Non-financial reporting takes centre stage

Towards standardised EU reporting rules

November 2022 was a busy month for sustainability reporting and European standards.

• On 10 November, European Parliament adopted the Corporate Sustainability Reporting Directive (CSRD) with 525 votes in favour. While currently less than 12 000 companies are covered by the?existing legislation on the disclosure of non-financial information (NFRD ). The new rules on sustainability reporting standards will have to be applied by 50 000 companies across the EU, starting to take effect between 2024 and 2028.
• On 15 November, EFRAG approved the final version of the European Sustainability Reporting Standards (ESRS) , setting out the reporting rules and requirements under CSRD. On 23 November, first draft ESRS were submitted to the European Commission by EFRAG, taking into consideration public consultation inputs.

• The Council is expected to adopt the proposal today, on 28 November, after which it will be signed and published in the EU Official Journal.
• On 18 November, European Securities and Markets Authority (ESMA) launched a consultation to draft guidelines on fund names with ESG or sustainability-related terms?to determine how funds should use sustainability-related?terms in their names, and how they can reflect them fairly and consistently in objectives and policy. Comments can be submitted by 20 February 2023 .
• Switzerland: from 2025, large Swiss companies and financial institutions will have to?implement new disclosure requirements on climate-related risks, impacts and plans, based on the recommendations of the FSB Task Force on Climate-related Financial Disclosures (TCFD) .

Read more about CSRD and its timeline in ISFC's June 2022 blog post .

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In the news?

Green and not-so-green investments: European Investment Bank (EIB) published a seven minute interview with Eila Kreivi and Nancy Saich , experts on climate change and sustainable finance:

COP27 achievements and failures: For a comprehensive summary of COP27 - UN Climate Change Conference , read Simon Mundy 's and Patrick Temple-West article on the debates around fossil fuels, loss and damage fund and sustainability-related labels. Further, this Reuters article discusses the landmark deal on a fund created to help vulnerable countries affected by climate disasters.

COP29 in CZ: Czechia is considering to become the next hosts of COP . For Czech speakers, the following article reflects on the Deputy Environment Minister's, Jan Dusík 's comments about the conference.

Penalty & ESG Funds: U.S. Securities and Exchange Commission fined 高盛 for ESG fund misconduct . Goldman Sachs Group Inc.?will pay $4 million because it failed to properly weigh ESG factors in some of its investment products, and allegedly suffered from poor policies and practices.

Evidence on greenwashing: 3 European Supervisory Authorities, European Banking Authority (EBA) , European Insurance and Occupational Pensions Authority (EIOPA) and European Securities and Markets Authority (ESMA) , published a Call for Evidence on greenwashing . It aims to collect examples of potential greenwashing practices to better understand the drivers of greenwashing and the associated risks. The deadline to respond to the consultation is 10 January 2023.

The use of ESG or sustainability-related terms: European Securities and Markets Authority (ESMA) launched another consultation to draft guidelines ?on how funds should use sustainability-related?terms in their names, and reflect them fairly and consistently in objectives and policy.

Understated risk in climate scenarios: Financial Stability Board (FSB) and the Network for Greening the Financial System released a joint report , which warns about a lack of understanding of climate-related financial risks, writes Sustainable Views .

SDG shortfalls & trade-offs: Robert Eccles and Bhakti Mirchandani write about the SDGs efforts hindered by the current economic downturn in ImpactAlpha 's new article .

Hydrogen in CEE: Four leading Central European gas infrastructure companies have analysed the possibilities to develop a hydrogen “highway” through the region . Uncertainties remain, but the study results demonstrate technical feasibility, writes CEENERGYNEWS .

Bulgaria's potential for energy innovation: Watch the discussion organised by the Center for the Study of Democracy , focused on the necessary policies for Bulgaria's low carbon transition.

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Recommended reading

Accelerating Green Deal implementation: European Commission DG Energy published a draft Commission Notice on the Guidance to Member States for the update of the 2021-2030 national energy and climate plans (NECPs) - not yet applicable or enforceable - with an aim to speed up the clean energy transition.

Sustainable Capital Asset Pricing Model: This paper , published by the European Finance Association , shows how sustainable investing affects asset returns via asset pricing model, with partial segmentation and heterogeneous preferences.

Emerging market sovereign issuances: 世界银行 published?a report?on Sovereign Green, Social and Sustainability bonds to support new issuers and developing economies mobilising private capital to finance climate action.

Nature-positive economy: The second report of the World Economic Forum ’s new Nature Economy series , provides practical insights needed for a fundamental transformation across three socio-economic systems: food, land and ocean use; infrastructure and the built environment; and extractives and energy.

Structural reduction in gas consumption: In its latest study , Agora Energiewende demonstrates the potential to reduce natural gas consumption via direct electrification (Power-2-Heat) of industrial processes in the paper, food, and plastics industries.

The financing gap: This new eBook , edited by Dirk Schoenmaker and Ulrich Volz , offers a comprehensive country- and region-level analysis on?scaling up sustainable finance and investment to reach climate and development objectives.

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Podcasts

Tune in: ISFC's latest Sustainability in Finance podcast episode is out! In this discussion, led by Julian Toth , Director of Czech Sustainable Investment Forum , Maud Gaudry talks about her experience working with EFRAG on ESRS, and the different approaches to sustainability in the US vs EU. Maud also shares advice from her distinguished career in sustainable finance. The episode is available here .

Sustainable finance framework: Listen to the Eurosif - The European Sustainable Investment Forum podcast Sustainability Bridges' new episode with Executive Director, Aleksandra Palinska and MEP Paul Tang discussing the implementation of the Sustainable Finance Disclosures Regulation (SFDR).

Dispatches from COP27 (in Hungarian): Green Policy Center 's broadcasts from Egypt are filled with inspirational speakers, such as Diana Urge-Vorsatz from IPCC , Barbara Kovács from the Ministry for Innovation and Technology, and Green Policy Center's Co-founder Tibor Schaffhauser .

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Events?

Sustainability Hub Prague : On 28 November, CSDD & Supply chains will be in focus at our panel discussion co-organised by International Sustainable Finance Centre (ISFC) and ACCA .

Sustainability Hub Prague : On 30 November, RICS in partnership with ISFC will look at the rise of ESG and its effects on the real estate sector in 2023.

Online: EFRAG organises a hybrid event on corporate sustainability reporting on 7 December.

Prague, Czechia: On 29 November, 安永 in Czechia is hosting the European Corporate Governance Conference 2022. Check out the agenda and register on the website .

Budapest, Hungary: On 7 December, Budapest Climate Summit will discuss sustainable finance and investing topics, featuring a great line up of speakers which includes Gábor Gyura , Anita Orban , Péter Kaderják , Andreas Beckmann , Dr. Barbara Botos , and Julian Popov .

London, UK: On 8 December, the City of London Corporation organises an event on Demystifying COP27 .