ESG regulatory landscape for listed issuers

ESG regulatory landscape for listed issuers

Given the markets’ increased focus on ESG considerations, legislators and regulators alike have started legislating with a view to (primarily) increasing ESG-related disclosures. While the scope of a number of these laws is narrow (e.g. the Sustainable Finance Disclosure Regulation (SFDR), which requires financial market participants and financial advisers to disclose information about the sustainability risks they face and their principal adverse impacts), other pieces of legislation apply more broadly, including in respect of issuers.


The main laws which issuers ought to concern themselves with in terms of ESG regulation are the following:


Corporate Sustainability Reporting Directive


On April 21, the European Commission presented its proposal for a Corporate Sustainability Reporting Directive (CSRD), which aims to revise, broaden and strengthen the existing rules introduced by the Non-Financial Reporting Directive (NFRD) and to bring sustainability reporting on a par with financial reporting.


Under CSRD, all large companies, and all companies listed on EU regulated markets except listed micro-enterprises, would be subject to these reporting requirements and will have to report on (1) how sustainability issues affects their business, and (2) the impact of their activities on people and the environment.


Under CSRD, reporting would have to be in line with mandatory EU sustainability reporting standards that will be developed by the European Financial Reporting Advisory Group (EFRAG), the first set of which should be ready by mid-2022.


Reporting standards would include indicators that correspond to indicators in the SFDR and build on indicators in the Taxonomy Regulation (as explained below). In order to ensure proper reporting, CSRD also introduces an audit (assurance) requirement for reported sustainability information which will be a ‘limited’ assurance requirement to start off with.


If the EU Parliament and EU Council reach agreement by the en ..

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