The three European Supervisory Authorities (ESAs) issued their respective opinions on the first set of draft ESRS delivered by EFRAG in November 2022. As per the Corporate Sustainability Reporting Directive, these ESAs are required to provide such an opinion.
The European Securities and Markets Authority (ESMA), the European Insurance and Occupational Pensions Authority (EIOPA) and the European Banking Authority (EBA) overall supported the standards and concluded that they broadly comply with the criteria set by each of these ESA. However, all ESAs provide suggestions for improvement for the European Commission (EC) before the finalisation of the standards.
Kerstin Lopatta was appointed Vice-Chair of the Sustainability Reporting Board (SRB). The European Investment Bank joined as an official observer in EFRAG’s both pillars as discussions continued in December 2022.
EFRAG is also enhancing its sustainability reporting standards technical capabilities with:
The European Parliament‘s (EP) Economic and Monetary Affairs (ECON) and Industry, Research and Energy (ITRE) Committees adopted their opinions on the Corporate Sustainability Due Diligence Directive (CSDDD). ECON’s vote was significant since it covered the inclusion of the financial sector. This matter seems to be one of the most controversial topics in the negotiations, for which the right- and left-wing political groups shared an opposing view.
The EP’s Legal Affairs (JURI) Committee tabled their amendments (AMs) to MEP Lara Wolters’ (S&D/Netherlands) draft report on the CSDDD. MEPs had divergent views on several aspects, to name a few:
JURI Committee is expected to vote on the CSDDD in March.
The EP and Council met for the fourth time to negotiate the EU green bond standard proposal on 14 December 2022. They did not reach a provisional political agreement due to divergent views on transparency requirements and flexibility pocket, among other matters, as mentioned by rapporteur MEP Paul Tang (S&D/Netherlands). The negotiations are expected to continue under the Swedish Presidency.
The European Commission (EC) issued two sets of FAQs to help companies:
The European Banking Authority (EBA) outlined its objectives and timeline to deliver on sustainable finance. The roadmap covers eight areas:
ESMA’s Securities and Markets Stakeholder Group (SMSG) submitted its advice to ESMA on the European Supervisory Authorities’ (ESAs) Call for Evidence on greenwashing. SMSG advises, among other things, to clarify concepts and terminology and identify gaps in the current regulatory framework to fight greenwashing in the financial sector.
The International Sustainability Standards Board (ISSB) met in December to redeliberate some of the proposals in the first two reporting standards. Amongst other decisions, they tentatively decided to:
The ISSB aims to make the final decisions on these two standards by their meeting in February.
The IFRS Foundation appointed new Trustees members with a broad range of accounting and sustainability expertise. Steven Maijoor, former Chair of ESMA, is one of the newly appointed Trustees.
The IFRS Foundation established an ISSB presence in Beijing following a Memorandum of Understanding with the Ministry of Finance of China. The ISSB continued engaging with Global South jurisdictions to advance adopting IFRS Sustainability Disclosure Standards.
The Sustainability Standards Advisory Forum (SSAF) was formed to provide the ISSB with technical advice to contribute to the ISSB’s standard-setting work development. SSAF has thirteen inaugural members representing jurisdictions and regions from around the world. The European Union is represented in the SSAF, whereas the EC serves as an official observer.
The UK Financial Reporting Council announced its areas of supervisory focus for 2023-2024. These include TCFD-based reporting and how adequately companies’ net-zero commitments have been addressed in financial statements.
The UK Endorsement Board published its draft 2023/2024 Regulatory Strategy for consultation. They expect to undertake some projects related to the ISSB. As a result, all ISSB projects have been classified as “significant”.This 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.