The EU Sustainable Finance April package and how EU sustainability reporting standards fit in

May 2021 Issue

This year will be key for future climate policy and especially for sustainable finance in Germany and Europe. Sustainable Finance plays a crucial role in improving climate protection and sustainable growth. To this end, Germanwatch joined forces with the Alliance for Corporate Transparency in order to push towards greater corporate responsibility and disclosure requirements to meet the EU and Paris climate targets.

This is the third article of our briefing series "Full Disclosure: Monthly Briefing on EU Corporate Transparency Regulation", in which we aim to shed light on the need for and benefits of forward-looking reporting requirements in a changing EU regulatory environment

About this issue:

The European Commission adopted a sustainable finance package on 21 April 2021, covering the following measures:

1. A draft Corporate Sustainability Reporting Directive (CSRD) (formerly Non-Financial Reporting Directive (NFRD) ) that addresses companies’ obligations to report consistent and comparable key data on sustainability-related risks and impacts.
2. The EU Taxonomy Climate Delegated Acts as part of the EU Taxonomy Regulation which classifies sustainable activities (and specifies criteria and reporting requirements) for the purpose of sustainable finance.

This article sheds light on how these two measures as well as the Sustainable Finance Disclosure Regulation are linked and addresses the following three questions:

1. How do these three measures fit together?
2. What needs to be reported and by whom?
3. What are the gaps that the upcoming CSRD will have to close?

The article also integrates a first analysis on how the current CSRD proposal covers the German Sustainable Finance Committees recommendations on scenario analyses for forward-looking reporting standards.

March Issue: "Reform of the EU Non-financial Reporting Directive: A Push Towards Future-proof Reporting Obligations" 

April Issue: What needs to be reported on sustainability-related governance?