27 April 2020. The European Commission set up in 2018 a Technical expert group on sustainable finance (TEG) to assist it in developing: An EU classification system – the so-called EU taxonomy – to determine whether an economic activity is environmentally sustainable; An EU Green Bond Standard; Methodologies for EU climate benchmarks and disclosures for benchmarks; and guidance to improve corporate disclosure of climate-related information
The TEG published the final report on EU taxonomy on 9 March 2020. It contains recommendations relating to the overarching design of the taxonomy, as well as guidance on how companies and financial institutions can make disclosures using the taxonomy. In addition, the TEG has prepared excel tools to help users of the Taxonomy to implement it in their own activities.
In its 26 April 2020 statement on the Covid-19 crisis (also available in French, Italian and Spanish), the TEG encourages governments and the private sector to use EU Taxonomy, the Green Bond Standard and the Climate Benchmarks as tools to ensure a ‘resilient, sustainable and fair’ recovery.
20 February 2020. The Commission has today launched a public consultation on the review of the Non-Financial Reporting Directive (NFRD). This Directive requires certain large companies to include a non-financial statement (e.g. on environmental or social issues) as part of their annual public reporting obligations.
Valdis Dombrovskis, Executive Vice-President, said, “Tackling climate change has implications across the board, including on corporate reporting. Our transformation to a carbon-neutral economy means that people need more information from the companies they are investing in. As things stand today, there is currently a sustainability reporting gap that is hampering progress towards a sustainable financial system. The needs of investors for corporate sustainability information are growing faster than any improvements in company reporting. ”
CONSULTATION DOCUMENT: REVIEW OF THE NON-FINANCIAL REPORTING DIRECTIVE
5. DIGITISATION The EU has introduced a structured data standard, the European Single Electronic Format (ESEF) under the Transparency Directive. With effect from 1 January 2020 listed companies in the EU shall report their annual financial reports in XHTML (audited financial statements, management report and issuer’s responsibility statements). Additionally, if the consolidated financial statements are prepared in IFRS, the XHTML document should also be tagged using iXBRL elements specified in the ESEF taxonomy. This allows the information to be machine-readable.
20 February 2020. How to improve climate-related practices -A summary of good practices from Europe and beyond.
This summary brochure highlights key messages and findings of the recent report issued by the Project Task Force on Climate-related Reporting at the European Corporate Reporting Lab @ EFRAG. The report and its two supplement documents analyse reporting practices on climate-related disclosures and scenario analysis.
06 February 2020. The European Securities and Markets Authority (ESMA), the EU’s securities markets regulator, has today published its Strategy on Sustainable Finance. Steven Maijoor, Chair, said: The financial markets are at a point of change with investor preferences shifting towards green and socially responsible products, and with sustainability factors increasingly affecting the risks, returns and value of investments.
The strategy sets out how ESMA will place sustainability at the core of its activities by embedding Environmental, Social, and Governance (ESG) factors in its work. (Page 4) The enhanced regulatory framework increases, through a single set of standards, transparency obligations and enhancement of due diligence processes on financial markets participants in relation to ESG. It should ensure that the risk of “greenwashing” is reduced and that investors are informed about, and can compare, the ESG credentials of their investments.
27 January 2020. PCAF publishes a guidance to navigate through the cluster of climate initiatives. Understanding the cluster of climate initiatives will help financial institutions at different levels of progress to identify the most efficient support available to scale their climate efforts.
Financial institutions can join several climate initiatives. These are a great starting point and provide insights and guidance on various methodologies, standards and tools to decarbonize their portfolio. Existing collaborative climate initiatives supporting financial institutions on climate actions as of December 31, 2019. Besides these initiatives, there are also standards, projects and tools, and upcoming policies and regulations offering solutions and guidance for financial institutions throughout their climate journey.
18 December 2019. Council of the European Union. Sustainable finance: EU reaches political agreement on a unified EU classification system (Page 17) …companies and financial institutions will need to increase their disclosure on climate and environmental data so that investors are fully informed about the sustainability of their investments. To this end, the Commission will review the Non-Financial Reporting Directive.
REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on the establishment of a framework to facilitate sustainable investment, and amending Regulation 2019/2088 on sustainability-related disclosures in the financial services sector
Publication. 21 December 2019
Interconnected Standard Setting for Corporate Reporting
11 December 2019. The European Commission presented the European Green Deal, the most ambitious package of measures that should enable European citizens and businesses to benefit from sustainable green transition. Measures accompanied with an initial roadmap of key policies range from ambitiously cutting emissions, to investing in cutting-edge research and innovation, to preserving Europe’s natural environment.
Supported by investments in green technologies, sustainable solutions and new businesses, the Green Deal can be a new EU growth strategy. Involvement and commitment of the public and of all stakeholders is crucial to its success.
06 December 2019: Action plan on sustainable finance
The EBA’s workplan on sustainable finance will focus first on key metrics and disclosure to support banks’ green strategies and then look into evidence for any adjustments to risk weights.
The EBA encourages institutions to act proactively in incorporating environmental, social and governance (ESG) considerations into risk management and strategies including setting a green asset ratio.
17 June 2019: Executive summary « A call for action ».
Recommendation n°5: Achieving robust and internationally consistent climate and environment related disclosure.
Recommendation n°6: Supporting the development of a taxonomy of economic activities.
Recommendations n°5 and 6 do not fall directly within the remit of central banks and supervisors but point to actions that can be taken by policymakers
TCFD pilot project report and investor guide to scenario-based climate risk assessment in Real Estate Portfolios. November 2019
Unwrapping the risks of plastic pollution to the insurance industry. November 2019
High Level Guidelines for Banks on the application of the EU taxonomy. An initiative of the European Banking Federation and the UNEP FI. Webinar Jul 16 2019
Guidelines on non-financial reporting: Supplement on reporting climate-related information
Targeted consultation on the update of the non-binding guidelines on non-financial reporting (Summary Report page9): Some respondents argued that it would be difficult to use all the recommended disclosures because of a lack of adequate data from investee companies. In this context, it was suggested that the guidelines for banks and insurance companies were premature and that non-financial sector companies should be subject to stronger sustainability disclosure requirements. The lack of adequate data from investee companies was presented as a particular problem for those banks whose main clients are SMEs.
The 300 series of the GRI Standards include topic-specific Standards used to report information on an organization’s material impacts related to environmental topics.
GRI’s XBRL TAXONOMY, last update 2014