Sustainability update

July 2024


  • Council adopts general approach on green claims directive
  • ESAs’ joint opinion on SFDR
  • IASB to finalise the Management Commentary
  • EFRAG and TNDF publish correspondence mapping

Feature story

CEAOB’s consultation on guidelines for sustainability assurance

The Committee of European Audit Oversight Bodies (CEAOB) issued draft guidelines for limited assurance engagements on sustainability reporting under the Corporate Sustainability Reporting Directive (CSRD). The objective is to facilitate the harmonisation of the sustainability assurance across the EU before the European Commission (EC) adopts EU limited assurance standard in 2026.

The proposed guidelines are non-binding and do not override national pronouncements that are in force in EU Member States (MS). However, national competent authorities may recommend or impose the use of the guidelines.

The guidelines are open for public consultation until 22 July 2024.

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EU developments

Council adopts general approach on green claims directive

The Green claims directive sets rules for explicit voluntary environmental claims’ substantiation and verification to combat greenwashing. The Council’s general approach:

  • requires companies to use clear criteria and the latest scientific evidence for their claims and labels
  • maintains the requirement for prior verification of environmental claims and labels
  • introduces a simplified procedure to exempt certain types of explicit environmental claims from third-party verification
  • includes support measures to assist SMEs
  • introduces a requirement to prove climate-related claims and distinguishes between contribution claims and offset claims

Trilogues will begin in the new legislative cycle.

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Council gives green light on nature restoration law

On 17 June, the Council adopted the nature restoration law setting binding targets and obligations for nature restoration in different types of ecosystems. The purpose is to mitigate climate change and the consequences of natural disasters.

The regulation will be published in the EU’s official Journal and enter into force. It will be directly applicable in all MS.

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European Commission’s climate-related risks report: key insights

The EC issued a report on the transition and physical risks of climate change. It describes the state-of-play of climate-related financial risk analysis in the EU as well as the potential policy responses. The report identifies key legislation to assess climate risk:

  • the CSRD provides sustainability disclosures that help improving stress test exercises
  • the Taxonomy Regulation establishes the definition of environmentally sustainable activities
  • the Taxonomy Disclosures Delegated Act requires the financial sector to provide performance indicators like the green asset ratio for banks/credit institutions and green investment ratio for asset managers

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Council’s conclusions on Environmental Action Programme mid-term review

The Environment Council adopted conclusions on the 8th Environmental Action Programme (EAP) mid-term review. The (EAP) aims to accelerate the green transition in a fair and inclusive way and defines a framework for action up to 2030.

The Council continues to support the EU Green Deal implementation and, in its conclusions:

  • calls on the EC to support MS in implementing green transition legislation
  • highlights the importance of (i) establishing clear verification and certification for sustainable investments and economic activities, and (ii) enhancing private and public investment to achieve the priorities of the green transition
  • calls on the EC and MS to (i) ensure multi-level governance in green transition policies, and (ii) integrate a green transition angle into the European Semester
  • encourages the EC and MS to cooperate with financial institutions to improve standards and reduce risk for corporate transition plans

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ESAs’ joint opinion on SFDR

The European Supervisory Authorities (ESAs) issued a joint opinion on the Sustainable Finance Disclosure Regulation (SFDR), outlining policy recommendations to the EC:

  • introducing a clear product classification system based on regulatory categories and/or sustainability indicators for financial products
  • revisiting and harmonising the concepts of sustainable investment and taxonomy-aligned investment
  • complete the EU Taxonomy and extend it to social sustainability
  • ensure that sustainability disclosures meet investors’ needs
  • evaluate introducing a framework to assess the sustainability features of government bonds

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ECB’s biennial report on FISEA

The European Central Bank’s (ECB) biennial report on Financial Integration and Structure in the Euro Area (FISEA) focuses on structural developments in the financial system in the euro area and the EU. Among relevant sustainability-related recommendations, the ECB suggests:

  • keeping working on reporting standardisation tools such as the CSRD
  • fostering green bond markets to help non-financial corporate and government debt securities issuers meet their green financing needs
  • promoting measures aimed at simplifying voluntary reporting standards
  • enhancing interoperability among reporting standards
  • that ESMA revises EU Green Bond Standard Regulation’s securitisation templates to require additional climate-related disclosures for non-green securitisation

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International developments

IASB to finalise the Management Commentary

The International Accounting Standards Board (IASB) will finalise the revision of the International Financial Reporting Standards (IFRS) Practice Statement 1 Management Commentary via targeted amendments to its Exposure Draft in the first half of 2025. The IASB will cooperate with the International Sustainability Standards Board (ISSB) and will consider the Integrated Reporting (IR) framework in the final version.

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EFRAG and TNDF publish correspondence mapping

EFRAG and the Taskforce on Nature-related Financial Disclosure (TNFD) issued a correspondence mapping between the European Sustainability Reporting Standards (ESRS) and the TNDF’s disclosures. The mapping shows that standards are strongly aligned and addresses:

  • concepts and definitions
  • approach to materiality
  • the Locate, Evaluate, Assess and Prepare (LEAP) approach
  • the reporting pillars
  • recommended disclosures and metrics

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ISSB’s new workplan

The ISSB announced its 2-year workplan, whereby the highest priority will be supporting IFRS S1 and IFRS S2 application.

In addition, the ISSB announced it will:

  • assume responsibility of the Transition Plan Taskforce, and develop educational materials on the matter
  • engage in updates and decisions on the Greenhouse Gas Protocol
  • continue cooperating with CDP
  • ensure full interoperability with the Global Reporting Initiative (GRI) standards

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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.