Chapter 6: New Forms of Reporting Flashcards
(29 cards)
Describe Sustainability Reporting History In Europe. 6 deals came out, what were they
NFRD
Paris Agreement
European Green Deal
EU Taxonomy
SFDR
CSRD
European Green Deal
1. What was it
2. 3 goals
- Sustainability Growth Strategy
- Green transition, fight climate change, contribute to Paris Agreement
What was the SFDR?
What did it qualify?
- Law requiring financial market participants to disclose sustainability information
- Qualify ESG Impact of a financial project
What were the objectives of the SFDR for investors (3)
- make informed choices on projects supporting sustainability
- assess how sustainability risks are integrated in investment decision
- Attract private funding and help Europe shift to net-zero
Legal Pressure Reporting Sustainability Equation
Taxonomy + SFDR + CSRD = Sustainability Reporting
Contextual Observation: Company activity have social & environment impacts
Solution: ???
Creating a non-financial activity impact disclosure
Observation: European Commission’s desire to make non-financial reporting more effective and easier to understand
Solution: ??? (2)
- Sustainability Finance
- Redirect investment flows towards forward-looking operations
Regulatory Developments: NFDR reporting requirements
Single material reporting on environmental, social and governance policies/risks.
Regulatory Developments: NFDR how it is broken down
Broken down by: (KPI + Event Description + How the company manages them)
Regulatory Developments evolution: CSRD requirements (6)
- Social and environment
- detail of governance for implementation
- reporting and target-setting
- ESRS groups
- Double material
- Third Party Audit
Why the change from NFRD to CSRD?
CSRD is pushing heavier threshold, so more companies follow SFDR principles
How has minimum thresholds changed with companies required to report? (4)
Reduction in fields related to:
- companies on market
- Unlisted companies
- employees
- sales/balance sheet
Taxonomy Regulation Purpose:
Alignment reporting to prepare for sustainability reporting obligations.
CSRD Sustainability Report
Where is it legally present?
What does it analyze?
- Present business model and strategy
- Analysis of sustainable risks and opportunities
CSRD Alignments (4)
Paris Agreement, Stakeholders, Sustainable Risks, Governance Bodies
ESRS 1
General Requirements
ESRS 2
General Disclosures
What is in the ESRS General Disclosures ? (5)
Opportunities, Risk, Impact, Metrics and Targets,
Why is the CSRD Important in ESG Reporting for Companies?(3)
- Standardized and Regulated
- Double Materiality
- Audited by trusted third party organizations
Measuring ESG Impacts:
Financial Criteria (3)
Simple, standardized, stable method of calculation
Measuring ESG Impacts:
Non- Financial Criteria (3)
Complex, constantly evolving, calculation method not defined
Organizational ESG
Financial Impact (3)
Old discipline, simple implementation, monetary data,
Organizational ESG
Financial Impact - 2 information sources
Information source is accounting and finance
Organizational ESG
Non - Financial Impact (3)
New discipline, complex implementation, Unique work units
