June 18, 2019

EC published the guidelines and associated frequently asked questions (FAQs) on corporate climate-related information reporting, as part of its sustainable finance action plan. The guidelines will provide companies with practical recommendations on how to better report the impact that their activities are having on the climate as well as the impact of climate change on their business. Additionally, EC welcomed the publication of three reports by the Technical Expert Group (TEG) on sustainable finance, including key recommendations on the types of economic activities that can make a real contribution to climate change mitigation or adaptation. EC has also published a factsheet on sustainable finance.

The new guidelines will assist nearly 6,000 EU-listed companies, banks, and insurance companies that have to disclose non-financial information under the Non-Financial Reporting Directive. The guidelines are inspired by the recent TEG proposals on sustainable finance and integrate the recommendations of the FSB Task Force on Climate-related Financial Disclosures (TCFD). Valdis Dombrovskis, the EC Vice-President responsible for Financial Stability, Financial Services, and Capital Markets Union, also remarked on the new guidelines on corporate climate-related information reporting and the expert reports by TEG on sustainable finance. 

EC welcomed the following three TEG reports on sustainable finance:

  • The first report is a classification system—or taxonomy—for environmentally-sustainable economic activities. It offers practical guidance for policy makers, industry, and investors on how best to support and invest in economic activities that contribute to achieving a climate-neutral economy. This expert report is published as the EC proposal on taxonomy, which awaits agreement by the co-legislators.
  • The second expert report on an EU Green Bond Standard recommends clear and comparable criteria for issuing green bonds. By linking the criteria to taxonomy, it will determine which climate and environmentally friendly activities should be eligible for funding via an EU green bond. EC expects this to boost the green bond market, allowing investors to scale up sustainable and green investment
  • The third expert report on EU climate benchmarks and benchmarks' environmental, social, and governance (ESG) disclosures sets out the methodology and minimum technical requirements for indices that will enable investors to orient the choice of investors that wish to adopt a climate-conscious investment strategy and address the risk of green-washing. The report also sets out disclosure requirements by benchmark providers in relation to ESG factors and their alignment with the Paris agreement. This expert report relates to the EC proposal on low-carbon benchmarks, which has recently been agreed by the co-legislators.

 

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Keywords: Europe, EU, Banking, Insurance, Securities, Sustainable Finance, Reporting, TEG, Green Bond Standard, Taxonomy, Climate Benchmarks, ESG, Disclosures, Action Plan, Non-Financial Reporting, FAQ, EC

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