ESG Ahead Brief
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BLOG Story
Author: Veini Simolin
Title: ESG and sustainability expert
Blog: Sustainability Weekly in LinkedIn
Hi all!
Sorry for being absent for a few weeks. I have been busy with the Maria 01 Northern light accelerator program. You can check my previous post for that if you’re interested in finding out more. Here is some accumulated information from the past few weeks. Alignment between the European sustainability reporting framework and the international ISSB framework seems like the hot topic at the moment, with many of the articles highlighted in this edition discussing it.
🌐 One example of such discussion is this article from Reuters. Here you can find a good summary of the global state of play of sustainability reporting. Give it a read. I wanted to highlight a point from the article:
“Sustainability consultancy Council Fire points to the fact that more than 30 countries including Japan, Singapore, Australia, Brazil and Nigeria are adopting or aligning with ISSB standards.
“This is, quietly, the most important development in sustainability reporting right now. Not any single jurisdiction’s rules, but the emergence of a shared grammar that makes it possible to report once and translate for local audiences rather than maintaining entirely separate reporting tracks,” George Chmael, Council Fire’s founder and chief executive, wrote in a blog.”
Indeed, I believe that the adoption of the ISSB globally in developing economies will be the movement that eventually gets this global reporting trend over the line. With many of the biggest economies in the world aligning like this there is unquestionable momentum. Now we just have to see how the frameworks of the EU and the ISSB will end up playing together.
(https://share.google/YbF3OTOOUwUfffH6D)
🏭 There has been a lot of discussion recently about the carbon markets in the EU. In short carbon markets allow companies that emit more greenhouse gases to offset their emissions by subsidising companies who reduce emissions. This distributes the burden of decarbonisation in the economy and incentivises further decarbonisation.
Now the EU, Brazil and China have signed a deal to create a coalition of carbon markets, with at least New Zealand looking into joining.
“With around 80 carbon pricing schemes in place across 50 different countries, there is a clear benefit to working together under this Coalition: fostering mutual understanding, promoting best practices, and raising global standards. For the EU, this is an opportunity to advance carbon pricing as the most cost-effective tool to reduce emissions, building on over 20 years of experience with the EU Emissions Trading System”
🇪🇺 Here is a fantastic LinkedIn article from Sajed M. regarding the recent developments in the EU sustainability regulation landscape. There is a lot of stuff here that even I wasn’t familiar with beforehand. Give it a read. There is also a nice audio summary!
📝 This post from Andreas Rasche is about a call from a vast array of stakeholders for the EU to stay on schedule for publishing guidance on the corporate sustainability due diligence directive. The directive is set to begin applying in 2029 and the EU has set itself a deadline of July 2027 to finish the guidance to help in the implementation of the CSDDD. The guidance is critical for companies to be able to comply with the law.
“The #CSDDD draft guidance has been delayed for a while. Today, an alliance of practitioners, lawyers and academics calls on the EU to publish the guidance as soon as possible so that the process can continue. Whatever your view on the Directive may be, authoritative guidance is essential to clarify expectations and obligations. Businesses need a clear view of what compliance looks like in order to start implementation processes. 👉 “The Directive has been adopted. Companies are preparing. What they need now is guidance, not silence.” === Full Letter and Signatories: https://lnkd.in/d7Q-z_bj”
🤝 Here is another text discussing the EU framework – ISSB alignment. This one from the perspective of double materiality.
Basically, the EU framework requires the assessment of important or material topics from two perspectives: The financial perspective and the impact perspective (risks & opportunities in the financial side and impacts on the impact side). However, the ISSB only looks at the financial aspect of materiality. This is a big point of divergence between the frameworks, and in my view the biggest barrier to alignment. Interestingly large overseas companies operating in the EU will have to comply with the EU sustainability reporting rules compelling them to also comply with double materiality. I believe that we will see a bit of a Brussels effect here, and the ISSB will eventually adopt a double materiality framework, not only because of the impact of the EU but simply because it gives a more holistic view of the relationship between a company and its operating environment. This post is from Andrea M. Bacher.
“𝐀 𝐦𝐨𝐧𝐭𝐡 𝐚𝐠𝐨 𝐈 𝐚𝐬𝐤𝐞𝐝 𝐰𝐡𝐞𝐭𝐡𝐞𝐫 𝐍-𝐄𝐒𝐑𝐒 𝐰𝐚𝐬 𝐛𝐮𝐢𝐥𝐭 𝐟𝐨𝐫 𝐧𝐨𝐧-𝐄𝐔 𝐫𝐞𝐩𝐨𝐫𝐭𝐢𝐧𝐠 – 𝐨𝐫 𝐈𝐒𝐒𝐁 𝐚𝐥𝐢𝐠𝐧𝐦𝐞𝐧𝐭. This week we got a first answer. The European Commission preserved double materiality in the revised ESRS – different to ISSB. Impact materiality and financial materiality remain required. Since ESRS is the foundation for N-ESRS, this gives a strong signal on direction. And interoperability is becoming more important than ever for companies reporting under both frameworks. According to EFRAG, around 1,200 non-EU companies remain in scope for CSRD under the revised approach after Omnibus. This is around 90% reduction of the previous scope. At its meeting last week, EFRAG discussed the N-ESRS following Omnibus. An exposure draft is coming in July. For companies in scope and PE firms with portfolio companies headquartered outside the EU: This is worth tracking now. My key takeaways here: 1️⃣ Who is in scope Thresholds: – Your group generates more than €450M in EU turnover – Your EU subsidiary or branch generates more than €200M Largest country groups in scope: – United States: 350–450 companies – United Kingdom: 150–200 companies – Switzerland: 100–150 companies – Japan: 100–150 companies 2️⃣ Impacts only, not double materiality No risks and opportunities disclosures, no financial effects assessments, no resilience analysis. 3️⃣ Twelve standards remain Reduced scope does not mean light reporting. 4️⃣ Three reporting options Option 1: Global reporting across all topics Option 2: Mixed approach: climate globally, other topics limited to EU-related impacts Option 3: Voluntary full ESRS; EU subsidiaries may rely on the subsidiary exemption (article 19a or 29a of the CSRD) 5️⃣ Value chain reporting stays, upstream and downstream 6️⃣ Field test is open now Register before 1 July Three focus areas: – Interoperability – Mixed reporting approach – Internationalisation of EU references For companies in scope, and for PE firms tracking portfolio companies’ disclosure obligations: This is an opportunity to shape the standard. 🗓️ Key dates – 1 July 2026: Field test deadline – Mid-July 2026: Exposure draft + 100-day consultation – January 2027: EFRAG advice to Commission – Mid-2027: Expected adoption – FY2028: First reporting year My take: The direction of travel is becoming clear. Use the time, prepare and engage. ♻️ Share with ESG, legal, and sustainability reporting peers navigating CSRD 🔔 Follow for weekly ESG regulation, due diligence and related AI governance insights”