Sharing a very timely and on point commentary by Tim Mohin
The ESG landscape is experiencing seismic shifts on both sides of the Atlantic. In Europe, a recent clash over new reporting requirements saw members of Parliament’s efforts to block them narrowly defeated, leading to some delayed components of the reporting scheme.
Meanwhile, the approval of the EU reporting policy has ignited a standards war, with the contentious issue of double vs. single materiality at its core. As climate pledges come under scrutiny, disagreements foreshadow negotiations at the upcoming COP 28.
In the U.S., the SEC’s decision to remove ESG from its 2024 compliance priorities raises questions, as California lawmakers advocate for comprehensive climate disclosure rules.
The Taskforce on Climate-related Financial Disclosures (TCFD) has released its final progress report before integrating into the International Sustainability Standards Board (ISSB), while the CDP achieves a milestone in company reporting and aligns with multiple global standards.
Simultaneously, the Amazon, a vital natural resource, faces a looming environmental catastrophe, with record drought and deforestation drying up the world’s largest source of freshwater.
Summary of recent events
- A proposal to block Europe’s ESG reporting rules was narrowly defeated, while another proposal to delay its implementation is progressing.
- A group of 44 right-wing and liberal MEPs attempted to block the adoption of new sustainability reporting standards, but the move was rejected, paving the way for the European Sustainability Reporting Standards (ESRS) to be implemented.
- The motion to block the reporting standards was primarily driven by lawmakers from the center-right European People’s Party (EPP), who cited concerns about the administrative burden on companies.
- In a separate development, the European Commission proposed delaying certain aspects of the EU’s Corporate Sustainability Reporting Directive (CSRD), including sector-specific reports and non-EU company reporting, by two years.
- The EU’s extensive reporting standards, based on “double materiality,” pose challenges for companies reporting under both EU and International Sustainability Standards Board (ISSB) standards.
- The EU recently revised its emissions reduction target for 2030, scrapping a plan to reduce emissions by 57% and facing opposition from some member states.
- The US Securities and Exchange Commission (SEC) removed ESG from its compliance priorities for 2024, despite receiving a letter from California lawmakers advocating for Scope 3 reporting.
- The Taskforce on Climate-related Financial Disclosures (TCFD) released its final progress report, showing significant improvements in climate disclosures by large corporations, though full alignment with TCFD recommendations remains limited.
- CDP announced that it would align its questionnaire with the new ISSB climate disclosure standard (IFRS S2) starting in 2024.
- The Amazon, a vital natural resource, is experiencing an epic drought due to deforestation, lack of rain, and extreme heat, leading to drying rivers, wildfires, and severe ecological consequences.
Source: Tim Mohin
