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The European Parliament (EP) approved the final text of the Corporate Sustainability Due Diligence Directive (CSDDD) on 24 April. The CSDDD is a pivotal step towards more corporate accountability, advancing human rights and environmental protection whilst creating a level playing field for companies in the European Union (EU). The final text includes significant changes compared to the provisional agreement reached in December 2023 to secure a majority among Member States (MS). Nevertheless, it remains a landmark legislation which will enable European companies to gain more insights into their supply chains and adopt a climate transition plan. The CSDDD’s provisions will be applied in:
Third-country companies are also included in the scope and the year of application will depend on the turnover they generate in the EU.
On 15 May, the EU ambassadors at Coreper approved the final text. The final sign-off on new law will take place at Council level on 24 May. Following this, the CSDDD will be published in the EU Official Journal and will enter into force 20 days later. MS will then have two years to transpose the Directive into national law.
Accountancy Europe welcomes the adoption of the new Directive as a significant step forward in advancing responsible business practices. You can read our welcoming statement here.
On 24 April, the EP approved the provisional agreement on Environmental, Social, and Governance (ESG) rating activities. Key elements of the agreement include:
Once the Council approves the text, the regulation will take effect 18 months after its entry into force.
The European Commission (EC) issued the corrigendum to the European Sustainability Reporting Standards (ESRS) correcting typos, references, and other inconsistencies within the standards’ text.
The EU Platform’s on Sustainable Finance (Platform) report proposes a framework to measure effective contribution of finance towards the EU Green Deal objectives. The framework relies on precise methodology and data structure. It integrates a bottom-up representation of the real economy along with financial sector instruments. Also, it considers transitional plans for financial and non-financial undertakings. The report represents an intermediate view that can be tested and expanded when more data are available via reporting obligations. The Platform will publish a final report providing an overview of national assessments of investment by the end of its mandate.
Enrico Letta, President of the think tank Jacques Delors Institute and former prime minister of Italy, published a report setting out recommendations on how to strengthen the Single Market. The report focuses on the Single Market’s future challenges such as the need for further education, strategic investments, sustainability, and international outlook. Sustainability-related recommendations, amongst others, include:
ESMA issued guidelines on funds’ names using ESG or sustainability-related terms. These funds can use sustainability-related terms if they use at least 80% of their investment to meet environmental, social characteristics, or sustainable investment objectives. These guidelines are meant to:
Global Reporting Initiative (GRI) together with MEP Pascal Durand (S&D/France) and the Lefebvre – Sarrut Group issued a publication on the Corporate Sustainability Reporting Directive (CSRD). A series of 11 briefings explains and navigates through the complexities of the new directive. Accountancy Europe participated as a contributor to this project.
We Mean Business Coalition issued a white paper on how the EU green taxonomy reporting legislation is working in practice. They analysed reports of 100 companies outlining some areas of improvement:
The International Financial Reporting Standards (IFRS) Foundation and EFRAG issued guidance material on interoperability. It illustrates:
The ISSB issued the IFRS Sustainability Disclosure Taxonomy (ISSB Taxonomy) to enable investors to analyse and compare sustainability-related financial disclosures efficiently.
Moreover, it will start soon working on research projects on the new IFRS sustainability standards development on:
The International Accounting Standards Board (IASB) will consult on climate-related and other uncertainties in financial statements in the third quarter of 2024. The consultation will be open for 120 days and will contain:
The IFRS Interpretations Committee (IFRIC) issued an interpretation on how net-zero commitments would be accounted under IAS 37 Provisions, Contingent Liabilities and Contingent Assets. The IFRIC concluded that there is no need to add a specific standard-setting project to the workplan, that the IASB approved.
European Commission
DG FISMA management plan 2024
European Council
Council conclusions on European Court of Auditor's special Report on the Global Climate Change Alliance (+)
Principles for Responsible Investment
Policy Briefing: taking action in a time of uncertainty: the role of the G7 in driving the economic transition
IFRS
Jurisdictional sustainability consultations
IFAC
IFAC proposed changes on IES
ESMA
ESMA letter to IESBA on the proposed International Ethics Standards for Sustainability Assurance
21 May
Embedding Sustainability into Initial Accountancy Training: Understanding the Proposed Changes to the International Education Standards - IFAC
23 May
Unlocking Synergy – Interoperability Guidance on IFRS Sustainability Disclosure Standards and European Sustainability Reporting Standards – EFRAG & ISSB
