This blog is part of a quarterly series on the wide topic of Environmental, Social and Governance and covers items that have caught my attention.
Official announcements
- The IFRS Foundation published a new guide, Applying IFRS S1 when reporting only climate-related disclosures in accordance with IFRS S2, which aims to help companies understand how to report only climate-related information when applicable using International Sustainability Standards Board (ISSB) Standards.
- President Trump ordered the U.S. ambassador to the UN “to immediately submit formal written notification of the United States’ withdrawal from the Paris Agreement under the United Nations Framework Convention on Climate Change,” adding that the U.S. will consider the withdrawal of its obligations under the accord to be effective as soon as the UN notification is given.
- EU member states in the European Council announced that they have adopted a new regulation aimed at banning products made with forced labour from being sold on the EU market, or exported. Goods that are determined to have been made using forced labour can removed by the authorities, to be either donated, recycled, or destroyed. Firms that do not comply with the regulation can be fined, while the regulation would allow products back on the market if the company eliminates forced labour from its supply chain.
It has also released a standalone questionnaire for SMEs tailored to their resources and needs, to build capacity across a critical component of the global value chain.
Resources, Reports and Announcements
- One of the key outcomes of COP 29 was an agreement on the creation of a New Collective Quantified Goal on Climate Finance (NCQG), aimed at aligning global financial flows with the objectives of the Paris Agreement, with nations agreeing that climate financing for developing nations should reach at least $1.3 trillion per year by 2035.
Another key takeaway from COP29 was a final agreement on Article 6 of the Paris Agreement, aimed at establishing high integrity carbon markets detailing how countries will authorise carbon credit trading and how registries tracking this trading will operate.
- Over 1,000 companies have referenced the International Sustainability Standards Board (ISSB) in their reports and 30 jurisdictions are making progress towards introducing ISSB Standards in their legal or regulatory frameworks according to a detailed progress report presented to the Financial Stability Board (FSB) by the IFRS Foundation today. The report also sets out alignment of disclosures with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations.
82% of companies disclosed information in line with at least one of the 11 TCFD recommendations. However, with less than 3% of these companies reporting in line with all 11 TCFD recommended disclosures, few companies provide disclosures that cover the company’s climate-related governance, strategy, risk management or metrics and targets. If the omitted information is material, it indicates investors are not currently receiving the information needed to assess and price climate-related risks and opportunities.
- According to a new survey by EY, nearly 9 out of 10 investors report that they have increased their use of ESG data over the past year, yet trust in that data appears to be lacking, with a large majority also believing that greenwashing by companies is a worsening problem.
Despite the increased use of ESG information, however, the report also found that nearly two thirds of investors believe that their firms would be likely to decrease their use of ESG factors in decision-making, with attention turning to more near-term factors. Notably, the forecast decline in ESG considerations comes despite a reported growth in demand for sustainable investments, with 74% of asset managers reporting growth in client interest in ESG-related investment products over the past year, and 77% reporting an increase in their development of sustainable investment products.
- According to a new survey by PwC, less than half of companies required to report under the EU’s new Corporate Sustainability Reporting Directive (CSRD) in the upcoming year are “fully confident” in their ability to meet their reporting obligations, even as most expect CSRD reporting to have a material impact on their companies, in areas including access to finance and employee retention.
- The Science Based Targets Network (SBTN) announced the release of the first-ever set of validated science-based targets for nature, with new freshwater and land-focused goals announced by global biopharma company GSK, global luxury group Kering and building materials company Holcim.
Launched in 2019 by founding partners including CDP, World Resources Institute, WWF, United Nations Global Compact and Conservation International, SBTN was established to help businesses and cities operate within the Earth’s limits while meeting society’s needs through the setting of science-based targets (SBTs), in order to help them address their environmental impacts across areas including biodiversity, land, freshwater and ocean.
Naresh Aggarwal
18 February 2025
