April 2022

  • EU final negotiations on the CSRD proposal
  • ESMA Corporate Reporting Enforcement and Regulatory report for 2021
  • EFRAG progresses with sustainability reporting standard-setting
  • EC asks for feedback on Sustainable Corporate Due Diligence Directive
  • ISSB publishes its first two Exposure Drafts on sustainability standards
  • IFRS Foundation and GRI to align capital market and multi-stakeholder standards to create an interconnected approach for sustainability disclosures

EU final negotiations on the CSRD proposal

On 15 March, the European Parliament (EP) Legal Affairs Committee (JURI) adopted its position on the Corporate Sustainability Reporting Directive (CSRD) proposal with a large majority (22 in favour, 1 abstention). MEPs also approved the EP’s mandate to enter the trilogues. Below are some of the key points in the EP’s position:

  • scope:  all large companies (listed and non-listed), non-EU companies operating in the EU internal market, subsidiaries. Listed SMEs are excluded from the scope. The EP also asks the EC to establish additional reporting criteria for companies with relevant activities in high-risk sectors (textile, agriculture, mining, minerals)
  • reporting timeline: first company reporting in 2025 for 2024 financial year
  • assurance: mandatory limited assurance engagement. The statutory auditor or the audit firm(s) cannot conduct sustainability assurance engagement to the same client
  • Member States shall open the market to other independent service providers considering they comply with equivalent requirements set out in the Audit Directive
  • European Commission (EC) should adopt limited assurance standards before 1 October 2023 and reasonable assurance standards before 1 January 2026

The EU institutions entered the final negotiations of the CSRD proposal. The first political trilogues took place on 28 March and 7 April. The EP and Council want to reach a political agreement swiftly, possibly by the end of May. It is expected that the following elements will be part of the priorities for negotiations:

  • scope, especially whether non-EU companies should be captured
  • desire to protect SMEs from unnecessary administrative burden
  • audit regime and whether there should be a strict separation between audit and assurance service providers

ECON vote on the EU green bond proposal delayed

The EP’s Economic and Monetary Affairs (ECON) Committee’s vote on its position on the EU green bonds proposal is delayed and expected for 28 April. It seems that this is due to diverging views on the inclusion of natural gas and nuclear energy within the EU Taxonomy. The European Commission (EC) put forward a complimentary delegated act that covers certain gas and nuclear activities. Rapporteur MEP Paul Tang (S&D, Netherlands) and other MEPs are against this inclusion – a joint letter signed by 102 MEPs was sent to the EC asking to withdraw the complimentary delegated act (see Twitter).

ESAs supervisory statement on the Sustainable Finance Disclosure Regulation application

The three European Supervisory Authorities (ESAs) issued an updated joint supervisory statement to promote a consistent and effective application and national supervision of the Sustainable Finance Disclosure Regulation (SFDR). The statement includes a new timeline, expectations about the explicit quantification of the product disclosures under the EU Taxonomy Art 5 and 6 as well as the use of estimates.

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EC adopts disclosure rules on sustainable investments

The EC adopted technical standards via delegated regulation that are meant for disclosing sustainability-related information under the SFDR. Those standards precise the content, methodology and presentation of the disclosed information. Financial market participants will have to provide information on how they tackle and reduce possible negative impacts of their investments on environment and society. The EP and Council will have three months to object or not to the delegated regulation.

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ESMA calls for experts in Sustainable Finance

The European Securities and Markets Authority (ESMA) seeks for approximately 20 members to join its newly established Consultative Working Group (CWG). CWG will support ESMA’s recently announced Sustainable Finance Roadmap for 2022-24 through technical input into various areas of ESMA’s sustainable finance work. The deadline to submit applications is 4 May 2022.

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EFRAG progresses with sustainability reporting standard-setting

The European Financial Reporting Advisory Group’s (EFRAG) General Assembly appointed the Sustainability Reporting Board (SRB) which will be responsible for delivering the European sustainability reporting standards (ESRS). Wim Bartels, Chair of the Accountancy Europe Sustainability Policy Group, represents the accountancy profession in the SRB. The SRB is still missing the Chair, who will be appointed by the EC.

EFRAG also issued the Due Process Procedures for Sustainability Standard-Setting, which establishes the requirements for EFRAG to follow when acting as the technical advisor to the EC in the ESRS drafting.

EFRAG will launch the ESRS consultations by the end of April, with a 3 months comment period by 31 July 2022.

Lastly, EFRAG issued an open call for tenders to assist in the cost-benefit analysis of the first ESRS set. The deadline for applications is 28 April 2022.

EFRAG’s Working Papers on ESRS

Throughout the month, EFRAG continued issuing the Working Papers on the ESRS. These documents are made available for transparency purposes but are not subject to consultations yet. The following list is the complete set of currently publicly available working papers.

On conceptual guidelines for the standard setter:

The complete set on strategy, governance, impacts, risks, opportunities:

The complete set on environment topics:

The complete set on social topics:

The complete set on governance:


EC asks for feedback on Sustainable Corporate Due Diligence Directive

The EC issued a proposal for Sustainable Corporate Due Diligence Directive that is now open for feedback until 23 May. The Commission will summarise all received feedback and present to the EP and Council.

EC proposes to make sustainable products the norm in the EU

The EC proposed a regulation on sustainable products on 30 March. It sets new requirements to make products more sustainable. In addition, product-specific information requirements will ensure consumers know the environmental impact of their purchases. All regulated products will have Digital Product Passports. Labelling can be introduced as well. The purpose is to empower consumers in the green transition, improve their knowledge on the environmental sustainability of products and protect then against greenwashing.

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EC consults on the ESG ratings and ESG factors used in credit ratings

The EC is seeking to better understand the functioning of the ESG ratings market and how credit rating agencies incorporate ESG risks in their creditworthiness assessment. Stakeholders are invited to provide feedback until 6 June. The Commission also issued a call for evidence to collect evidence in order to further develop a potential future policy initiative.

EU Platform on Sustainable Finance work on EU Taxonomy

The EU Platform on Sustainable Finance issued final reports on:

  • extended environmental transition taxonomy intended to increase transparency in the entire economy. This is supposed to help all economic actors to share their transition stories. The report outlines a set of recommendations available here
  • technical screening criteria for the four remaining EU Taxonomy objectives. The report outlines recommendations for the Taxonomy objectives 3-6 and how to improve the Taxonomy’s design and criteria

ISSB publishes its first two Exposure Drafts on sustainability standards

The International Sustainability Standards Board (ISSB) issued two Exposure Drafts (EDs) on:

  1. general sustainability-related disclosure requirements, and
  2. climate-related disclosure requirements

The consultation period runs for four months and closes on 29 July 2022.

The International Organization of Securities Commissions (IOSCO) welcomed these EDs and reiterated they will be endorsed after the standards have been finalised. Such endorsement would support IOSCO members when considering how to adopt and apply the ISSB standards as the baseline for their own sustainable reporting requirements.

The International Financial Reporting Standards (IFRS) Foundation Monitoring Board also welcomed the EDs. Some of the Board members are the EC, the Financial Services Agency of Japan, the US SEC, the Brazilian Securities Commission, the Financial Services Commission of Korea, and China Ministry of Finance.

The ISSB also announced: i) that it will consult on its standard-setting priorities later this year; ii) its plans for building upon SASB’s industry-based standards and leveraging SASB’s industry-based approach to standards development.

IFRS Foundation and GRI to align capital market and multi-stakeholder standards to create an interconnected approach for sustainability disclosures

The IFRS Foundation and the Global Reporting Initiative (GRI) have announced a collaboration agreement under which the ISSB and the GRI’s Global Sustainability Standards Board (GSSB) will seek to coordinate their work programmes and standard-setting activities. Both entities recognise the considerable public interest in aligning – where possible – their respective work programmes, terminology and guidance. This is expected to help reduce the reporting burden for companies and further harmonise the sustainability reporting landscape at international level.

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Andreas Barckow delivers a keynote speech at ICGN 2022 conference

Andreas Barckow, Chair of the IASB, delivered a keynote speech at the 2022 International Corporate Governance Network (ICGN) conference Global Sustainability Standards: Convergence and the Future.

He noted that the principle-based nature of IFRS standards already allows to account for different risks, including sustainable risks and opportunities. However, depending on the feedback of the Third Agenda Consultation, the IASB may re-deliberate on what else it could do regarding climate-related risks in the financial statements.

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IOSCO adopts its 2022 workplan

The IOSCO’s 2022 workplan will include:

  • reviewing the International Sustainability Standards Board’s (ISSB) Exposure Drafts and final standards. This would provide all 140 IOSCO member jurisdictions with the basis to decide how they might adopt, apply or be informed by the ISSB standards
  • pushing forward work to develop assurance standards and review carbon markets to identify the vulnerabilities in nascent voluntary carbon markets.

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US SEC proposes rules to enhance and standardise climate-related disclosure for investors

The US Securities and Exchange Commission proposed rule changes that would require a registrant to disclose information on the impact of climate-related risks on its business, specifically:

  1. the registrant’s governance of climate-related risks and relevant risk management processes
  2. how any climate-related risks identified by the registrant have had or are likely to have a material impact on its business and consolidated financial statements, which may manifest over the short, medium, or long term
  3. how any climate-related risks are likely to have a material impact on its business, business model or strategy
  4. the impact of climate-related events in the consolidated financial statements

TNFD releases first beta version of framework for market consultation

The Taskforce on Nature-related Financial Disclosures (TNFD) published the first version of its disclosure framework. This will be followed by a 18-month consultation period and development together with a broad range of market players and stakeholders. This first beta version of the TNFD framework comprises three components:

  1. foundational science-based concepts and definitions
  2. draft disclosure recommendations, and
  3. a prototype of practical guidance on nature-related risk and opportunity analysis for companies and financial entities

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ICAS report on reporting high-quality sustainability information

The Institute of Chartered Accountants of Scotland (ICAS) published a report that sets out the necessary conditions for the reporting of high-quality sustainability information. The report also considers why the current system is not serving the public interest and highlights the increased demand for information on the company’s true performance.

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.