single Market and Competitiveness Report tracks the European Single Market’s annual progress in alignment with nine competitiveness drivers.
The report notes the progress that the EC is making in lowering the burden of reporting requirements by 25%. In autumn 2023, the EC collected input via a call for evidence to prepare rationalisation plans. The report indicates that three out of the eight opinions planned for 2024 relate to automating sustainability reporting; actions and methodology to avoid unnecessary reporting obligations; and the Sustainable Finance Disclosures Regulation.
In recent developments:
On 28 February, the EP voted on a resolution on the European Investment Bank’s (EIB) financial activities. At the plenary, EIB President, Nadia Calviño, presented EIB’s financial activities annual report for 2023 and the group’s new strategic priorities. On climate action and green policy, the EIB:
The EC’s Green Claims Directive proposal outlines rules for validating voluntary green claims to combat greenwashing and misleading environmental claims. On February 14, the EP Committee on Environment, Public Health, and Food Safety (ENVI) and the Committee on Internal Market and Consumer Protection (IMCO) adopted the draft report on the EC’s proposal.
The co-rapporteurs MEP Andrus Ansip (RE/Estonia) and Cyrus Engerer (S&D/Malta) advocated for strengthening transparency requirements and assessing the need for additional requirements for products containing hazardous substances. The EP will vote to adopt their position on 12 March.
The provisional agreement clarifies the EC’s and Member States’ (MS) responsibilities in identifying companies exploiting forced labour, aiming to ban their products from entering the EU market
The EC will issue guidelines for economic operators and competent authorities to help them comply with the regulation, including best practices. These guidelines will also include accompanying measures for micro, small, and medium-sized enterprises.
The EP and Council now must formally approve the provisional agreement.
WWF published a report assessing the alignment of the methodological requirements of the Science Based Targets initiative (SBTi) and the Corporate Sustainability Reporting Directive (CSRD). Among the key findings:
The report recommends:
On 20 February, 73 industry leaders representing nearly 20 industrial sectors called for a European Industrial Deal that supplements the Green Deal and is central to the EU’s policy agenda over the next five years. The declaration underlines the industry’s commitment to making Europe more competitive, resilient, and sustainable. The industry sector calls for:
The US Securities Exchange Commission (SEC) adopted “The Enhancement and Standardization of Climate-Related Disclosures for Investors” rule.
The rule applies to public companies and public offerings in the US. Compliance will be phased-in starting with the first companies in scope providing disclosures for 2025 and GHG emissions data for 2026. The focus is climate risks whereby disclosures are required on:
Scope 1 and Scope 2 GHG emissions disclosures are subject to assurance, starting with limited and gradually moving to reasonable. Assurance can also be provided by a “non-auditor”.
The rule also requires certain disclosures as part of the notes to the financial statements.
Chair Gary Gensler, Commissioner Caroline A. Crenshaw, Commissioner Mark T. Uyeda, Commissioner Hester M. Peirce, and Commissioner Jaime Lizárraga followed up with statements providing their views on the requirements.
The US Chamber of Commerce and other business and trade associations brought the lawsuit arguing that the laws:
The ISSB issued educational material explaining how to use the SASB Standards to meet the requirements in IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information.
The ISSB is also developing educational materials on:
scenario analysis / resilience assessment disclosure
China’s three major stock exchanges – the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Beijing Stock Exchange – proposed new guidelines on sustainability disclosures for listed companies. The disclosures would be provided in the annual report and would:
Third-party verification is encouraged.
The International Federation of Accountants (IFAC), the American Institute of Certified Public Accountants (AICPA), and the Chartered Institute of Management Accountants (CIMA) released an updated report on the current state of sustainability disclosure and assurance globally. The study collected approximately 1400 company reports with Environmental, Social, and Governance (ESG) information from 22 jurisdictions. The study highlights that:
AICPA and CIMA, a research team from the CBS International Business School, and Bochum University, released a study on corporate sustainability performance management and the role of management accounting in five multinational corporations. The study notes that:
In its letter to the government, the Parliament’s Environmental Audit Committee raised concerns about the slow progress on a UK’s green taxonomy and transition plans. The Committee asked the government to set out an exact timeline for the green taxonomy and transition plans consultations to keep the UK a global green finance leader.
EP and Council
EP and Council reached provisional agreement on a regulation establishing a certification framework for carbon removal
EFRAG
Launch of Educational Videos on SME Standards
IFRS
Call for members – IFRS Sustainability Reference Group
PRI
Sign-on statement calling for adoption of ISSB standards
Responsible Investor
Responsible Investor launches ISSB Adoption Tracker
