The CS3D Digest #36
Ripple Research
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Welcome to the 36th edition of The CS3D Digest, a dedicated newsletter by Ripple Research and your weekly compass for navigating conversations that matter in the corporate sustainability landscape. Our goal is simple—to keep you informed about the latest developments in the Corporate Sustainability Due Diligence Directive (#CSDDD) space as we further our understanding of it.
Read our previous editions to catch up, and subscribe for future updates!
Today's focus: European Commission's CSRD implementation guidelines, UK government's plan to regulate ESG ratings providers, SEC's defense of the new climate disclosure rules, Deloitte report revealing company executives' progress toward sustainability goals, Vanguard Investment penalized by Australia over greenwashing claims.
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What are we reading?
We've employed our proprietary AI tools to curate the most engaging news about CS3D and related regulations. Our focus extends beyond what's trending at the moment to showcase headlines that are fueling meaningful conversations around the world.
The European Commission has outlined detailed guidelines for the implementation of the EU Corporate Sustainability Reporting Directive (CSRD), introduced through Directive (EU) 2022/2464, which mandates new sustainability reporting requirements to enhance corporate transparency and accountability. The CSRD applies to large undertakings, listed SMEs (excluding micro-undertakings), parent companies of large groups, and certain third-country entities with significant EU operations. These entities must adhere to the European Sustainability Reporting Standards (ESRS) and ensure digital taxonomy compliance. The directive will be implemented in phases—starting in 2024 for large public-interest entities with over 500 employees, 2025 for other large undertakings, and 2026 for listed SMEs, small and non-complex institutions, and certain insurance entities. The CSRD requires sustainability information to be included in the management report and subjected to limited assurance by statutory auditors or Independent Assurance Services Providers (IASPs). Third-country entities with significant EU business must also publish sustainability reports consistent with EU standards.
The UK government has announced plans to introduce new legislation in 2025 to regulate Environmental, Social, and Governance (ESG) ratings providers to support investors in more informed decision-making. The new legislation is expected to align with recommendations from the International Organisation for Securities Commissions (IOSCO), ensuring that ESG ratings providers are transparent about their methodologies and disclose any conflicts of interest. ESG ratings providers will also come under the supervision of the Financial Conduct Authority (FCA), marking a significant shift in oversight as demand for ESG-integrated investment strategies continues to grow. The UK's move mirrors actions taken by the European Union, which recently placed ESG ratings providers under the supervision of the European Securities and Markets Authority (ESMA).
The Securities and Exchange Commission (SEC) is facing legal challenges over?a newly proposed rule mandating public companies to disclose climate-related financial risks. In a recent brief submitted to the U.S. Eighth Circuit Court of Appeals, the SEC argued that there is a need for more detailed, consistent, and comparable information on climate risks, citing significant demand from investors for enhanced disclosures to support informed investment and voting decisions. The Commission noted that current reporting practices are inconsistent, making it difficult for investors to evaluate the financial implications of climate risks accurately. The climate disclosure rules have encountered opposition from various groups, including 25 Republican state attorneys general and the U.S. Chamber of Commerce. Critics argue that the rules are overly burdensome and that the information required, particularly concerning GHG emissions, is speculative. In response to these legal challenges, the SEC has temporarily paused the implementation of the rules but will continue defending them in court.
According to Deloitte’s 2024 “Sustainability Action Report,” more than 75% of executives have observed progress in their sustainability goals. Regulatory pressures, such as the SEC’s climate-related disclosures and the EU’s requirements, are driving organizations to invest in sustainability reporting, with over half of executives reporting benefits like increased efficiencies, reduced risks, and enhanced stakeholder trust. To build trust and comply with evolving regulations, 80% of companies are pursuing reasonable assurance over their sustainability data, often using multiple standards like ISSB/SASB, GRI, and TCFD. Companies are also investing in their ESG capabilities, with 99% preparing for increased sustainability requirements and 77% creating new roles, such as ESG Controllers and Chief Sustainability Officers. Despite challenges with data quality, the focus on capacity building, regulatory compliance, and strategic ESG investments is driving more credible and robust sustainability reporting.
领英推荐
Vanguard Investments Australia is facing significant penalties after the Federal Court found that the company misled investors about the ethical exclusions in its Vanguard Ethically Conscious Global Aggregate Bond Index Fund. The court ruled that Vanguard falsely claimed to exclude companies involved in fossil fuels, alcohol, tobacco, gambling, military weapons, and other sectors deemed unethical. However, due to limitations in its screening process, some companies that did not meet these ethical standards were included in the fund, such as the Abu Dhabi Crude Oil Pipeline. This ruling, delivered in March, marked the first successful greenwashing case by the Australian Securities and Investments Commission (ASIC) that resulted in a finding of liability. ASIC is seeking a penalty of $21.6 million, adjusted for Vanguard’s cooperation, but Vanguard argues that this amount—or even a lower figure—could represent a substantial portion of its annual profit, which has ranged from $10 million to $50 million in recent years.
Voices from this week
??Andreas Rasche, Professor and Associate Dean at 丹麦哥本哈根商学院 , welcomes the European Commission’s guidelines on CSDDD implementation that provide clarity on the score of rules, determination of company size, and approval requirements for assurance.
??Hakan Karaosman, Associate Professor at 英国卡地夫大学 , discusses how only a small fraction of global fashion giants commit to Just Transition strategies, underscoring the need for more inclusive and context-specific approaches to decarbonization that consider both environmental and social impacts.
??Jaime Calero Gómez-Acebo, Sr. Product Manager at Varda - Foundation , advocates for companies and regulators to use the CSDDD’s transition period—until July 2026 for national integration and July 2027 for compliance—to ensure timely implementation and set ambitious sustainability standards.
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