ESG and sustainability disclosure and reporting requirements for listed and non-listed companies are rapidly taking shape. As announced at COP26, there is now an International Sustainability Standards Board (“ISSB”) tasked with encouraging global uptake of ESG reporting standards. In the EU, the European Financial Reporting Advisory Group (“EFRAG”) is the body tasked with developing mandatory sustainability and ESG reporting standards under the EU’s Corporate Sustainability Reporting Directive (“CSRD”). Both the ISSB and EFRAG have each recently published ESG and sustainability disclosure and reporting “prototypes”. These prototypes are important pieces to an emergent reporting regime that is very likely to become critical commercially—if not mandatory—for many companies. There are also encouraging signs that what has until recently been a relatively disjointed set of standards, is beginning to come together under a more harmonized agenda and institutions.

This blog presents an overview of some of the detailed climate-related disclosure and reporting metrics covered by the ISSB and EFRAG climate prototypes, and highlights critical considerations for companies as more detailed and mandatory ESG and sustainability reporting frameworks begin to take shape.


Continue Reading ESG & Sustainability Reporting Developments: Climate Disclosure Prototypes

As the United Nations Climate Change Conference of the Parties (“COP”) in Glasgow has drawn to a close, with seemingly mixed messages and a somewhat ambiguous conclusion, it is worth reflecting on the overall trajectory of the climate issue, societal expectations, and the accomplishments that — with time — Glasgow is likely to represent.  COP26 highlighted the fragility of the planet, as well as the fragility of the global consensus-based United Nations approach to protecting it.  It highlighted the sweep of global climate-induced challenges and the scale of transformation needed to address them.  With rising temperatures has come a rising global focus on climate and a far greater set of emerging societal expectations for meaningful responses by government and the private sector.  Despite the risk that the global agreement forged in Glasgow is seen by climate activists as all talk and no action — what they referred to as “blah, blah, blah” — I believe that a number of features will endure as important accomplishments.

Continue Reading Report from Glasgow COP26: Assessing the United Nations Climate Conference

On 19 October, alongside a number of other important strategy documents (over 2,000 pages in total), the UK Government published its ‘Net-Zero Strategy’ (NZS) which will help achieve the UK’s interim five yearly carbon targets leading up to net-zero by 2050.

Continue Reading The UK’s Net Zero Strategy

The European Commission has published a proposal for a Corporate Sustainability Reporting Directive (2021/0104) (“CSRD”), which forms just one part of a comprehensive package of sustainable finance measures (see our blog here).  The Commission has put forward these measures in response to demand for stronger and wider sustainability reporting standards, over and above what the EU Non-Financial Reporting Directive currently provides.  The CSRD seeks to mandate sustainability reporting and assurance through the amendment of existing EU laws, including the Transparency Directive, the Accounting Directive, and the Audit Directive.  More fundamentally, according to the Commission, it will move the EU one step closer to realizing its aim of having sustainability reporting be “on a par” with financial reporting, in terms of attached weight and importance.  This is reflected in the change of terminology used in the CSRD proposal, from a focus on “non-financial” information reporting, to “sustainability”.

We cover below the background and detail, but in summary, these are the key elements of the CSRD proposal that corporates should be aware of:

  • Scope: The CSRD reporting requirements will apply to all large EU companies and all listed companies, including listed small and medium-sized enterprises (“SMEs”). This is estimated to cover around 49,000 companies.
  • Reporting: The so-called “double materiality” principle remains, but in-scope companies will now have to report according to mandatory sustainability standards. Simpler and “proportionate” standards will apply to listed SMEs.
  • Audit: The CSRD will require, for the first time, a general EU-wide audit (assurance) requirement for sustainability information.
  • Digitization: The sustainability information must be published in companies’ management reports — and not separately reported — and the information will need to be digitized or “tagged” so it can be incorporated into a planned European Single Access Point.
  • Timing: If the proposal is adopted and standards can be agreed in line with current ambitious estimates, large in-scope companies must comply from financial years starting on or after 1 January 2023, publishing reports from 2024; whilst SMEs have to comply from 1 January 2026.


Continue Reading The EU Corporate Sustainability Reporting Directive Proposal: What Companies Need to Know

The European Commission has presented a package of key enabling legislation on sustainable finance (the “Sustainable Finance Package”).  This includes the much-awaited first technical screening criteria under the Taxonomy Regulation — outlined in the Taxonomy Climate Delegated Act (“TCDA”) — and a proposal for a Corporate Sustainability Reporting Directive (“CSRD”), which significantly revises and expands on the existing Non-Financial Reporting Directive’s remit and disclosure rules for corporates. While the former is directly aimed at financial institutions and investors, and the latter at large and listed entities, the package has broader implications for all corporates.

Sustainable Finance Package: Context and Comment

The Commission’s intention with its Sustainable Finance Package is twofold: (1) in the short term, to set a clear regulatory framework to encourage investments that will contribute to a sustainable and inclusive economic recovery from the COVID-19 pandemic; and (2) in the long term, to ensure the transition to a carbon neutral EU economy by 2050, in accordance with the 2020 European Climate Law.  Following the adoption of the EU Taxonomy Regulation (explained further below), the Sustainable Finance Disclosure Regulation, and the Benchmark Regulation, which enhances the transparency of benchmark methodologies, the Commission has in this legislative package laid out the next building blocks for its envisioned sustainable finance ecosystem.


Continue Reading The EU’s Green Capitalism Takes Shape: Taxonomy Screening Criteria and Corporate Sustainability Reporting

This blog is the third in a series, “The ABCs of the AJP.”

An animating principle of President Biden’s American Jobs Plan (AJP) is the urgency to address climate change.  But a cross-current is competition with China.  This comes through not as subtext, but as the stated purpose.  According to the White House, “the President’s plan will unify and mobilize the country to meet the great challenges of our time: the climate crisis and the ambitions of an autocratic China.”


Continue Reading The Climate Crisis and China

Today, on Earth Day, the United States made a bold move to resume international leadership on climate change by announcing the United States’ new target to achieve a 50 to 52 percent reduction in economy-wide greenhouse gas pollution from 2005 levels by 2030.  The President announced the target on the first day of the Leaders Summit on Climate, which he is hosting to raise ambition and set the stage for a successful United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties (COP) later this year in Glasgow.
Continue Reading The United States’ New Nationally Determined Contribution (NDC) and the ABCs of the American Jobs Plan (AJP)