Accountants should use the 3-step checklist to help guide the conversation with their SME clients about their business sustainability. It was developed in collaboration with the European Association of Co-operative Banks (EACB), and is a follow-up to our 2020 SME sustainability risk management publication.
The checklist facilitates building a sustainability profile for the business, thereby enabling:
The checklist’s 3 steps consist of:
1. building the business profile
2. conducting a sustainability risks calculation to identify key risk areas and where information is lacking
3. taking steps towards monitoring, improving and eventually reporting
It is important to note that the checklist is not a standard or tool for sustainability disclosures or non-financial reporting. Rather, it aims to help build up SMEs’ ‘sustainability maturity’ and, eventually, make it possible for the business to report on its business sustainability.
According to the latest news, the EC proposal on Sustainable Corporate Governance, which was due to be launched in June, will now be delayed until autumn. The file now will also be shared between Justice Commissioner Didier Reynders and Internal Market Commissioner Thierry Breton.
These standards should be built on the proposals of EFRAG’s project task force on EU non-financial reporting standards. This work is to be undertaken in parallel to the negotiations of the proposed CSRD, and to the establishment of the new governance structures for EFRAG as set out in the proposals by EFRAG’s President.
EFRAG is expected to deliver the first set of draft standards on 15 June 2022 only after:
The JTF will help EU countries deal with the economic and social impact of the transition towards climate neutrality. It will focus on aspects like training and workers’ inclusion, funding to micro-enterprises, business incubators and universities, and investments in new sustainable technologies. Member States’ commitment to the climate goals by 2050 is a key condition to access the fund. As a next step, the JTF must be adopted by the Council.
The EC published the Taxonomy’s Article 8 draft delegated act. It will ensure transparency in the market and prevent greenwashing. The draft delegated act specifies the disclosure obligations under Article 8 of the Taxonomy Regulation (content of KPIs related to turnover, capital and operational expenditure, methodology and presentation of information).
Stakeholders can provide feedback on the draft delegated act until 2 June 2021.
WWF, BEUC, ECOS, BirdLife, and Transport&Environment suspended their activities within the EU Platform on Sustainable Finance due to their concerns over the labelling of certain activities in the EC’s EU Taxonomy proposal presented on 21 April. In their view, the political interference has undermined the Taxonomy principles and led to an approach which is not based on scientific evidence. The main issue was the classification of the industrial logging and biomass energy as green investment.
Nathan Fabian, Chair of the EU Platform on Sustainable Finance, called for a review of the governance and transparency in the decision making of the EU Taxonomy criteria, following the publication of the EC Climate delegated act on 21 April. He confirmed the engagement of the EU Platform in keeping the science-based evidence at the core of the Taxonomy. It will ask for a review of the proposal if those would not be met. The EU Platform continues advising the EC on extension of the Taxonomy and criteria for further environmental objectives. Further recommendations are due shortly.
BETTER FINANCE, ecoDa, European Family Businesses, EuropeanIssuers, Federation of European Securities Exchanges, Invest Europe, and SMEUnited shared their concerns over the Sustainable Corporate Governance proposal in a joint letter to the EC. Signatories consider that:
The initiative aims to make the EU’s climate targets legally binding, notably climate neutrality by 2050 and the reduction of GHG emissions of 55% by 2030. The EP’s ENVI Committee approved the agreement reached in the Council at ambassadors’ level on 10 May. The proposal will be submitted to the plenary vote between 23 and 24 June. The Council will then need to approve the proposal at ministerial level.
The Centre for European Policy Studies (CEPS) published a study as part of the ongoing monitoring of the implementation of Non-Financial Reporting Directive (NFRD). The EC’s DG FISMA has commissioned this report to CEPS. The report analysed the data of 17 million companies within the EU. Among the main findings:
The IFRS Foundation Trustees’ response to the feedback received to their Consultation Paper: Sustainability Reporting is to:
Following the Feedback Statement and the Trustees response, the IFRS Foundation issued an Exposure Draft (ED) proposing amendments to the constitution to accommodate the creation of an ISSB within the organisation’s governance and structure. The amendments include revisions to the objectives of the Foundation and the institutional arrangements for the ISSB.
The consultation is open for comment until 29 July 2021.
Stakeholders strongly supported the creation of an ISSB under the IFRS Foundation and building upon existing initiatives, in the two roundtables jointly organised by IOSCO Sustainable Task Force and the World Economic Forum. IOSCO gathered views on:
Value Balancing Alliance (VBA) develops methodology along the double materiality concept to support standardisation. In its latest position paper, VBA suggests:
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.