January 2022

  • CSRD institutional debate
  • EC calls for applications for Chair of EFRAG Sustainability Reporting Board
  • Stakeholders concerned about the EC delaying its Sustainable Corporate Governance initiative
  • Guidance on the Taxonomy Disclosures Delegated Act implementation
  • International Sustainability Standards Board’s composition

CSRD institutional debate

The European Parliament (EP) Legal Affairs committee considered the proposed amendments (AM 54 – 269 and AM 270 – 616) to the European Commission’s (EC) Corporate Sustainability Reporting Directive (CSRD). MEPs had divergent views on several matters, to name a few:

  • scope expansion – some MEPs were in favour of including SMEs in the scope, especially those operating in high-risk sectors, while others argued against it suggesting the focus should be on big companies only
  • timeline for reporting – there is an urgency to have the requirements in place, but this needs to be done in a reasonable way
  • audit provisions – a need for proper auditing in place and water-tight provisions was highlighted

MEP Pascal Durand (RE/France) – rapporteur – intends to discuss these matters with shadow rapporteurs to reach a consensus. It is worth noting that Jessica Polfjärd (EPP/Sweden) and Lidia Pereira (EPP/Portugal) – rapporteurs for opinion from ECON and ENVI associated committees – stressed the importance of consistency and alignment with global developments when it comes to sustainability reporting standards.

The Legal Affairs committee vote on the CSRD file is foreseen for March (the exact date is yet to be confirmed).

Institutional debate on the EU green bond standard

MEP Paul Tang (S&D/Netherlands), rapporteur on the file, presented its draft report on the EC proposal for an EU green bond standard to the EP Economic and Monetary Affairs committee (ECON) on 13 January. The rapporteur seeks to reinforce the EC proposal to strengthen public confidence in green bonds and ensure a liquid market. To his view, trustworthiness of green bonds will be crucial. His main concern here is ensuring independence of external verifiers. To this end, he will seek to strengthen provisions on conflict of interest through shareholders, fee structures and outsourcing.

The deadline for tabling amendments (AMs) is 20 January. Consideration of AMs at ECON committee is scheduled for 28 February. The committee is expected to vote on the file on 31 March.

EC calls for applications for Chair of EFRAG Sustainability Reporting Board

The EC will nominate the Chair after consultation with the European Parliament and the Council. The successful candidate will be appointed for an initial period of three years, which may be further extended for another period of three years. The deadline to apply is 1 February 2022, 12.00 AM CET.

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Stakeholders concerned about the EC delaying its Sustainable Corporate Governance initiative

After being postponed twice, the EC Sustainable Corporate Governance initiative is now provisionally scheduled for 15 February. To recall, the proposals have twice failed to pass the EC internal quality control. The latest delay triggered several stakeholders to express strong concerns and to reiterate their support for this legislation. For more information, see the EU NGOs open letter to Ursula von der Leyen and a joint statement by Business & human rights experts and leaders.

Guidance on the Taxonomy Disclosures Delegated Act implementation

The EC issued FAQs to provide large businesses and financial undertakings with additional support for the EU Taxonomy Disclosures Delegated Act (DA) implementation. The DA is meant to supplement the EU Taxonomy Article 8 on reporting obligations for large companies and financial undertakings detailing those rules. The Disclosures DA rules apply as from 1 January 2022. The EC is expected to issue further guidance in January 2022. Additionally, the EU Platform on sustainable finance published considerations on reporting voluntary information as part of Taxonomy eligibility.

EC prepares to adopt a delegated act on nuclear power and gas

The EC is consulting the Member States Expert Group on Sustainable Finance and the EU Platform on Sustainable Finance on a Taxonomy Complimentary DA draft text. This DA covers certain gas and nuclear activities. The EC considers that natural gas and nuclear power can play a role in facilitating the transition towards a renewable-based future. To fit the EU Taxonomy framework, these energy sources need to be classified under ‘clear and tight conditions’.

The EC extended the initial deadline (12 January) to 21 January for experts to provide their contributions. The EC is expected to adopt the DA shortly after and it will be subject to the co-legislators’ scrutiny for four months.

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Social and environmental Taxonomies delayed to 2022

The EC confirmed a new timeline for the EU Platform on Sustainable Finance to deliver further work on taxonomy. The Platform’s reports on the environmental transition taxonomy, social taxonomy and recommendations on technical screening criteria for the remaining environmental objectives are now planned for Q1 2022.

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EIOPA’s sustainable finance priorities

The European Insurance and Occupational Pensions Authority (EIOPA) announced its three-year plan for sustainable finance activities. Among other key areas of activity, EIOPA intends to focus on promotion of sustainability disclosures and a sustainable conduct of business framework by providing guidance on disclosures under the Sustainable Finance Disclosure Regulation and the Taxonomy Regulation.

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International Sustainability Standards Board’s composition

Emmanuel Faber, former Chair of the Board and CEO of Danone, was appointed as the Chair of the International Sustainability Standards Board (ISSB), effective as of 1 January 2022. The Vice-Chair of the ISSB has also been selected and will be announced soon.

The International Financial Reporting Standards (IFRS) Foundation Trustees have also started the search for up to 11 members to fill the 14 seats of the ISSB.

The European Financial Reporting Advisory Group (EFRAG) welcomed the appointment of Emmanuel Faber as the ISSB Chair and extended a cooperation invitation for sustainability reporting standard-setting in the co-construction spirit.

IAASB responds the demand for assurance engagements on sustainability and ESG reporting

Chair Tom Seidenstein notes that the International Auditing and Assurance Standards Board (IAASB) recognises the growing demand for sustainability and climate-related information. To that end, the IAASB commits to do more work to enhance the assurance of sustainability reporting. Their initial work could lead to:

  • developing new subject-matter specific standard(s) that build on and supplement ISAE 3000 (Revised)
  • targeted enhancements to ISAE 3000 (Revised), as necessary, or
  • other related actions that are necessary in the public interest, for example, revising our existing guidance or developing new guidance

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Value Reporting Foundation publishes Integrated Thinking Principles

The principles, published on 7 December 2021, provide a structured approach to embed integrated thinking within an organisation aiming to reinforce its endeavour to value creation. They are designed to be embedded into an organisation’s business model and applied across key activities overseen by the Board and managed by the senior management team.

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.