June 2023

  • EC reacts to EP’s concerns on EFRAG’s funding 
  • Member States exchange on the upcoming ESRS 
  • EP ECON Committee supports the political agreement on the EU green bond 
  • Council and EP reach a provisional agreement on ESAP 
  • ISSB issues two new consultations 

Stakeholders call for proper public funding for EFRAG

Accountancy Europe and 20 other organisations (private and public sectors but also NGOs) represented at the EFRAG board sent a letter to the European Commission (EC) on the EFRAG funding for the development of credible and successful European Sustainability Reporting Standards (ESRS). The co-signatories expressed concerns that EFRAG remains dramatically underfunded and continues being forced to operate under unacceptable working conditions having to rely on donated staff while operating under unrealistic deadlines. Therefore, organisations call on the EC to urgently provide additional annual funding to EFRAG. 

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EFRAG’s ESRS implementation support

EFRAG is planning the implementation support activities for the first set of ESRS, following the EC’s requests. The following deliverables have been prioritised: 

  • materiality assessment guidance 
  • guidance on the value chain 
  • a list of the detailed requirements to support preparer’s gap analysis activities

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EC reacts to EP’s concerns on EFRAG’s funding

Commissioner McGuinness responded to the European Parliament’s (EP) concerns about EFRAG’s funding. In a written response, McGuinness notes the EC has offered EFRAG two action grants to increase the funding for its work on the ESRS. The grant is supposed to co-finance up to 90% of eligible costs. 

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Member States exchange on the upcoming ESRS

Estonia and Denmark requested to address the upcoming sustainability reporting standards at the Competitiveness Council meeting on 22 May. In the note, the two Member States (MSs) indicated the need for standards which are ambitious but also proportionate, value-creating and possible to execute for both prepares and users. They invited the EC and other MSs to avoid the upcoming ESRS that would be burdensome and costly for companies.

EP supports new rules for sustainable and durable products

The EP approved their negotiating mandate on the proposal for a directive Empowering Consumers for the Green Transition. The proposed directive should improve product labelling and durability and prevent greenwashing. The EP’s position foresees, amongst others, banning misleading advertising and general unsubstantiated environmental claims. The EU negotiations on the draft legislation will start soon. This directive is part of the first circular economy package. 

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EP ECON Committee supports the political agreement on the EU green bond

The EP’s Economic and Monetary Affairs Committee (ECON) voted in favour of the political agreement on the EU green bond standard that the EU co-legislators reached earlier this year (39 votes in favour, 4 – against, 5 abstentions). 

The EP plenary is expected to vote on the agreement in September 2023.

Council and EP reach a provisional agreement on ESAP

The Council and the EP reached a provisional agreement on three proposals creating the European Single Access Point (ESAP) on 23 May. 

To recall, the ESAP will create a single location to offer EU-wide access to public financial and sustainability-related information about EU companies and EU investment products. 

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ISSB issues two new consultations

The International Sustainability Standards Board (ISSB) is seeking feedback on: 

ISSB’s Transitional Implementation Group launch

The ISSB is setting up a Transition Implementation Group (TIG) that will focus on implementing its first two sustainability reporting standards. 

The TIG will: 

  • provide a public forum for discussing questions on implementation 
  • inform the ISSB of any actions, such as issuing supporting materials, webinars, and case studies to address these questions 

Membership application is open until 30 June 2023. 

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Climate considerations for SMEs in the IFRS

The IFRS Foundation published educational material to illustrate how the IFRS for SMEs Accounting Standard requires companies to consider climate-related matters with a material effect on the financial statements. 

The publication is using similar educational material to support full IFRS Accounting Standards, including several examples. With this publication, IFRS aims for consistent application of the IFRS for SMEs Accounting Standard. It does not add to or change the requirements in the IFRS for SMEs Accounting Standard.  

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IFAC releases Key Questions on sustainability for Audit Committees

The International Federation of Accountants (IFAC) released Key Questions for Audit Committees Overseeing Sustainability-Related Disclosure to provide audit committees with the necessary questions when overseeing sustainability and environmental, social and governance (ESG) related disclosures.This curated content was brought to you by Vita Ramanauskaité, Accountancy Europe Manager, Head of Sustainability, since 2015. You can send her tips by email, follow her on Twitter and connect with her on LinkedIn.