March 2023

  • EC publishes green claims proposal to fight greenwashing 
  • EC plans to streamline reporting requirements 
  • MEPs ask the EC about EFRAG funding 
  • EPP debates CS3D at stakeholders’ meeting 
  • IFRS Foundation continues outreach and work on sustainability standards

EU co-legislators reach a provisional agreement on EU green bond standard

The European Parliament (EP) and the Council met for the fifth time to continue the negotiations on the EU green bond standard that led to an agreement on 28 February (see Council’s and the EP’s release).

Under the provisional agreement: 

  • ESMA will act as a centralised registration system for green bond verifiers 
  • external verifiers will need to identify, eliminate, or manage and disclose in a transparently any actual or potential conflicts of interest; ESMA will develop regulatory technical standards to specify criteria and assess the management of conflicts of interest 
  • a 15% flexibility pocket will allow both sovereign and corporate issuers to invest 15% of green bond proceeds to: i) economic activities complying with the EU taxonomy requirements but with no technical screening criteria available yet or ii) activities complying with technical screening criteria on the ‘best effort’ basis 
  • application of the Regulation is postponed by 12 months to allow Member States enough time to adapt national legislation for new tasks of national competent authorities 

The provisional agreement will have to be approved by the EP at the plenary sitting and Council at Coreper level.

EC publishes green claims proposal to fight greenwashing

The European Commission (EC) proposed common criteria against greenwashing and misleading environmental claims in the substantial green claims directive. The proposal covers all voluntary claims about the environmental impacts, aspects or performance of a product or the trader. However, it excludes claims already covered by existing the EU rules, such as the EU Ecolabel or the organic food logo. Green claims will need to be independently verified and proven with scientific evidence. Stakeholders can provide their feedback on the proposal by 18 May.

EC releases Net-Zero Industry Act

The EC proposed the Net-Zero Industry Act on 16 March. The aim is to scale up manufacturing of clean technologies and ensure the EU is well-equipped for the clean-energy transition. EC President von der Leyen announced this initiative as a part of the Green Deal Industrial Plan. 

EC plans to streamline reporting requirements

In her speech at the EP plenary, EC President von der Leyen indicated the EC’s plans to put forward concrete proposals to simplify reporting requirements by reducing them by 25%. In her speech on 21 March, Commissioner McGuinness noted that the EC asked EFRAG to prioritise its efforts and focus on providing additional guidance for companies to apply the first set of European Sustainability Reporting Standards (ESRS). Consequently, this would delay the sectorspecific standards public consultation.

ESRS Educational videos and Basis for Conclusions

EFRAG issued the Basis for Conclusions for the first set of draft ESRS delivered to the EC in November 2022. 

EFRAG also published educational videos for these draft ESRS.

EFRAG’s new appointments to the sustainability reporting pillar

EFRAG’s Sustainability Reporting Board (SRB) appointed: 

  • Sigurt Vitols as EFRAG Sustainability Reporting Technical Expert Group (SR TEG) Vice-Chair, as the sustainability reporting pillar continues working on the second set of draft ESRS 
  • Christoph Töpfer as EFRAG SR TEG member 

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MEPs ask the EC about EFRAG funding

A group of MEPs note that EFRAG has limited capacity and resources, and the CSRD sets ambitious deadlines. This might put at risk the quality of the standards being developed. Thus, MEPs asked whether the EC would consider providing at least 1 million Euros more to EFRAG. 

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EPP debates CS3D at stakeholders’ meeting

The EP’s European People’s Party (EPP) held a stakeholder meeting on the Corporate Sustainability Due Diligence Directive (CS3D) on 8 March. Shadow rapporteur Axel Voss (EPP, Germany) chaired the meeting. The discussion focused on the most conflictual points between the EPP and the Socialists (S&Ds), notably:  

  • Directive’s scope  
  • discussion on the value chain vs supply chain 
  • corporate governance and civil liability provisions  

MEP Axel Voss confirmed the EPP on its own does not have the majority to ensure the reflection of their positions in the text. 

Nordic Industries ask the EP to exclude corporate governance rules from CS3D

The Nordic Industries have sent a joint letter to the EP rapporteurs on the CS3D, calling to exclude corporate governance rules from the CS3D. They argue that there is a significant risk that the proposed Directive would harm business. It would also reduce businesses’ continued successful contribution to developing a sustainable economy and society.

SMSG advice to ESMA on greenwashing

ESMA’s Securities and Markets Stakeholder Group (SMSG) issued advice on additional questions on greenwashing: 

  • greenwashing definition and relevance of intent for the definition 
  • supervisory relevance of ‘greenbleaching’ 
  • declining number of funds under the Sustainable Finance Disclosure Regulation Article 9 and ESMA’s role

IFRS Foundation continues outreach and work on sustainability standards

The IFRS Foundation held the IFRS Sustainability Symposium, which brought together stakeholders from 45 countries, incl. businesses, investors, policymakers, and regulators. IFRS Foundation published seven takeaways that also included the importance of global comparability and the need for capacity building. Other news: 

  • International Sustainability Standards Board (ISSB) met with the Sustainability Standards Board of Japan (SSBJ), which will develop sustainability reporting standards for Japan 
  • G20 Finance Ministers and Central Bank Governors look forward to the ISSB’s finalisation of the standards and their work beyond climate 
  • ISSB will publish the Exposure Draft on the SASB internationalisation in May 2023

ACCA provides insights into sustainability assurance

ACCA issued a report that: 

  • provides an overview of the current landscape for sustainability assurance, a fast-growing area for professional accountants and others 
  • introduces the standard and guidance for sustainability assurance by the International Auditing and Assurance Standards Board (IAASB) 
  • discusses skills and competencies required for undertaking sustainability engagements 

Read more This curated content was brought to you by Vita Ramanauskaité, Accountancy Europe Manager since 2015. You can send her tips by email, follow her on Twitter and connect with her on LinkedIn.