Dr. Rainer Lenz

Join us at the Academy of European Law ERA 2024 "Annual Conference on Law and Sustainable Finance in the EU" for up-to-date discussions about #sustainablefinance #regulation. I am glad to present on #greenwashing and participate to a roundtable on sustainable finance regulation #supervision. Please check out also my recent EUSFiL working paper on #greenwashing, #investmentfunds and #enforcement: https://lnkd.in/dU46mc6j Università degli Studi di Genova EUSFiL #greenwashing #investments #investmentfunds #ESAs #sustainablefinance

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Studies on early #CSRD / #ESRS implementation point towards many challenges. Here comes an overview of key insights from four studies conducted in 2024. Studies include: EFRAG (n=28 firms), Frank Bold (n=100 firms), Position Green (n=400 firms), and PwC (n=547 managers). These studies differ in terms of aims and methods, so results cannot be compared directly. But the findings show some common challenges: 1️⃣ DOUBLE MATERIALITY: The EFRAG data shows that firms adopt a thorough and analytical DMA approach, but it is also this very approach that brings challenges, for instance the lack of specific data. Frank Bold's results point in a similar direction showing that many firms do not specify what types of impacts they have within their material topics. 2️⃣ REPORTING GAPS: Disclosures for "new" topic areas is a challenge (i.e. areas not yet part of existing reporting). The studies by Position Green and Frank Bold reveal significant gaps in terms of biodiversity reporting. Likewise, PwC's findings show that biodiversity was the topic for which managers expressed the lowest level of confidence for meeting reporting requirements. 3️⃣ ORGANISATIONAL CHALLENGES: The results by PwC show that CSRD implementation is approached as a cross-functional effort that reaches beyond the sustainability unit. But, this brings new organizational challenges, which the EFRAG study summarised as being about the need for "clear governance" and "upskilling". These early results give good insights into those areas where implementation challenges likely exist. Many more details in the four studies... === Note: Due to the CSRD's scope, the four studies focus mostly on larger companies, as these are the ones that need to file reports in 2025. Frank Bold: https://lnkd.in/d-tQkBTv PwC: https://lnkd.in/dqfNjFW7 Position Green: https://lnkd.in/d3Jy8bf5 EFRAG: https://lnkd.in/dpsM_UX6 #sustainability, #esg

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The finalization of CRD6 includes requirements for the management of ESG risks and impacts. Read our summary here:

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ESGin3: Sustainability standards and materiality (https://lnkd.in/e7F2KS54) Recent developments in strategic relationships between #ISSB and each of the Transition Plan Taskforce (TPT), Greenhouse Gas Protocol (GHG Protocol), CDP, Taskforce on Nature-related Financial Disclosures (TNFD) and Global Reporting Initiative (GRI) illustrate how collaboration is key to driving harmonization of sustainability standards and frameworks. And harmonization can be key to accelerating progress around 𝘪𝘯𝘵𝘦𝘳𝘰𝘱𝘦𝘳𝘢𝘣𝘪𝘭𝘪𝘵𝘺 of standards and future 𝘦𝘲𝘶𝘪𝘷𝘢𝘭𝘦𝘯𝘤𝘦 considerations (see my prior LinkedIn post on these topics here: https://lnkd.in/eDrxKsiq). Additionally, building off the momentum of the ISSB and #EFRAG interoperability table published in May, EFRAG released a mapping tool (https://lnkd.in/eJs3MjU5) that shows where the TNFD and European Sustainability Reporting Standards (#ESRS) overlap. At the foundation of sustainability standards is materiality determination criteria, and #IFAC (https://lnkd.in/e6xgisK6) also recently reinforced the importance of a robust materiality assessment in accordance with recognized standards and reporting criteria as a critical step in moving from voluntary to regulated sustainability reporting in a manner that will withstand required independent assurance. Our recent Deloitte Heads Up 𝘜𝘯𝘱𝘢𝘤𝘬𝘪𝘯𝘨 𝘵𝘩𝘦 𝘋𝘰𝘶𝘣𝘭𝘦 𝘔𝘢𝘵𝘦𝘳𝘪𝘢𝘭𝘪𝘵𝘺 𝘈𝘴𝘴𝘦𝘴𝘴𝘮𝘦𝘯𝘵 𝘜𝘯𝘥𝘦𝘳 𝘵𝘩𝘦 𝘌.𝘜. 𝘊𝘰𝘳𝘱𝘰𝘳𝘢𝘵𝘦 𝘚𝘶𝘴𝘵𝘢𝘪𝘯𝘢𝘣𝘪𝘭𝘪𝘵𝘺 𝘙𝘦𝘱𝘰𝘳𝘵𝘪𝘯𝘨 𝘋𝘪𝘳𝘦𝘤𝘵𝘪𝘷𝘦 provides really important practical insights on performing a double materiality assessment in accordance with #CSRD and ESRS, with consideration to the #SEC Climate Disclosure Rule and ISSB standards and related materiality criteria as well. A few key points: 1. 𝗣𝗿𝗮𝗰𝘁𝗶𝗰𝗮𝗹 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀: There are four general steps to consider when conducting a #DMA process and related internal controls. Judgment is required to design a process that (1) is in compliance with the standards and (2) reflects the entity’s specific facts and circumstances. Several examples are included to illustrate practical decision-making considerations. 2. 𝗔𝘀𝘀𝘂𝗿𝗮𝗻𝗰𝗲 𝗿𝗲𝗮𝗱𝗶𝗻𝗲𝘀𝘀: A key step in obtaining assurance over an entity’s CSRD compliance is to capture management’s judgments and conclusions in writing throughout the DMA process. 3. 𝗜𝗻𝘁𝗲𝗿𝗽𝗹𝗮𝘆 𝘄𝗶𝘁𝗵 𝗦𝗘𝗖 𝗮𝗻𝗱 𝗜𝗦𝗦𝗕: While the guidance on financial materiality in ESRS and in the SEC’s definition of materiality are different, many of the underlying concepts are generally similar and, in many cases, overlapping. However, the double materiality approach under ESRS further requires companies to disclose matters that may be material from an impact perspective. And EFRAG and the ISSB noted that their guidance is aligned in terms of financial materiality. #deloitteesgnow

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Sustainability Data and Reporting: How to avoid duplication and overlaps!

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#IASB #climaterisks #reporting "The International Accounting Standards Board (IASB) has taken a significant step to address investor concerns about climate risk disclosure, proposing eight new illustrative examples to guide companies in reporting climate-related and other uncertainties in their financial statements. In response to growing demand from investors and other stakeholders, the IASB has developed these examples to tackle concerns that information about climate-related uncertainties in financial statements was often insufficient or appeared inconsistent with disclosures made elsewhere in company reports. The proposed examples cover key areas such as materiality judgements, disclosures about assumptions and estimation uncertainties, and disaggregation of information. While focusing primarily on climate-related risks, the IASB emphasises that the principles illustrated apply equally to other types of uncertainties"

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The IFRS Foundation, which oversees the International Sustainability Standards Board (ISSB), will assume responsibility for several core elements of the UK’s Transition Plan Taskforce (TPT), including its disclosure framework. This will harmonise and consolidate the corporate sustainability disclosure landscape and is a welcome development. #Scope 3 emissions will benefit from the coordination between the Greenhouse Gas Protocol (GHG Protocol) and IFRS Foundation which will help standardise reporting. https://lnkd.in/eWrb6Z7q EY

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Timely report on the early challenges of ESRS implementation. My key takeaways are: 1. Shift in DMA process towards evidence-based. 2. Triggering a renewed organisational approach. 3. Value chain is the most challenging and least mature area. 4. Improvements required in data quality controls. 5. Enhanced cross-functional collaboration. 6. Additional capabilities and resources are necessary.

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Thanks to EFRAG for providing this valuable information that addresses many common questions related to the application of ESRS. #KnowledgeSharing #Gratitude #ESRS

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Check out the latest research chapter on how financial stress propagates in the global economy. The chapter was recently published in the Handbook of Financial Integration and is a joint work by Dr. Norbert M., GBS Master in Finance Lecturer and Senior Economist at Deutsche Bundesbank, along with Sandra Eickmeier, Josefine Quast, and Sabine Tanneberger. You can download it here: https://lnkd.in/ePP9cQ_c

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Yet another step towards Global Baseline in Sustainability Reporting. Hope this momentum goes on and further accelerates! Asian Centre for Corporate Governance & Sustainability welcomes this ISSB & EFRAG interoperability guidance and compliments International Sustainability Standards Board (ISSB) EFRAG #ESG #SustainabilityReporting #GlobalBaselineInSustainabilityReporting #Interoperability

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🌍 𝗘𝘅𝗰𝗶𝘁𝗶𝗻𝗴 𝗡𝗲𝘄𝘀! 🌍 We are pleased to announce that the first meeting of the 𝗖𝗦𝗥𝗗 𝗪𝗼𝗿𝗸𝗶𝗻𝗴 𝗚𝗿𝗼𝘂𝗽 for CCR members took place on September 3rd. It was considered a great success by participants. 🎉 Would you like to know more about the CSRD Working Group and which companies are part of it? Then get in touch: [email protected]. #Sustainability #CSRD #CorporateReporting #PeerExchange #SustainabilityReporting #Networking

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Harald Walkate and I are doing a really fun project with the European Corporate Governance Institute (ECGI) on the topic "Does Sustainable Investing Work?" (see more here: https://lnkd.in/eR4Ta5cH ). We wrote three articles on the topic, based on our review of the academic literature, and are now interviewing some leading industry practitioners and academics on their views on what we've had to say: what we've got right, what we've got wrong, and what we've missed altogether. We're doing slightly longer form interviews of up to 30 minutes to enable some of the nuance to emerge, so good for watching but also for listening as an accompaniment to doing the ironing or similar household chores! Before we introduce the reactions from industry practitioners, for those of you who prefer to watch / listen than to read, here I interview Harald on why we did the project and he gives a summary of what we concluded. You can watch the video here: https://lnkd.in/e594ktph As you can see from our expressions below, although this is a serious topic we've had a bunch of fun tackling it! #sustainableinvesting #responsibleinvesting

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Significant news for #CSRD implementation 💡🌱💻 EFRAG publised its first three #ESRSImplementationGuidance documents reflecting the outcome of the public feedback: ✅ EFRAG IG Materiality Assessment, ✅ EFRAG IG 2 Value Chain ✅ EFRAG IG 3 ESRS Datapoints 🎯IG 1: #MaterialityAssessment Implementation Guidance (MAIG) provides an illustrative materiality assessment process for undertakings, and it develops the concept of impact and financial materiality with a number of examples, including how these two concepts interplay. It also contains FAQs on the double materiality assessment to provide practical implementation guidance on disclosing material impacts, risks and opportunities > #IRO 📦 IG 2: #ValueChain Implementation Guidance (VCIG) outlines the reporting requirements for the value chain from materiality assessment to policies and actions to metrics and targets. It illustrates the reporting boundary of the group for sustainability reporting, including the concept of operational control in environmental standards. The VCIG also includes FAQs for further information and a 'value chain map' summarising value chain implications per disclosure requirement across all ESRS. 💻IG 3: List of ESRS #Datapoints translates the complete ESRS Set 1 list of detailed requirements in each Disclosure Requirement and related Application Requirements in Excel format. The file contains additional information, such as the types of requirement (for example, quantitative or qualitative) or whether these are subject to transitional provisions. This list can form the basis for a data gap analysis or data collection exercise. More info on https://lnkd.in/dYRg4cHy

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The sustainability reporting interoperability guidance that we've all been waiting for... just how tricky is it to comply with both the new European Sustainability Reporting Standards (ESRS) and the International Sustainability Standards Board (ISSB) Standards... this guidance reassures and provides a clear mapping between the standards. The guidance is also useful as it sets out how ESRS disclosures are much more comprehensive, and are in effect ISSB disclosures + impact disclosures. Interesting times! And be careful - not all "Sustainability reports" are made the same way.

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Tomorrow, I will present a civil society perspective on the social reuse of confiscated assets at the IACC workshop titled "Asset Recovery Speed Dating: 18 Countries in One Hour". The workshop focuses on the findings from a comprehensive study prepared by the Basel Institute - "Good practices in asset recovery legislation in selected OSCE participating States". #IACC #OSCE

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Our International Audit Seminar focuses on ISQM & ESG. We are preparing for the audits of CSRD reports and also preparing to support, with our consultation, those firms in the supply chain of those who must report. Exciting presentations and a lot of information. I look forward to sharing the knowledge I have learned here with our firm and our clients. If you know someone who would be interested in joining our efforts in ESG consultations and audits, just send me a message. #esg #isqm #csrd #esgconsulting

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