Tag: European Commission

June 21, 2023

Corporate Sustainability Reporting Directive (CSRD) explained

Corporate Sustainability Reporting Directive (CSRD) is in action since January 2023. CSRD will strengthen and standardize the rules for how companies are required to report on their social and environmental activities and their impact on people and the planet. Currently Corporate Sustainability Reporting Directive impacts approximately 50 000 companies in Europe.

CSRD timeline and what to expect in the future

The Corporate Sustainability Reporting Directive applies to companies in the following order:

From January 2024, listed companies with more than 500 people (i.e. those already covered by the NFRD are obliged to prepare a statement of non-financial information and publish information according to the EU taxonomy).
From January 2025, listed and unlisted companies that meet at least two of the following criteria: more than 250 employees, revenue of 20 million euros or more than 40 million euros in turnover.
Listed SMEs from 1 January 2026.
From January 2028 CSRD expands to third-country companies with turnover over 150 million euros.

Companies subject to the CSRD will have to report according to European Sustainability Reporting Standards (ESRS).

ESRS entered a four-week feedback period for the first set of Sustainability Reporting Standards, the feedback period lasts from 9th of June to 7th of July 2023.

These mandatory reporting standards aim to ensure that companies are fully transparent about their impact on people and the environment. The standards will also be a key tool in trying to extinguish green washing. The new standards will assist companies in communicating and managing their sustainability performance more efficiently.

After the four week feedback period, the commission will consider the feedback given and then finalise the standards. When adopted, the standards will be used by companies that are subjected to CSRD (Corporate Sustainability Reporting Directive) reporting requirements. This will be another step forward to the goal to achieve a sustainable EU economy.The requirements for different companies will be phased in gradually, depending on factors such as company size and revenue.

Additionally, all sustainability reports must be verified by an independent assurance provider, to ensurereliable information. CSRD also supports and requires reporting in digital format.

Prepare now for CSRD reporting

In 2023 prepare reporting systems. Ensure you have clear Key Performance Indicators (KPI’s), goals and a plan in place for 2024 reporting requirements.

In 2024 gather data trough out the year for 2025 reporting and review it with your accountant. Note, if your company is subjected to NFRD you are required to report on 2024 data in 2025.

In 2025 review your reporting activities and systems to establish or improve for 2026 reporting. It is also good to note that many companies that are not yet in the scope of CSRD will have to report for the companies that are in the scope because they need information about their supply chain’s impacts.

Corporate Sustainability Reporting Directive reporting requirements

CSRD is adding requirements on top of the Non-Financial Reporting Directive (NFRD). According to the NFRD, large companies must report on:

environmental matters
social matters and treatment of employees
respect for human rights
anti-corruption and bribery
diversity on company boards (in terms of age, gender, educational and professional background)

With the Corporate Sustainability Reporting Directive companies need to also report on:

governance relating to sustainability impacts, risks and opportunities
impacts of sustainability-related risks and opportunities on the company’s strategy, business and financial planning
processes for identifying and assessing sustainability impacts, risks and opportunities
metrics and targets that are used to assess and manage sustainability risks and opportunities

Corporate Sustainability Reporting Directive impact on business strategy

Sustainability will in the future have a bigger role in the evaluation of companies. In addition to the reporting obligations, CSRD sets other requirements for companies. For example, in the future companies must plan how to take climate and other sustainability risks into account in the business model and strategy, as well as the transition to a climate-neutral economy.

The role of the company’s management and board of directors must now be strengthened in accordance with sustainability goals. The interest of customers and investors in responsible and environmentally sustainable businesses has grown. This contributes to the financing companies receive for sustainable and responsible projects.

The direction is clear even for those who have not yet been able to participate in creating responsible businesses. Common sustainable development rules accelerate the market, creating new growth opportunities for companies.

Large companies are already obliged to annually publish information on how much of their operations are in line with the EU taxonomy’s climate and environmental goals. The first EU taxonomy reporting was due in the first months of 2023.

Benefits of CSRD directive

According to the European Parliament, The CSRD will improve the existing legislation (NFRD) by requiring more detailed information from companies’ impact on the environment, human rights and social standards, that are in line with the EU’s climate goals.

What we can expect from adapting to CSRD is

Standardized reporting on companies’ activities on people and the planet, therefore providing the opportunity to compare sustainability reports to one another.
Direct finances and investments to activities and businesses that create a positive or ‘net-zero’ impact on the planet and people.
CSRD pushes management to adapt to or improve their strategies to be aligned with sustainability and EU climate goals.
CSRD enforces companies’ capability to mitigate risks, such as climate risks that will help companies to ensure longevity.

Adapting to CSRD requirements as soon as possible is recommended, due to the vast scope of the directive. Where to start from depends on the company’s status with sustainability matters and how well they are documented and reported in the past.

Building a reporting system with Double Materiality assessment is a highly recommended starting point as it is required in the directive to be analysed.

If you wish to talk more about CSRD, don’t hesitate to contact us below or send an email to info@ecobio.fi.

January 24, 2023

New interpretation and guidance on screening criteria and reporting

On Monday 19.12 the EU Commission published two draft Commission Notices, one providing interpretation and implementation guidance on the EU Taxonomy Climate Delegated Act and one providing interpretation and implementation guidance on the Disclosures Delegated Act.

The Commission Notices complements previous guidance provided on reporting of Taxonomy-eligible economic activities and an earlier Commission Notice on the Disclosures delegated act. While the previous guidance focused attention on Taxonomy-eligible activities, the new drafts focus on the application of the technical screening criteria and reporting Taxonomy-aligned economic activities. The aim of the new documents is to clarify the existing provisions, but do not expand or add additional requirements.

Draft Commission Notice on the interpretation and implementation of certain legal provisions of the EU Taxonomy Disclosures Delegated Act

The Commission Notice on the Disclosures Delegated act answers FAQs and aims to assist non-financial companies with the reporting requirements under the Disclosures Delegated Act. Topics covered include general questions and questions on the turnover KPI, the capex KPI and the opex KPI specifically. General questions cover for example reporting on activities under the Complementary Climate Delegated Act (nuclear energy and fossil gas), the impact of CSRD, accounting for “double-counting”, and consolidation of KPIs on group level.

Do you want to learn more about the EU Taxonomy?

Read our FAQ about EU Taxonomy here.

March 9, 2022

New corporate sustainability due diligence requirements

The European Commission took a much-expected step towards sustainable corporate governance at the end of February when the proposal for a Directive on Corporate Sustainability Due Diligence was published. The new EU rules will require companies to strengthen their responsibility and sustainability operations throughout their global value chains and avoid adverse impacts on human rights and the environment. Companies operating in the EU will have common rules on corporate sustainability due diligence, and by this, the responsible companies can better meet investors’ and consumers’ expectations. Companies can also benefit from having a clearer view of their operations and their suppliers’ external impacts and will be able to identify problems and risks earlier.

Companies’ due diligence requirements will be clarified

Although many companies have already taken voluntary steps on corporate responsibility, there is a need to encourage more responsible and sustainable corporate behaviour. The aim is to answer many companies’ call for legal certainty on their due diligence requirements. Better transparency is also needed, as consumers and investors are increasingly more interested in the overall sustainability of companies and their products and services.

What the rules mean in practice for companies operating in the EU?

Companies will have to integrate due diligence policy to identify and prevent or mitigate negative human rights, climate and environmental impacts in their value chain. These avoided impacts include issues such as inadequate workplace health and safety and, for example pollution of the environment and biodiversity loss.
Companies are required to have a plan to ensure that their business strategy, and remuneration policies, are in line with the Paris agreement to limit global warming to 1,5°
The proposal also involves new rules for companies’ directors that will have duties to set up and oversee the implementation of corporate sustainability due diligence processes and ensure that sustainability matters are taken into account in the corporate strategy also in the long term.

The proposal also includes possibility to impose fines and sanctions to companies, if a company fails to fulfil its due diligence obligations. Company can also be liable for damages if its failure to comply with the due diligence obligations leads to damages to affected people.

Large companies and high-impact sectors are in the scope

Large companies operating in the EU (500+ employees and net turnover worldwide more than 150 million euro) are in the scope of the Directive. The rules start to apply to 2 years later for smaller companies (250 + employees and net turnover worldwide more than 40 million euro) operating in defined high-impact sectors, that include e.g., the manufacture of textiles, food manufacturing, forestry, agriculture, metal products and mineral resources. Larger market players can take a leading role in mitigating the risks in their value chains and hence support smaller companies, that are not directly in the scope of the proposal.

Once the Directive is in force and applied in the EU, all companies in scope need to establish due diligence procedures and integrate human rights, environmental and climate objectives into their corporate strategy. Directors are required to consider sustainability consequences of their decisions in the short, medium and long-term. Company’s Board of Directors should, in principle, be able to assess the company’s operations from an environmental and human rights perspective.

Corporate sustainability due diligence complements EU Taxonomy and sustainability reporting

The Corporate Sustainability Due Diligence Directive complements the EU Taxonomy and CSRD (the proposal for Corporate Sustainability Reporting Directive) by requiring companies to identify their adverse risks and, for example, by helping in providing more detailed information on how companies respect the social safeguards as required by the Taxonomy Regulation. The CSRD will complete the last step of companies’ due diligence duty, that is the reporting part.

At the same time as the due diligence proposal is negotiated in the EU, the national corporate social responsibility legislation is being prepared in Finland. According to the Finnish Government, the national and EU rules on corporate sustainability will complement each other. After all, the aim of both legislative proposals is clear, that is to have more effective protection of environment and human rights and to get more companies involved in sustainable development goals.

Ecobio’s sustainability tools for top management

Are you wondering how you should prepare to meet the obligations? Our sustainability experts can help you guide your organization towards sustainable development. We have the expertise to lead organizations towards their goals ranging from alternative strategies to practice management and reporting. You can find more information about our sustainability tools for top management here.

If you wish to speak to a consultant, please contact Henrik Österlund:

Henrik Österlund

email: henrik.osterlund@ecobio.fi

phone: +358 (0)20 756 9457

To read more about Ecobio Manager EU-Taxonomy services, please click here.

Written by: Terhi Valtonen, Senior Consultant, Ecobio

January 7, 2022

Voluntary information as part of Taxonomy-eligibility reporting

Last December, the EU’s Taxonomy Platform published considerations on voluntary information as part of Taxonomy-eligibility reporting, which gives supplementary guidance for disclosures.

In addition to mandatory reporting, voluntary reporting under the Taxonomy framework can enable non-financial companies and financial institutions to explain the eligibility proportion of their entire operations, investment profile, or balance sheet since it may include both Non-Financial Reporting Directive (NFRD) and non-NFRD companies, for example.

Voluntary disclosures should be made regarding the same scope and timeline as the financial and non-financial statements of the firm and in line with the reporting obligations. Voluntary reporting should be prepared on the basis that it does not contradict or misrepresent the mandatory information according to the disclosures delegated act, and it should not be given more prominence than the mandatory disclosures. Where an undertaking includes voluntary reporting, this should be accompanied with information on the basis used for its preparation and a clear explanation of how it differs from mandatory reporting.

Ecobio Manager – Our proposal for the first-period reporting

We provide a free trial account for Ecobio Manager’s Taxonomy classification and reporting tool for non-financial companies. By which, your team can disclose according to the first period’s requirements. The offering is valid until the end of March 2022. Its value is 3000 euros.

Act now! Please contact us and request your access to Ecobio Manager and book a demo presentation: sales@ecobiomanager.com.

Text: Sanna Perkiö

Source: https://ec.europa.eu/info/files/sustainable-finance-taxonomy-eligibility-reporting-voluntary-information_en

January 5, 2022

Define total turnover, Capital expenditure and Operating expenses, of the Taxonomy-eligible economic activities in non-financial companies

Last December, The European Council adopted the Delegated Act (2021/2178/EU) related to Taxonomy methodology and disclosure obligations for financial and non-financial companies.

In 2022, non-financial companies shall disclose only information of Taxonomy-eligible activities for the environmental objectives of climate change mitigation and climate change adaptation.

From 1 January 2022 until 31 December 2022, non-financial undertakings shall only disclose the proportion of Taxonomy-eligible and Taxonomy non-eligible economic activities in their

total turnover,
capital expenditures, and
operational expenditures.

In addition, non-financial undertakings need to provide relevant qualitative information associated with the eligibility proportions.

Ecobio has published a whitepaper that provides more implementation guidance on the EU Taxonomy classification and reporting for non-financial companies. Please find the latest whitepaper here.

Upcoming for non-financial companies

In Q1/2021, the European Union will adopt

Taxonomy classification criteria for nuclear power and natural gas, and
Technical Screening Criteria for remaining environmental objectives.

Ecobio Manager – Our proposal for the first-period reporting

Act now! Please contact us and request your access to Ecobio Manager and book a demo presentation: sales@ecobiomanager.com.

With best regards,

Ecobio’s Taxonomy team

Katrine Hoset

Senior Consultant, Account Manager, PhD.

Sanna Perkiö

Head of Innovations, D.Sc.

Malena Weuerlander

Key Account Manager

January 4, 2022

Ecobio Whitepaper: EU Taxonomy Classification and Reporting in 2022 – Five Steps for Compliance

Update:

EU Taxonomy classification and reporting in 2023 – Eight steps to compliance whitepaper available now

The new whitepaper aims to provide implementation guidance on EU Taxonomy Classification and Reporting requirements valid from 2023.

EU Taxonomy classification and reporting in 2023 – Eight steps to compliance whitepaper

This whitepaper aims to provide implementation guidance on EU Taxonomy Classification and Reporting requirements valid from 2023. The document deals with the actions needed by companies in the non-financial sector. Read the latest whitepaper to learn more about:

What is the EU Taxonomy Regulation?
Which companies are required to act now?
Eight steps for compliant EU Taxonomy classification and reporting from 2023

Click for more here.

In 2022, the Taxonomy classification and reporting requirements are limited. Non-financial undertakings are required to disclose the share of their turnover, capital, and operational expenditure associated with environmentally sustainable economic activities. Our new whitepaper contains the five steps for compliant EU Taxonomy classification and reporting in 2022.

The whitepaper provides implementation guidance on EU Taxonomy Classification and Reporting 2022. The document deals with the actions needed in non-financial undertakings. The five-step work pipeline in the whitepaper will help you fulfil the actual Taxonomy requirements in your entity.

2022 whitepaper covered the topics of:

What the EU’s Taxonomy Regulation implicates
How your company is affected by Eu taxonomy
What the current timeline for the Taxonomy looks like
Which requirements apply to your company
Five most important steps to meet the Taxonomy Requirements

This whitepaper is no longer available for download.

EU Taxonomy classification and reporting in 2022

The EU Taxonomy Regulation and related statutes direct investments toward sustainable economic activities. They formulate a robust and science-based framework for companies and investors that provides environmental criteria for determining which economic activities substantially contribute to the EU Green Deal objectives.

The EU Taxonomy Regulation (2020/852/EU) sets technical screening criteria to determine if an economic activity can be considered sustainable for six environmental objectives. Currently, the screening criteria are available for the two objectives: climate change mitigation and climate change adaptation. The screening criteria for the remaining objectives will be published in spring 2022.

Read more about our EU Taxonomy digital solution here and our sustainable finance consultancy services here.

December 10, 2021

Webinar 27.1: EU Taxonomy Reporting in 2022 – What are the obligations and how to use digitalization in reporting?

Join our EU Taxonomy webinar on the 27th of January!

In our webinar, Ecobio’s EU taxonomy experts will briefly review the current environmental classification and reporting obligations of the EU Taxonomy for large companies and entities regarding 2022 reporting. The webinar focuses on the requirements of large listed companies and non-financial entities.

Why is EU taxonomy reporting timely?

The EU Taxonomy Regulation requires large organizations to assess and report annually the financial impact of environmentally classified activities. In the spring of 2022, large listed companies and other non-profit organizations will report for the first time in accordance with the regulation.

The EU Commission has created a complex system that makes it easy for companies to get lost without expert help and a systematic way of working. Our webinar presents the steps of first-year taxonomy reporting and introduces an easy and comprehensive digital solution to meet the complex requirements. The taxonomy requirements will expand next spring, making it profitable to take advantage of the efficiency offered by digitalization. As an added benefit, we offer a free trial use of Ecobio Manager for taxonomy-obliged participants for a limited time.

Webinar agenda

Our taxonomy experts will answer the following questions in the webinar:

What are the benefits of the EU taxonomy regulation?
Which entities will be affected by the EU taxonomy in 2022, and what are the obligations?
How are economic activities identified, and how do you perform an eligibility assessment?
What key performance indicators should be reported and how?
What else is required for financial reporting?
How will the EU taxonomy develop in 2023 and the future?
How can digitalization help with environmental classification and reporting?

During the event, it is possible to ask questions of our experts in the chat.

To whom?

The webinar is aimed at financial and sustainability reporting officers of listed companies and other public interest entities, financial- and sustainability experts and those in charge of EU Green Bonds.

What are the additional benefits for the webinar participants?

We offer your company a free trial (worth 3 000 €) to our digital taxonomy solution, Ecobio Manager, until the end of March 2022. During the trial, you can conveniently use digitalization to classify and report your data according to the first year’s requirements. The offer is intended for participants with taxonomy obligations.

We give you the opportunity to take advantage of the added benefit even before the webinar. Contact us by email at sales@ecobiomanager.com, and we will open the service for your company.

When?

The free webinar in English will be held on Thursday, January 27, 2022, from 11:00 to 11:40 (UTC+2)!

In case you are interested in the topic but would prefer to listen to the webinar in Finnish you can register for the Finnish webinar (27.1.2022 at 10.00-10.40) here.

Welcome to listen and ask about the current EU environmental classification!

Read more about Ecobio here and Ecobio Manager here.

December 9, 2021

The Climate Delegated Act to the EU Taxonomy Approved and Ready to Be Applied

The delegated act on the climate part of the EU regulation (2020/852) on taxonomy – the first delegated act presented by the European Commission – was approved by the majority of the Member States. The delegated act specifies the technical screening criteria for environmental objectives of climate change mitigation and climate change adaption – two of six environmental objectives included in the EU Taxonomy. The Official Journal has published the decision on Thursday, the 9th December 2021.

This approval means that the large public-interest companies with more than 500 employees can accelerate their preparations to disclose this year’s taxonomy eligible economic activities as defined in the climate delegated act.

Before the end of the year, the Commission will present a complementary delegated act concerning the inclusion of fossil gas and nuclear in the taxonomy. No official date has yet been set.

Would you like to have more information about EU Taxonomy?

Please subscribe to Ecobio’s EU Taxonomy News here and book a presentation for Ecobio Manager’s digital taxonomy tool here.

Text: Sanna Perkiö & Katrine Hoset

Picture: Shutterstock

Source: European Parliament, 9.12.2021

November 25, 2021

Three steps for EU Taxonomy Reporting – Deadline coming soon

Are you ready to report EU Taxonomy eligibility as a non-financial entity? In the EU, this year will be the first EU Taxonomy reporting period to disclose in 2022 for non-financial listed companies with over 500 employees on average during the reporting period (Prop. 2021/22:11).

During the first year, non-financial companies shall disclose the proportion of total turnover, total CapEx and total OpEx that consist of environmentally sustainable economic activities eligible with the EU Taxonomy. I.e., the activities within one of the defined categories for which the Taxonomy regulation provides sustainability criteria. Reporting on eligibility already in 2022 will ensure that companies required to report complete KPIs on Taxonomy alignment from 2023 will be better prepared for the work of classifying and defining the financial reporting level necessary to comply with the Taxonomy regulation.

Three steps for EU Taxonomy Reporting

The following three steps guides reporting for the first year:

Step 1. Economic activity. Identify each potential economic activity, including a subset of transitional and enabling economic activities

Step 2. Eligibility. Assess eligibility by comparing your economic activity with the Taxonomy defined activity category descriptions and NACE codes.

Step 3. Reporting KPIs. Report eligibility as the proportion of total turnover, total CapEx and total OpEx, including relevant contextual information on how eligibility has been determined and implemented in the necessary calculations.

The turnover KPI represents the proportion of the net turnover derived from products or services that are taxonomy eligible. The turnover KPI gives a static view of the company’s contribution to environmental goals.

The CapEx KPI represents the proportion of the capital expenditure of an activity that is either already taxonomy-aligned or is part of a credible plan to extend or reach taxonomy alignment. CapEx provides a dynamic and forward-looking view of companies’ plans to transform their business activities.

The OpEx KPI represents the proportion of the operating expenditure associated with taxonomy-aligned activities or the CapEx plan. The operating expenditure covers direct non-capitalised costs relating to research and development, renovation measures, short-term lease, maintenance, and other direct expenditures relating to the day-to-day servicing of property, plant and equipment assets that are necessary to ensure continued and effective use of such assets.

The European Council will make a final decision about the schedule on the 8^th of December, 2021.

Digitalise your EU Taxonomy work process

With the deadline for the first reporting requirements regarding EU Taxonomy is approaching, it is beneficial to already from the beginning take advantage of the efficiency offered by digitalisation. Ecobio Manager is the world’s first comprehensive taxonomy solution, including a smooth classification process and up-to-date legal databases, as well as an environmental risk assessment protocol. So far, there has been no service with similar coverage in the global market.

With Ecobio Manager, you can turn the complex set of EU Taxonomy reporting requirements into a smooth and straightforward digital work process for your team. The digital solution includes a demanding entity of requirements always available and effectively managed. Our easy and comprehensive tool contains everything you need to meet the requirements of EU Taxonomy classification and reporting

Get expert advice and join our presentation

Presentation of our digital solution

Do you need help with EU Taxonomy classification and reporting? Join our presentation of the world’s first comprehensive digital solution for the EU Taxonomy! During our 30 min presentation, we present our easy and comprehensive tool containing all you need to meet the EU Taxonomy classification and reporting requirements.

Expert advice and personal demo account

Do you have questions regarding EU Taxonomy and need advisory? Do you want a presentation of our digital solution regarding EU Taxonomy? Contact our EU Taxonomy expert Katrine Hoset to get expert advice and an in-depth presentation of the comprehensive solution. Do not hesitate to ask our expert about a personal demo account to try out our platform.

Please get in touch with us

Katrine Hoset

Account Manager, Senior Consultant

katrine.hoset@ecobio.fi

+358 (0)20 756 2306

Read more about our EU Taxonomy digital solution here and our sustainable finance consultancy services here.

October 11, 2021

Join our presentation of the world’s first comprehensive digital solution for the EU Taxonomy!

Do you need help with EU Taxonomy classification and reporting? Join our presentation of the world’s first comprehensive digital solution for the EU Taxonomy!

Join us for a free 30 min presentation and we will show how the new section in our digital solution, Ecobio Manager, will help you to turn the complex set of EU Taxonomy requirements into a smooth and straightforward work process for your team.

With the requirements for the EU Taxonomy soon coming into effect, it is beneficial to have an innovative, efficient, and in-depth solution at hand, to get the process toward compliance started.

Join our presentation to learn:

How you can benefit from digitalization during classification and reporting
How our easy-to-use and comprehensive digital solution works
How to create a smooth and straightforward work process for your taxonomy team

During the event, you are also able to ask questions from our experts. Please register using your business email address.

The free online presentations are held on Wednesdays at 13.00-13.30 (UTC+2). You can find the presentation dates and register here.

You are warmly welcome!

Are you unsure whether you are in or out of the EU Taxonomy classification and reporting requirements?

Take our EU taxonomy quiz and determine whether your company is affected by the EU Taxonomy regulation. Take the quiz here.

Our recorded webinars can be found on our homepage

In our webinar library, you can find our recorded webinars that you can watch whenever you find most suitable for you! You can find our webinar library here.