June 2021

  • EFRAG’s consulting on the due process for EU sustainability reporting standard-setting 
  • Priorities for the Slovenian Presidency of the Council of the European Union  
  • IIRC and SASB merger finalised

EFRAG’s consulting on the due process for EU sustainability reporting standard-setting

EFRAG is requested to provide technical advice to the European Commission (EC) in the form of draft standards and/or draft amendments to EU Sustainability Reporting Standards (ESRS). The Corporate Sustainability Reporting Directive proposal includes a provision for ESRS to be mandated in the EU.

In parallel, EFRAG should be prepared with proper due process, public oversight and transparency, the expertise of relevant stakeholders, and accompanied by cost-benefit analyses.

Therefore, EFRAG is consulting on its proposed Due Process Procedures ​which stipulate the requirements to be followed in its role as technical advisor to the EC in the preparation of draft ESRS or draft amendments of ESRS.

The Consultation is open for comments until 15 September 2021.

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Priorities for the Slovenian Presidency of the Council of the European Union

Slovenia will take over the presidency of the Council of the European Union on 1 July. In line with the work of the last two presidencies, the Presidency set up four main priorities:

  • achieving resilience, recovery and strategic autonomy of the EU: implementing the NextGen EU and the Recovery and Resilience Facility, and accelerating the green and digital transition
  • using the conference on the Future of Europe as a forum for a Europe-wide debate on what the EU should look like in the future to meet EU citizens’ expectations
  • protecting the European way of life and protecting the rule of law
  • reinforcing the role of EU on a global level, while pursuing an important geopolitical role for the neighbour countries and the enlargement strategy

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EU Taxonomy Compass

The EC released an online tool that will provide an easier visual representation of the EU Taxonomy contents, including the Delegated Act on the climate objectives. It will be regularly updated to include future delegated acts. These acts will specify technical screening criteria for additional economic activities substantially contributing to the climate and environmental objectives of the Taxonomy Regulation.

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MEPs ask to reconcile crypto-assets technology and sustainability

MEPs have called on the EC to address environmental aspect of crypto-assets at the European Parliament (EP) Economic Affairs Committee joint debate on the ‘digital finance package’.

They highlighted the need to green the crypto-assets and ensure that the crypto-assets and their mining technology do not pose a threat to the global sustainability goals. Participating MEPs stated that they cannot support crypto assets based on a technology which uses more energy than some Member States.

The EC representative indicated that in terms of the environmental aspects they will aim to ensure coherence with the EU Taxonomy.

EC reassures NGOs over transparency in the EU Taxonomy’s Climate delegated Act

WWF, Transport & Environment, BEUC, BirdLife and ECOS, re-joined the EU Platform on Sustainable Finance. The decision came after the EC committed in its letter to more transparency in the adoption of future delegated acts on the EU Taxonomy. The five NGOs left the Platform on 21 April, contesting certain provisions of the draft Climate delegated act.

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New financial instrument to facilitate the transition towards a green economy

The Council adopted a regulation establishing the Just Transition Fund. It will consist of €17.5 billion that will finance projects to diversify the local economies, and will alleviate the socio-economic costs for communities across the EU depending on fossil fuels or greenhouse gas-intensive industries. The main support will be granted to SMEs, start-ups, and new firms. Investments related to nuclear power stations, fossil fuels and tobacco are excluded from the scope of the support.

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NGOs’ battle over forestry and bioenergy criteria in Taxonomy

The NGO Transport & Environment, together with other 90 civil society organizations, asked in a letter to the EP to refuse the classification of logging and burning trees as green investments in the framework of EU Taxonomy. In particular, they call for:

  • ending support for burning trees and crops in the Renewable Energy Directive proposal tabled for July 2021
  • revising the Land Use, Land Change, and Forestry Regulation (LULUCF)
  • including science-based evidence in all the legislative files concerning forestry
  • reconsidering the bioenergy and forestry taxonomy criteria

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IIRC and SASB merger finalised

The IIRC and SASB merged on 9 June and will operate from now on as the Value Reporting Foundation providing three products:

  • Integrating Thinking Principles
  • the IR Framework
  • the SASB standards

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G7 countries reach climate reporting agreement

G7 Finance Ministers committed to make reporting on climate impacts mandatory. This decision is in line with the global Task Force on Climate-related Disclosures’ recommendations. The coordinated approach will help avoid inconsistent information across different markets and develop the base for global standards for high-quality sustainability reporting.

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New global initiative for environmental-related financial disclosures

The newly launched Taskforce on Nature-related Financial Disclosures (TNFD) will be composed of 30 members, equally representing financial institutions, corporates, and service providers from developed and emerging markets. It aims to give financial institutions and companies a complete picture of their environmental risks. This will allow financial institutions and companies to better incorporate nature-related risks and opportunities in their decision-making processes.

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IFRS Foundation seeks nominations for Chair and Vice-Chair to the ISSB

Nominations for the Chair and Vice-Chair of the proposed International Sustainability Standards Board (ISSB) under the governance structure of the IFRS Foundation are open until 30 June 2021. The full role specifications and how to apply are available here.

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IFRS Foundation Trustees establish Eminent Persons Group

The Eminent Persons Group is chaired by Jean-Claude Trichet. It will provide strategic advice and counsel to the IFRS Foundation Trustees on the proposed formation of the ISSB and its connectivity with jurisdictional initiatives.

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“Invisible threads: communicating integrated thinking” – ACCA’s report on the annual integrated report

The report gives some guidelines for the preparation of the annual integrated report and how to communicate it better to investors and external stakeholders. Specifically, it looks at three ways in which integrated thinking is communicated in the annual integrated report:

  • clear communication of strategy
  • pertinent discussions about non-financial value drivers as basis of the multi-capitals model
  • consistency between the narrative report and the financial statements

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IRSG publishes recommendations to review EU Taxonomy for UK application

The International Regulatory Strategy Group (IRSG) endorses the British government’s approach in keeping the alignment with the EU provisions in the short term. It calls for providing clarity for the UK issuers and market participants ahead of COP26.

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.