Under the new European Union reporting standards, companies would be required to set a significantly broader range of sustainability targets, Carbon Disclosure Project, a non-profit environmental organization, said on Tuesday.
Authorities around the world are developing reporting requirements to counteract greenwashing, or firms exaggerating their climate actions to entice investors. Among them, the Securities and Exchange Commission of the United States has issued draft disclosure rules in March.
The European Financial Reporting Advisory Group (EFRAG) released its first draft sustainability standards for public consultation on last Friday. Final standards will be submitted to the bloc’s executive body European Commission for approval by November.
CDP has evolved as the world’s largest repository of voluntary environmental data given by firms under pressure from their shareholders to explain how they plan to navigate the transition towards a lower-carbon future.
Mirjam Wolfrum, CDP’s head of policy engagement in Europe, commented that the EU sustainability reporting standards are poised to be the “most ambitious standards globally.” However, she added that around half of the reported emissions in Europe are not covered by targets.
“Just 5% of European companies disclosed strong targets covering their emissions, deforestation, and water use to CDP in 2021, so standardizing disclosures on nature and biodiversity will be critical as nature clearly remains a blind spot for many companies,” Wolfrum remarked.
In March, the Legal Affairs Committee in the European Parliament adopted their position on the Corporate Sustainability Reporting Directive (CSRD), introducing more specific reporting obligations for companies to ensure their operations are more accountable for their impact on people and the environment.
After Parliament votes on its position in an upcoming plenary session, talks to finalize the bill will commence with the EU Council of Ministers, which represents the EU’s 27 member states.
