Client Advisory News

News and updates focused on the implications for ESG developments 

The federal government will require some of the largest publicly traded companies to disclose their levels of greenhouse gas emissions under a new rule from the Securities and Exchange Commission (SEC). The SEC voted 3-2 on Wednesday to require large companies to tell investors about greenhouse gas emissions directly caused by their business if that information would be likely to influence someone’s decision on whether to invest.
The EU-Corporate Sustainability Due Diligence Directive (CSDDD), which aimed to enhance corporate sustainability reporting and accountability, failed to achieve the required majority in the European Parliament on February 28th. This unexpected development marks a turning point in the EU's regulatory push for sustainability disclosure, suggesting markets may have reached their limit after the CSRD and SFDR additions. Although the CSDDD's ascension was expected, its failure provides a temporary reprieve for small and medium-sized companies facing increasing ESG data requests from larger corporations preparing for compliance. While portfolio companies can pause further expansions of supply chain reporting for now, maintaining existing capabilities is prudent in case the CSDDD regains life. Investors can also reorient efforts toward ESG initiatives more aligned with value creation. However, the strong momentum behind the CSDDD signals that enhanced sustainability reporting will likely remain a regulatory frontier
Spring Budget 24: Treasury confirms regulation of ESG ratings  Investment Week
The U.S. Securities and Exchange Commission (SEC) has scaled back some of its ambitious greenhouse gas emissions disclosure requirements in its draft climate rules, notably dropping the requirement for U.S.-listed companies to disclose Scope 3 emissions. This adjustment marks a significant departure from earlier proposals aimed at enhancing transparency around the environmental impact of corporations. The move is seen as a concession to corporate lobbyists and a deviation from stricter European Union standards, potentially complicating global compliance efforts.
The European Union's Corporate Sustainability Due Diligence Directive (CSDDD) has encountered a significant obstacle as the European Council did not provide the necessary endorsement, effectively halting its progress. This development casts uncertainty on the directive's future, especially with the approaching European elections. Despite efforts to modify the directive for broader acceptance, opposition from key member states like Germany and Italy was a major hurdle. The directive's aim to enforce stringent human rights and environmental standards for companies now faces a delay and potential reevaluation after the elections. For more detailed insights, you can read the full article
The International Ethics Standards Board for Accountants (IESBA) announced the launch of public consultations on two Exposure Drafts aimed at establishing a global ethical benchmark for sustainability reporting and assurance. These drafts propose comprehensive ethical standards for sustainability assurance practitioners and accountants involved in sustainability reporting, with the goal of enhancing the quality and trust in sustainability information. This initiative seeks to address issues like greenwashing and improve the credibility of sustainability disclosures.