The sustainability space in the EU and beyond is moving at unparalleled speed, driven by seismic shifts in the regulatory space and bold actions taken by investors, companies and civil society in response to growing societal challenges. To keep up with the daily influx of sustainability news crowding your LinkedIn feeds, the Raison Recap brings you the biggest headlines within the sustainability and ESG space that caught our attention during the week.
#1: The annual Global 100 ranking of the “world’s most sustainable companies” came out last week, but with noticeable less buzz than in previous years as ESG ratings appear to have fallen out of grace and questioned as relevant proxies for (real) sustainability. The list featured the usual list of large global conglomerates – from energy companies and banks to FMCG companies – each of which is rated on a mix of criteria from “sustainable revenue” to “climate commitment”, which is ultimately combined into a single score. As a result, the number one company on the list does not have a climate commitment while number six on the list (a bank) has only 29% sustainable revenue and 0% sustainable investments. Interestingly, Danish Ørsted, who held the number one spot for several years, has been bumped to number 17 on this year’s list but as it often is with these rankings, we can’t really tell why…
Access the list here and let us know what you think. Is there still a place for these rankings?👉 https://lnkd.in/d2nTmiXFAlso
#2: Also last week, the European Securities and Markets Authority (ESMA) published its final guidance for fund names using ESG, impact or other sustainability-related terms to provide greater clarity to fund managers and avoid greenwashing. Among noteworthy points, ESMA confirms that funds which promote sustainability characteristics (“Article 8”) or sustainable investment objectives (“Article 9”) should have at least 80% of their portfolio managed in accordance with their name. Further, ESMA clarifies that to use any sustainability-related words in funds’ names, the fund should “invest meaningfully” in sustainable investments – put differently, a fund that solely promotes sustainability characteristics (Article 8) cannot have sustainability in its fund name.
👉 Access the full guidelines here along with a helpful overview by EuroSif: https://lnkd.in/dciXNc8J
#3: Companies in the UK are getting one step closer to getting their very own sustainability reporting standards as the UK Government published a new implementation update and supporting policy paper on May 16th to advance the corporate reporting dimension of the UK Sustainable Disclosure Regulation (SDR). In the policy paper, the UK Government confirms its commitment to model the UK Sustainability Reporting Standards around the International Financial Reporting Standards (IFRS), which, contrary to the European equivalent (CSRD), is based on financial materiality only. In practice, a singular financial materiality focus is likely to yield fewer disclosure obligations for UK firms than for the rest of the EU, notwithstanding the extraterritorial obligations that will pull many UK firms into CSRD anyway. The UK Government expects a final decision on the UK Sustainability Reporting Standards to be made in Q2 of 2025 – so some time still.
👉 Access the implementation update here: https://lnkd.in/e_Yvv4P3 and the policy paper outlining terms of reference and framework for the future UK Sustainability Reporting Requirements here: https://lnkd.in/d5jW2VWV
Finally, a tip: Our friends and colleagues at SB+CO released a new research paper last week outlining the implementation challenges involved in getting ready for CSRD based on insights from CSOs, senior sustainability practitioners and finance leaders. There are a lot of concerns raised by the practitioner community, including not-so-subtle criticism of the behaviours of some accounting firms, with one company stating that they were quoted a £10k assurance fee per metric (the company had more than 600 metrics to report on, so you do the math…).
👉Link to the study here: https://lnkd.in/d_zvRMNp
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