Sustainability update

March 2024


  • EC published 2024 Annual Single Market and Competitiveness Report
  • EFRAG continues to work on ESRS
  • ENVI and IMCO committees adopted their report on Green Claims Directive
  • WWF published report on corporate climate targets
  • IFAC, AICPA, and CIMA benchmark report on the state of sustainability disclosure and assurance
  • US adopts climate disclosures rule

Feature story

CSDDD – still no agreement at Council level while timeline is getting tighter

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:

  • significantly wider scope, capturing only a fraction of European companies compared to the scope agreed initially
  • limiting civil liability provisions
  • removing all references to directors’ remuneration

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.

EU developments

EC published 2024 Annual Single Market and Competitiveness report

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.

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EFRAG continues to work on ESRS

In recent developments:

  • EFRAG issued a second set of explanations to the European Sustainability Reporting Standards (ESRS) questions received in its Q&A platform. These explanations are non-authoritative and cover cases in which the ESRS content already provides an appropriate answer.
  • EFRAG signed a Memorandum of Understanding with CEN and CENELEC to ensure consistency in ESRS implementation.
  • EFRAG inaugurated three new advisory panels on banking, capital markets, and insurance. These advisory panels will advise on the respective ESRS sector standards development required under the CSRD.


EP voted on EIB strategic financial activities

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:

  • plays a crucial role in funding climate action and green transition initiatives. It aims at reaching 1 trillion in green investments by 2030
  • calls for a pragmatic approach to pursue the green transition
  • calls for ongoing investment in concrete just transition initiatives

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ENVI and IMCO committees adopted their report on Green Claims Directive

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.

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EP and Council agree to ban products made with forced labour

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 report on corporate climate targets

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:

  • SBTi is the gold standard for climate target setting
  • SBTi’s and CSRD methodological requirements overall correspond, making it easier for companies to meet EU climate target setting and reporting requirements

The report recommends:

  • EU institutions, MS, regulators and supervisors, and assurance providers to encourage companies to adopt SBTi climate targets
  • EU to develop a methodological regulatory framework for corporate climate target setting aligned with the 1.5°C temperature increase limit
  • relevant regulators and supervisors to monitor climate targets

Read more


Industry leaders called for European Industrial Deal

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:

  • EU-level incentives in the transition
  • next EC to prioritise addressing regulatory inconsistencies, unnecessary complexity in legislation, and over-reporting
  • a single market for energy, waste, and recyclable materials
  • less prescriptive legal frameworks for achieving green objectives
  • ‘European innovation stress test’ to be carried out for new legislation

Read more

International developments

US adopts climate disclosures rule

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:

  • impact business strategy, results of operations, or financial condition
  • any mitigation or adaptation activities
  • transition plans, scenario analysis, or internal carbon prices (if applicable)
  • board’s oversight and role of management
  • processes of identifying and managing climate-related risks
  • climate goals if any
  • Scope 1 and Scope 2 GHG emissions, for certain entities

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.


California sued over climate disclosures laws

The US Chamber of Commerce and other business and trade associations brought the lawsuit arguing that the laws:

  • violate the First Amendment’s freedom of speech
  • extend beyond California’s borders
  • create a patchwork of reporting
  • raise significant costs for businesses

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ISSB focuses on educational materials

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:

  • interoperability with ESRS
  • materiality
  • current and anticipated financial effects
  • proportionality mechanisms

scenario analysis / resilience assessment disclosure


China stock exchanges publish draft guidelines on sustainability 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:

  • follow the four-pillar TCFD structure
  • consider both impacts on companies’ enterprise value and companies’ own impact on society and the environment
  • include Scope 1, 2, and 3 GHG emissions
  • be effective from 2025

Third-party verification is encouraged.

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IFAC, AICPA, and CIMA benchmark report on the state of sustainability disclosure and assurance

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:

  • 98% of companies report some sustainability information
  • companies are increasingly reporting sustainability information in their annual reports or incorporating ESG disclosures in their integrated reports
  • 69% of companies obtained assurance for at least some of the sustainability disclosures

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AICPA and CIMA study on corporate sustainability performance management

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:

  • management accounting function plays a pivotal role in strategic and operational corporate sustainability management
  • corporations developed a sustainability strategy, sustainability related KPIs, and include ESG components in investment decisions alongside financial data
  • corporates plan to further integrate sustainability factors into management accounting processes

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National developments

British Parliament warns the government to speed up green taxonomy and transition plans consultations

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.

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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 X and connect with her on LinkedIn.