European Union (EU) Emphasis is placed on promoting sustainable business practices. on the basis of the environmental responsibility of Society and Governance (Environmental, Social, Governance (ESG)) and trying to push businesses to disclose sustainability information. (Sustainability Reporting) more
iIt enables financial markets and financial institutions to properly allocate funds to long-term value-creating activities. While investors can choose to invest in companies that have a positive impact on the environment, climate, society and the community as a whole.
Amendments to the Law on Disclosure of Unsustainable Company Information
On April 21, 2021, the European Commission proposed a law bill “EU Corporate Sustainability Reporting Directive“to amend the law”EU Non-Financial Reporting Directive” (Directive 2014/95/EU) published in 2013 to require companies to disclose non-financial information such as human rights, environmental and social impact policies and practices. as well as anti-bribery and corruption. Inform stakeholders about ESG performance
in the new law The European Commission has proposed to extend the scope of the law to all large companies and publicly traded companies, including SMEs listed on the stock exchange (except micro enterprises), are required to, disclose and report information about their sustainability performance.
for the stakeholders to be informed Along with the provision of systematic financial information and the abolition of the old rules which state that companies are under the framework of the draft law Companies with 500 or more employees
Anyway The bill is currently in the EU legislative process. The law is expected to be passed by the end of 2022, with the EU expecting nearly 49,000 companies to comply with the new law.
Guidelines for Disclosure and Reporting
- Disclosure and reporting of information relating to business sustainability. The details are shown in the business performance report. which is separate from the financial statements for shareholders, investors and the public to know and is easy to check
- Business Sustainability Reporting The impact of business operations on the environment must be dealt with. and the impact of climate change on business In other words, Businesses care about the environment as impact producers. (an ‘inside out’ perspective) and those affected (an ‘outside’ perspective), for which EU law requires reporting on these two dimensions, known as “double relevance”.
- Quality audits of third party sustainability reports (he must be a disinterested person) to gain confidence in the quality of the company’s sustainability measurements and reports.
- Adoption of digital technology increase efficiency in disseminating information to the public by requiring data to be stored in a digital format to facilitate people’s access to information and support open government digital information disclosure to the public
European Union Financial Reporting Advisory Board (EFRAG) In the process of developing sustainability reporting standards so that the company can continue to use it as a guide for sustainability reporting. It is expected to deal with important issues such as climate change, pollution, water and marine resources. circular economy biodiversity including social issues and governance.
for the latest progress meeting of the European Parliament European Council And the European Commission voted in favor of the measure in June. The EU aims to pass the bill by the end of 2022. This will apply to both EU companies. and foreign companies based in the EU that fall within the criteria set for the next 1-3 years
Different approaches between the EU and other countries
However, it seems that the standarddouble relevance“What the EU stipulates is different from the standards of other countries such as the US Securities and Exchange Commission (SEC). This will require companies listed on the stock exchange to disclose their greenhouse gas emissions. and the impact of climate change on business operations alone. (but does not include the business’ impact on the environment)
In addition, the organization International Sustainability Standards Board (ISSB) which aims to develop international sustainability information disclosure standards appears to have the same approach as the US SEC andLimit the scope of the business sustainability report.Just about climate change. but it does not include other environmental and social issues such as biodiversity. and human rights
If different countries set different business sustainability reporting standards, it willIt is difficult for investors to compare data. And it is unlikely to benefit the global investment climate. Therefore, setting international standards for business sustainability reports is another challenge for the international community to try to find as much common ground as possible. possible
Column: EU watch
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