September 2021

  • EFRAG welcomes Climate standard prototype working paper
  • European Commission publishes Sustainable Finance Package
  • EU Platform on Sustainable Finance works on Social and extended Taxonomies

Accountancy Europe continues to contribute to sustainability reporting standard setting at EU and international level

We continue to contribute both to EFRAG and the IFRS Foundation, as they advance in addressing sustainability reporting standards. Lately, we have focused to changes to their respective structures, governance and due processes. In specific, we shared our:

  • views on the principles of and how to operationalise a two-way cooperation between EFRAG and the IFRS Foundation in developing sustainability reporting standards. Read more
  • comments to the IFRS Foundation’s consultation on the proposed targeted amendments to the IFRS Foundation Constitution to accommodate an International Sustainability Standards Board (ISSB). Read more
  • suggestions to the International Accounting Standards Board (IASB) on how to better address sustainability topics in existing IFRS standards. Read more
  • comments to EFRAG’s consultation on the due process procedures for EU sustainability reporting standards. Read more

EFRAG welcomes Climate standard prototype working paper

The EFRAG Project Task Force on European sustainability reporting standards (PTF-ESRS)​ made public the working paper ‘Climate standard prototype’, which will further develop to a draft standard. This working paper​ is made publicly available for transparency purposes and is not submitted to public consultation at this stage.

Read more

EC unveils renewed Sustainable Finance strategy

The European Commission (EC) adopted a Sustainable Finance Package. Specifically:

  • the renewed sustainable finance strategy sets out six actions, focusing on expansion of the EU Taxonomy, SMEs and retails investors, enhancing the financial system’s resilience to sustainability risks, international sustainable finance initiatives and standards, etc
  • the EU Green Bond Standard proposal introduces a voluntary standard for green bond issuance. The standard will provide issuers a tool to show that they are funding activities aligned with the Taxonomy. Investors will also receive clear information on their investments and their positive impacts on the environment, avoiding greenwashing
  • the EU Taxonomy Delegated Act on Article 8 specifies the content, methodology and presentation of information that non-financial and financial companies will have to disclose. The delegated act is subject to the co-legislators’ scrutiny

Read more

EC accelerates issuance of NextGenerationEU green bonds

The EC intends to issue up to 250 billion euros green bonds starting October, as part of the NextGeneration EU recovery instrument. The fund will deliver 800 billion euros to support EU’s recovery from pandemic, 250 of them will be delivered in green bonds. For the green bond issuance, the EC adopted a Green Bond framework which is in line with the principles established by the International Capital Market Association.

Read more

Controversial report on ESG integration within the banking system

BlackRock published a study on the integration of ESG factors in the supervision of banks. The report states that, despite the efforts made by banks and supervisors, integration of ESG indicators within risk management and business strategies should be accelerated. The NGOs Change Finance and Reclaim Finance were critical towards this study. In their views, the involvement of BlackRock in coal, gas, and oil industry could slow down or derail the EC from achieving the objectives of the Paris Agreement.

Read more

EFRAG calls for sustainability reporting experts

The PTF-ESRS has kicked off their technical work to develop EU sustainability reporting standards. The PTF-ESRS is organised in clusters, which are currently scoping, researching, documenting and drafting the very first version of the standards. The PTF-ESRS aims to have pre-exposure draft version ready by mid-October.

To this end, EFRAG calls for experts to join Working Groups and provide input on the draft sustainability reporting standards being developed.

Read more

Technical screening criteria for Taxonomy under review

The EU Platform on Sustainable Finance called for feedback on the preliminary recommendations for the EU Taxonomy technical screening criteria by 24 September. The report presented a first set of priority economic activities and draft recommendations for associated substantial contribution and do no significant harm technical screening criteria. These are related to the remaining four environmental objectives: water, circular economy, pollution prevention, and biodiversity/ecosystems.

Read more

ECOFIN exchange of views on Sustainable Finance package

Economic and Finance Ministers (ECOFIN) held a public deliberation on the EC’s Sustainable Finance Package on 13 July. After the EC’s presentation, Member States shared their views on the proposals. Indicatively:

  • Poland, Bulgaria, and Czechia pushed for the inclusion of nuclear energy and natural gas in the Taxonomy
  • Czechia, Hungary, Romania and Slovakia asked for a flexible approach in the transition towards sustainability
  • Bulgaria and Estonia asked to keep a proportional approach for SMEs regarding sustainable finance regulations

Read more

EU Platform on Sustainable Finance works on Social and extended Taxonomies

Over the summer, the EU Platform on Sustainable Finance presented a report on Social Taxonomy that aims to define activities substantially contributing to social objectives. Also, the Platform issued a report on Taxonomy extension options linked to environmental objectives.  The report investigates ways to support the transition in the whole economy. It further clarifies activities that are significantly harmful to environmental sustainability and those activities that have no significant impact. This is to support the transition of significantly harmful activities to a ‘greener’ level.

Read more

EFRAG signs statements of cooperation with GRI and Shift

EFRAG will contribute to key technical projects of GRI and Shift and have them as observers in their respective technical groups to work towards international sustainability reporting convergence.

Five Member States are against the EC’s JRC opinion on nuclear energy

Five Member States – Austria, Denmark, Luxembourg, Spain, and Germany – signed a joint letter asking the EC to keep out nuclear energy from the Taxonomy. Those countries consider it as harmful and deeply criticised the JRC’s report on the topic. They stated that it failed to address the residual nuclear risk, the question related to nuclear waste, and, finally, they raised doubts on the expertise of the scientific committees who drafted the report itself.

Read more

EC Sustainable Corporate Governance initiative: MEPs demand ambition and expected EC discussions

Several MEPs sent a letter to the EC President von der Leyen and 13 Commissioners in view of the delayed EC’s legislative proposal on Sustainable Corporate Governance. They insisted on the inclusion of the European Parliament key demands laid out in its legislative own-initiative resolution. These pertain to the scope of the future Directive, extending the due diligence obligation to all risks along the entire value chain, proportionality and prioritisation, and liability.

President Von der Leyen received a second letter from the Presidents of EPP, S&D, Renew, GreensEFA and the Left urging to ensure the EC proposal takes the EP’s views into account.

The College of Commissioners indicatively plans to discuss Sustainable Corporate Governance initiative on 27 October 2021.

NGO recommendations on Sustainable Corporate Governance

Leading NGOs have published a briefing with key recommendations to help clarify directors’ responsibilities to oversee sustainability. NGOs urge to reflect their recommendations in the legislation that should apply to all companies and in particular those whose business activities are linked to significant sustainability risks and impacts.

IOSCO elaborates on its vision and expectations for the ISSB

IOSCO announced that it plans to consider endorsing the future sustainability reporting standards to be issued by the ISSB at the IFRS Foundation.

They noted the ISSB should consider how the common global baseline of standards might be adopted, applied or otherwise utilised in different jurisdictions.

Read more

Various countries bid to host the ISSB

The IFRS Foundation accepted proposals from countries to host the International Sustainability Standards Board (ISSB) until the end of August.

The following countries announced they had submitted bids to host the ISSB:

ACCA’s report on AI’s role in ESG

ACCA, together with Chartered Accountants Australia and New Zealand (CA ANZ), released a report “Ethics for sustainable AI adoption: connecting AI and ESG”. The study: i) shows the interlinkages between the implementation of Artificial Intelligence (AI) and ESG objectives ii) sets nine recommendations on this matter.

Read more

The FRC Lab’s publication on reporting on risks, uncertainties, opportunities and scenarios

The Financial Reporting Council (FRC) Lab published its latest project report: Reporting on risks, uncertainties, opportunities and scenarios. It outlines what investors expect from corporate reporting on risks, uncertainties, opportunities and the use of scenarios. It also provides several practical examples of corporate reporting that better meet investors’ needs. Finally, it includes high-level insight into how investors would like reporting on resilience to develop.

Read more

FRC’s findings on Streamlined Energy and Carbon Reporting

The Financial Reporting Council (FRC) reviewed how a sample of companies and Limited Liability Partnerships (LLPs) had complied with the new SECR requirements, identified examples of emerging good practice and outlined its expectations for future reporting.

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.