Acountancy Europe: Sustainable Finance Update - February
24 February 2021
A useful compendium of major ESG developments
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MEPs call for human rights and environmental due diligence
The European Parliament (EP) Legal Affairs Committee approved (21
votes in favour, 1 against and 1 abstention) the draft legislative
initiative report on human rights and environmental due diligence in the
corporate supply chain drawn up by Lara Wolters (S&D, Netherlands)
on 27 January.
The report indicates that the future European Commission’s (EC)
Directive will have to require companies to monitor, identify, prevent,
and remedy risks to human rights, the environment and governance in
their operations and business relationships — including suppliers and
sub-contractors. The scope of the future legislation should encompass
large companies (including financial institutions), listed SMEs and
high-risk SMEs.
The final vote is expected at the March plenary. The EC will present its proposal by June.
Read more
Summary of the stakeholder views on the upcoming renewed sustainable finance strategy
The EC’s summary report indicates that one of the challenges to
mainstreaming sustainability in finance is the availability,
comparability and quality of data on environment, social and governance.
The EC is expected to publish its renewed sustainable finance strategy
in the first half of 2021.
Read more
European Supervisory Authorities (ESAs) publish draft regulatory technical standards (RTS) on sustainability-related disclosures
The Joint Committee of the three ESAs (EBA, EIOPA and ESMA) delivered
to the EC their final report, including the draft RTS, on the content,
methodologies and presentation of disclosures under the EU Regulation on
sustainability-related disclosures in the financial services sector
(SFDR). The proposed RTS aim to strengthen protection for end-investors
by improving environmental, social and governance (ESG) disclosures on
the adverse impacts of investment decisions and on the sustainability
features of a wide range of financial products. The EC is expected to
endorse the RTS within three months.
Read more
Exchange of Views with the President of the Council (ECOFIN)
The EP Economic Affairs Committee held an exchange of views with Mr.
Joao Leão, ECOFIN President and Portuguese Minister for Finance on 1
February. He presented the three main priorities for the Portuguese
presidency on economic issues:
- relaunch the economy through the Recovery and Resiliency Fund and sustainable fiscal policies in the medium term
- strengthen the European Monetary Union and reduce the fragmentation in financial regulation
- address the challenges of green and digital transition, with a special focus on a renewed sustainable finance strategy
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The EC adopts ‘do no significant harm’ technical guidance to protect the environment
The guidance was presented in the context of the Recovery and
Resilience Facility (RRF). It aims to support Member States in ensuring
that all investments and reforms to be financed by the RRF ‘do no
significant harm’ to the EU’s environmental objectives, within the
meaning set out in the Taxonomy Regulation. It outlines key principles
and a two-step methodology for the assessment of ‘do no significant
harm’ in the context of the RRF to facilitate the work of Member States
in the preparation of their plans.
Read more
European Central Bank sets up climate change centre
The European Central Bank (ECB) has decided to set up a climate
change centre to bring together the work on climate issues in different
parts of the institution. This initiative demonstrates the growing
relevance of this issue for the economy and the ECB’s policy, and the
need for a more structured approach to strategic planning and
coordination. The work areas of the centre will focus on: financial
stability and prudential policy; macroeconomic analysis and monetary
policy; financial market operations and risk; EU policy and financial
regulation; and corporate sustainability.
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UK joins the International Platform on sustainable finance
The EC welcomed the UK to the International Platform on Sustainable
Finance (IPSF). The UK’s membership of IPSF will support the global
commitment to greening financial systems, and mobilising finance for
clean and resilient growth, and the aims of COP26.
Read more
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CFA Institute calls on policy makers to improve corporate governance in EU
CFA Institute, the international association of investment
professionals, issued recommendations on corporate governance and ESG
disclosures. CFA is calling, among others, for legislative consistency
in light of the upcoming revision of the Non-Financial Reporting
Directive to enhance clarity and avoid misinterpretations from
organisations and investors.
Read more
IFRS Foundation Trustees announce next steps for sustainability standards
The IFRS Foundation will set up a Trustee Steering Committee to
oversee next steps on sustainability reporting. They expect to produce a
final proposal (including a roadmap and timeline) by the end of
September 2021, with the intention of announcing the establishment of
the Sustainability Board in COP26 in November 2021.
Read more
The Global Risks Report 2021
The World Economic Forum published their annual Global Risks Report
for 2021. Environmental risks are amongst the top five global risks both
in terms of likelihood and impact.
Read more
Blackrock’s Larry Fink CEO letter 2021
Blackrock’s Larry Fink issued his annual letter to CEOs for 2021 calling on companies to:
- disclose a plan for how their business model will be compatible with
a net zero economy, including how such plans are incorporated into
long-term strategy and reviewed by the board, and
- expand disclosures on talent strategy to fully reflect long-term plans to improve diversity, equity, and inclusion.
Read more
The three asks by Climate Action 100+
Investors participating in Climate Action 100+ ask for three
commitments from boards and senior management to address decarbonisation
of the economy:
- implement a strong governance framework which clearly articulates the board’s accountability and oversight
- take action to reduce greenhouse gas emissions across the value chain, consistent with the Paris Agreement’s ambitions
- provide enhanced corporate disclosure in line with the Task Force on Climate-related Financial Discolsures (TCFD)
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VBA publishes a first paper on the Impact Statement Methodology
The Value Balancing Alliance (VBA) issued methodology for general,
cross-cutting aspects. Their goal is to create a single standardised
method to ensure greater sustainability, transparency and comparability
in business. Detailed papers on environmental and social economic impact
valuation will be published soon.
Read more
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International Developments |
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- MEPs call for human rights and environmental due diligence
- European Supervisory Authorities deliver on draft regulatory technical standards on sustainability-related disclosures
- IFRS Foundation Trustees announce next steps for sustainability standards
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