July 2023


  • EC publishes sustainable finance package
  • ESAs share common understanding of greenwashing
  • CSDDD trilogue negotiations start
  • ISSB publishes its two inaugural standards

Feature story

Accountancy Europe’s feedback on EC’s draft delegated act on ESRS

We have provided feedback on the European Commission’s (EC) draft delegated act on the first set of European Sustainability Reporting Standards (ESRS).

The European accountancy profession calls the EC to:

  • align the ESRS with the International Sustainability Standards Board’s standards before adopting the delegated act, and
  • ensure consistency between ESRS and other EU legislation (particularly the SFRD), which includes clarifying how to comply with other EU legislations’ mandatory requirements when the respective datapoints are subject to materiality in the ESRS reporting

We have included a technical analysis with detailed comments to all ESRS that could further enhance the standards in the future.

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EU developments

EC publishes sustainable finance package

The EC put forward measures to build and strengthen the foundations of the EU sustainable finance framework on 13 June. The EC’s sustainable finance package consists of:

  • communication on sustainable finance framework where the EC noted that developing a voluntary standard for non-listed SMEs is one of its priorities for EFRAG
  • Environmental, Social and Governance (ESG) ratings proposal to increase transparency on the market for sustainable investments
  • EU Taxonomy Delegated Acts outlining criteria for economic activities making a substantial contribution to one or more of the non-climate environmental objectives
  • recommendation on transition finance to provide guidance and practical examples for companies and the financial sector

EC adopts EU Taxonomy Delegated Acts
The EC officially adopted the EU Taxonomy Delegated Acts (DAs) published as part of the EU Sustainable Finance package (13 June). That includes a new environmental delegated act for the EU Taxonomy remaining four environmental objectives, and amendments to the existing Taxonomy Climate Delegated Act and Disclosure Delegated Act.

The Council and the European Parliament (EP) will now scrutinise the DAs.

JURI Committee exchange of views with EFRAG
The EP’s Legal Affairs (JURI) Committee exchanged views with EFRAG and the European Commission’s (EC) representative on 27 June. MEPs focused on the European Sustainability Reporting Standards (ESRS) draft delegated acts (DAs). Some MEPs expressed concerns about the EC’s introduced changes to the draft ESRS DAs, specifically on: i) the materiality assessment approach ii) turning mandatory into voluntary disclosure requirements. MEPs also covered other matters:

  • non-listed SMEs standard
  • extent to which the ESRS and ISSB standards are interoperable
  • alignment with other international standard-setting bodies
  • coherence and alignment with other EU legislative initiatives such as taxonomy, supply chain law, etc

Sven Gentner (EC) noted that the EC intends to adopt ESRS DAs in July and submit them to the EU co-legislators under silence procedure (if no veto, approved). He indicated that the EC intends to publish additional proposals for the 25% reporting burden reduction in September 2023.

CSDDD trilogue negotiations start
The first trilogue meeting on the Corporate Sustainability Due Diligence Directive (CSDDD) took place on 6 June. Rapporteur MEP Lara Wolters (S&D, Netherlands) reported to JURI Committee on the outcome of the first meeting on 27 June. MEP Wolters noted that it was agreed that companies should be able to follow a due diligence risk-based approach based on severity and likelihood of risk. The most controversial topics of the CSDDD were also discussed. Indicatively: the financial sector inclusion, the extent of civil liability, the scope of obligations down the chain and the coverage of the environment, including climate and human rights. MEP Wolters underlined that they will be resolved in later negotiations. The next trilogue is expected to take place on 11 July.

EFRAG calls for candidates for its Sustainability Reporting Financial Institution Advisory Panels
EFRAG calls for candidates to the EFRAG Sustainability Reporting Advisory Panels on:

  • banking
  • capital markets
  • insurance

The advisory panels will advise the EFRAG Sustainability Reporting Technical Expert Group on developing and maintaining the sector-specific ESRS on financial institutions. Candidates should apply by 31 July 2023.

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ESAs share common understanding of greenwashing
The European Supervisory Authorities (ESAs) – EBA, EIOPA, ESMA – published their progress reports on greenwashing in the financial sector. The ESMA report helps to understand greenwashing better and provides market participants and regulators with a shared reference point to deal with greenwashing. The report outlines risk areas, causes of greenwashing and preliminary remediation actions.

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ESMA and NCAs to assess sustainability-related disclosures
ESMA and National Competent Authorities (NCAs) launched a Common Supervisory Action (CSA) on sustainability-related disclosures and integration of sustainability risks. The goal is to assess compliance of supervised asset managers with the relevant provisions in the Sustainable Finance Disclosure Regulation (SFDR), the Taxonomy Regulation, UCITS and AIFMD.

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International developments

ISSB publishes its two inaugural standards
The International Sustainability Standards Board (ISSB) published IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures.

To access the standards, stakeholders should log in or create an IFRS account on the webpage.

ISSB Chair Emmanuel Faber gave a speech at the IFRS Foundation Conference to officially launch the standards. Moreover, the ISSB summarised the standards in “10 things to know” and in two webinars.

EFRAG welcomed the standards and acknowledged a high level of interoperability between ESRS and ISSB standards.

ISSB expands its presence and work
The ISSB opened a new office in Beijing following the Memorandum of Understanding (MoU) signed between the IFRS Foundation and the Ministry of Finance of China in December 2022.

The Beijing office’s work will focus on executing the ISSB’s strategy for emerging and developing economies, developing countries and SMEs, and will serve as a hub for stakeholder engagement in Asia.

The IFRS Foundation Trustees and the IFRS Foundation Monitoring Board updated their MoU to reflect all ISSB-related changes.

The ISSB partnered with the World Economic Forum to compile ‘learnings’ on early sustainability reporting efforts. In addition, the ISSB is currently setting up a Knowledge Hub and welcomes additional feedback and requests on its contents.

Updated educational material on considering climate in financial statements
The IFRS Foundation updated its educational material. To recall, educational material was developed to help companies determine how to consider climate-related matters when preparing their financial statements applying IFRS Accounting Standards.

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Guidance on Greenhouse Gas (GHG) Reporting
IFAC and We Mean Business Coalition (WMBC), in partnership with Accounting for Sustainability, Global Accounting Alliance, and World Business Council for Sustainable Development, released two guiding documents to help preparers build on existing systems and processes in view of GHG reporting.

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A Deep Dive into sustainability assurance engagements
The International Federation of Accountants (IFAC) published a study to enhance understanding of current market practice on sustainability assurance.

The study is focusing on: who conducts assurance engagements, what standards are used, the scope of disclosure being assured, and how various assurance practitioners apply internationally recognised standards set by the International Auditing and Assurance Standards Board (IAASB).

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National developments

H3C releases technical guidance on limited sustainability assurance engagement

The French audit regulatory authority High Council of Auditors (H3C) issued technical guidance on limited assurance over sustainability reporting. The guidance was prepared by a A working group composed of representatives of H3C, statutory auditors and assurance providers . It is meant to assist assurance service providers in sustainability assurance engagements. To recall, the Corporate Sustainability Reporting Directive (CSRD) introduced an EU-wide requirement for sustainability assurance. The EC shall adopt an EU assurance standard by 1 October 2026, but member states can use national standards and procedures in the meantime.

Read more (in French)

News in brief


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.