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The last quarter of 2022 saw several announcements for reporting frameworks and target setting principles including the ISO Net Zero Guidelines, UN Sustainable Development Performance Indicators and Transition Plan Taskforce Disclosure Framework draft all being released in November last year.
The ESG reporting landscape is constantly changing and this year is no different. So, what are some of the key updates expected this year?
The European Union
On 5th January the Corporate Sustainability Reporting Directive (CSRD) entered into force in the EU applying to approximately 50,000 companies. Companies that will be required to report are:
1. Large companies who meet at least two of the following criteria (3):
> €20M Total Assets
> €40M Turnover
> 250 employees
2. Small and Medium listed companies
Those companies will have to report according to the European Sustainability Reporting Standards (ESRS) developed by EFRAG (European Financial Reporting Advisory Group). It is expected that the first set of ESRS standards will be finalised and adopted in June 2023. Reporting will be phased in starting with companies already subjected to the Non-Financial Reporting Directive (NFRD) collecting data from their 2024 financial year, ready for reporting in 2025.
The United Kingdom
The Transition Plan Taskforce (TPT) released a draft of their Disclosure Framework late last year aimed at helping the private sector develop climate transition plans. Both the TPT and UK Sustainability Disclosure Requirements (SDR) were opened to public comment with the SDR deadline having passed (25th January) while the TPT deadline is fast approaching (28th February).
It is expected that the TPT framework and implementation guide will be finalised by Summer 2023 and that the UK government will publish updated policy rules around that time which will include the TPT framework into the SDR1.
International Sustainability Standards Board
Erkki Liikanen, the IFRS chair, announced at the WEF Forum in Davos that IFRS will release the finalised version of the ISSB sustainability and climate related standards in June 2023 (2). The adoption and implementation of these standards is decided by local jurisdictions. They will decide whether there is mandatory reporting, which companies will be required to comply and over which timeframe the reporting will be implemented and therefore the effective date for the standards coming into effect may vary by location.
The UK announced in 2022 that there would be a consultation process later in the year on the adoption mechanism for the ISSB standards with the details of this yet to be announced (5).
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