This month’s policy digest highlights notable sustainability-related policy developments in Europe and Asia-Pacific. At a global level, external assurance on sustainability reporting was addressed by the International Auditing and Assurance Standards Board (IAASB) in a new exposure draft for a proposed global sustainability assurance standard. On 17th August 2023, the EU took steps towards mandating importers of goods under the Carbon Border Adjustment Mechanism (CBAM) to provide emissions data during the transitional phase of the rule’s implementation. EFRAG released a Materiality Assessment Implementation Draft Guidance, outlining guidelines for companies seeking clarity on materiality assessment to support alignment with the European Sustainability Reporting Standards (ESRS).
Down under, the Australian Auditing and Assurance Standards Board (AUAASB) released a consultation paper to study the implications of the Proposed ISSA global sustainability assurance standard addressing diverse sustainability topics and frameworks, including IFRS Sustainability Disclosure Standards S1 and S2. In China, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) released an ESG reporting template and flexible framework with mandatory and voluntary reporting indicators for state-owned enterprises. Despite the lower volume of global policy developments this month, there remains an embedded policy objective to introduce and implement a wide range of measures supporting a sustainable transition.
IAASB introduces global sustainability assurance standards
In an effort to increase transparency from an investor-focused lens and improve reliability of sustainability data across different disclosures, the IAASB recently proposed the International Standard on Sustainability Assurance (ISSA) 5000, General Requirements for Sustainability Assurance Engagements. Once adopted, the standard will apply to sustainability information furnished across any sustainability topic and framework, including the recently released IFRS Sustainability Disclosure Standards S1 and S2. In addition, the proposed ‘principles-based standard’ may be used for limited and reasonable assurance engagements. Interested stakeholders are invited to provide feedback until December 1, 2023 with the final standard slated to be released by the end of 2024. Read more
EU Enforces Emissions Reporting for New Import Carbon Tax
The European Commission has adopted the ‘Implementing Regulation’ which shall impose transitional reporting requirements on importers of goods covered under the Carbon Border Adjustment Mechanism (CBAM). As a supplement to the rule, the Commission has also released detailed guidelines for the transitional phase of the Carbon Border Adjustment Mechanism (CBAM), set to take effect from October 1, 2023, until the close of 2025. First reporting is expected by January 2024. Importers must provide emissions data, including origin, production facility details, and direct and indirect emissions. CBAM will apply initially to products like iron, steel, cement, and expand to downstream goods, with importers specifically being responsible for reporting until 2026. The CBAM was established last year to prevent the risk of carbon leakage, taking aim at companies outsourcing carbon emissions abroad, where it may be easier to eschew manufacturing processes oversight. Read more
EFRAG releases Materiality Assessment Implementation Draft Guidance
EFRAG has created guidelines for the assessment of material impacts, risks or opportunities for companies adhering to European Sustainability Reporting Standards (ESRS) within the Corporate Sustainability Reporting Directive (CSRD). Based on EFRAG’s recommendations, reporting should cover policies, actions, targets, and metrics, allowing non-material metrics to be omitted. The process includes stakeholder engagement, compiling sustainability factors, and finalizing material matters. Transparency is key, with disclosure of assessment processes, impact-strategy links, and ESRS mandates. Overall, the guidance provides that disclosing companies must aim for comprehensive alignment with sustainable practices beyond regulatory compliance. Read more
AUAASB releases consultation paper on Proposed ISSA 5000 General Requirements for Sustainability Assurance Engagements
Australia’s auditing and assurance regulator has called for feedback on the IAASB’s proposed global sustainability assurance standard. This standard aims to bolster confidence in sustainability information and a diverse range of sustainability topics and frameworks, including IFRS Sustainability Disclosure Standards S1 and S2, while addressing limited and reasonable assurance. The AUAASB has highlighted in its consultation that these assurance standards may be used by both professional accountants and non-accountant assurance practitioners. Read more
SASAC releases ESG reporting template to state-owned enterprises
In China, the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) internally distributed its ESG reporting template and overarching framework for state-owned enterprises to report on sustainability-related information. The framework is organized into three tiers, spanning from 14 tier 1 indicators to 132 tier 3 indicators, encompassing both mandatory and recommended metrics. Read more
Other News & Resources
• IMF releases paper on Fossil Fuel Subsidies Data: 2023 update. Read more
• US Treasury appoints new Climate Counselor. Read more
• Science-Based Targets Initiative (SBTi) report reveals 87% surge in corporate climate action in 2022. Read more
• Institute for Energy Economics and Financial Analysis finds credit ratings are underplaying climate-related risks. Read more
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