GRI welcomes agreement reached on EU Due Diligence Directive
The Global Reporting Initiative (GRI) has welcomed the Corporate Sustainability Due Diligence Directive (CSDDD) set out by the European Parliament and the European Council. Under the principle of “obligation to act”, it sets new rules for responsible business conduct requiring that companies identify, mitigate and account for any adverse human rights or environmental impacts in their value chain. The CSDDD’s behavioural expectations are complementary to the disclosure requirements adopted one year prior in the Corporate Sustainability Reporting Directive (CSRD), as the latter set mandatory disclosure requirements for companies on their due diligence processes, under the “obligation to tell” principle. As the GRI standards are fully aligned with the Organisation for Economic Co-operation and Development (OECD) due diligence requirements, companies that are already GRI aligned are well positioned to adhere to the CSDDD.
CDP 2024 disclosure transformation
The Carbon Disclosure Project (CDP) will launch a refreshed disclosure framework on a new platform in April 2024; its aim is to deliver improvements in how organisations disclose through CDP, thereby helping drive climate action. The new questionnaires will be more efficient and user-friendly, with duplication across all existing themes (climate, forests, and water) considerably reduced. Notably, the questionnaire will also be aligned to International Sustainability Standards Board (ISSB) S2 Climate Standard. Importantly, the new framework will enable organisations to meet the demands ahead with greater ease, as the global economy enters a new era of mandatory disclosure. A new disclosure timeline will also be in place for corporates to submit their disclosures from early June to September 2024.
Amendments to the SASB Standards
The ISSB published amendments to the SASB Standards, to enhance their international applicability across different jurisdictions and accounting standards, whilst, also upholding the SASB Standards’ structure and intent- particularly around non-climate related disclosure topics and metrics.
EU Council agrees negotiating mandate on ESG ratings and FCA welcomes the launch of industry code of conduct for ESG ratings and data products
The EU Council reached an agreement on its negotiating mandate on ESG ratings, with the new rules aiming to strengthen the reliability and comparability of ESG ratings. Under the proposed rules, ESG rating providers will need to be authorised and supervised by the European Securities and Markets Authority (ESMA) and comply with transparency requirements. Furthermore, the Council introduced the possibility for ESG ratings providers not to have a separate legal entity for certain activities, provided that a clear distinction exists between activities, and any conflicts of interests are avoided. However, this would not be applicable to consulting or audit activities, for which the creating of a separate legal entity would be required. Meanwhile, the International Capital Market Association (ICMA) and the International Regulatory Strategy Group (IRSG) have launched a voluntary code of conduct for ESG rating and data product providers with the purpose of increasing transparency and trust. The FCA, having appointed ICMA and IRSG for the purpose of establishing the voluntary code, has welcomed the outcome.
