Following the mandates received in 2020, EFRAG submitted two reports to the EC with proposals:
The proposals on EU sustainability reporting standard setting include the foundations and operational guidelines of standard setting, and proposals on the architecture of standards and a roadmap.
In terms of the structure, EFRAG proposes to establish a non-financial reporting pillar, composed of a technical expert group and a board, in parallel to the current financial reporting pillar, which remains unaltered.
The Platform provides recommendations on how to strengthen the transition financing’s potential through the Taxonomy criteria. It underlines the importance of the EU Taxonomy to identify the investments that are much needed to reach the Green Deal goals, and its role as a tool for companies to plan and finance transition investments to reach the Green Deal and climate targets.
Amongst other recommendations, the Platform highlights the need to ensure that the forthcoming reporting and disclosure standards are coherent, pragmatic and enable all market participants, from corporates to SMEs, to access the green finance for the transition.
The European Commission (EC) will consider the advice when finalising the delegated acts and the renewed sustainable finance strategy.
EBA, EIOPA and ESMA seek input on the draft Regulatory Technical Standards (RTS). The European Supervisory Authorities (ESAs) ask for input regarding disclosures of financial products investing in economic activities that contribute to an environmental investment objective, as defined by the Taxonomy Regulation.
The proposed draft RTS aim to:
Stakeholders are invited to contribute to the consultation by 12 May.
The Regulation introduces changes in behavioural patterns in the financial sector discouraging greenwashing and promoting responsible and sustainable investments. The SFDR sets common EU rules on how:
Lara Wolter’s (S&D, Netherlands) report on Corporate Due Diligence and Corporate Accountability was adopted by a large majority at the EP plenary on 10 March.
The text calls on the EU to oblige companies to identify and address human rights, health, environmental and good governance risks arising from their activities throughout their supply chain. The EP also calls for a civil liability mechanism and legal remedies for victims. The EP expects that the report will be taken into consideration in the legislative proposals to be delivered by the EC in June.
ESMA published its advice to the EC on Article 8 of the Taxonomy Regulation regarding how and to what extent companies’ activities are associated with economic activities that qualify as environmentally sustainable under the Taxonomy Regulation. The advice addresses:
The EC adopted a strategy on climate adaptation which sets out how the European Union can adapt to the unavoidable impacts of climate change. It will be implemented in coherence with other initiatives of the European Green Deal.
The EC will explore further actions for the provision of climate-relevant insurance products in the context of the Renewed Sustainable Finance Strategy:
ESAs published a joint supervisory statement on the effective and consistent application and national supervision of the SFDR. The recommendations aim to:
The working group (WG) will undertake technical preparation for a potential international sustainability reporting standards board under the governance of the IFRS Foundation. The WG will provide a forum for structured engagement with initiatives focused on enterprise value reporting. Specifically, it will provide technical recommendations, including further development of the prototype built on the TCFD recommendations. These will serve as a potential basis for the new board to build on existing initiatives and develop standards for climate-related reporting and other sustainability topics.
The International Federation of Accountants (IFAC) and the International Integrated Reporting Council (IIRC) published their initial thinking towards integrated reporting assurance. The objectives of this publication are to:
IOSCO sees an urgent need for globally consistent, comparable, and reliable sustainability disclosure standards, announcing its priorities and vision for a Sustainability Standards Board under the IFRS Foundation. IOSCO supports:
IFRS Foundation Trustees have reached the following views about the strategic direction of a new Sustainability Standards Board:
In the next steps, the Trustees intend to publish a feedback statement to summarise the responses to their Consultation, as well as publish for public comment the proposed changes to the Foundation’s Constitution necessary to formalise establishment of the new board, including its composition. The consultation period will last for 90 days.
The Sustainability Accounting Standards Board (SASB) issued a SASB XBRL Taxonomy for a 60-days public consultation.
The United States (US) have advanced in the sustainability agenda recently. The US Securities and Exchanges Commission (SEC) Acting Chair Allison Herren Lee announced that they would increase their focus on climate-related disclosures, and also supported the IOSCO latest announcement on Twitter.
The SEC also announced the creation of a Climate and ESG Task Force in the Division of Enforcement which will develop initiatives to identify ESG-related violations.
More recently, the SEC issued a public consultation on how to address climate disclosure rules and guidance including which standards/frameworks to adapt, with the possibility of developing one.
The Committee is calling the federal government to implement measures like sustainability bonds, strategies for public-sector financial investments and economic support programmes. They are also asking for disclosures in corporate reporting with information on companies’ environmental impact and resilience.
ACCA’s recent study case notes that:
Read moreThis curated content was brought to you by Vita Ramanauskaité, Accountancy Europe senior policy advisor since 2015. You can send her tips by email, follow her on Twitter and connect with her on LinkedIn.