Examples
Carbon vs Climate Neutral vs Net Zero
- mentioning GHG Emissions
- carbon neutral … offset just CO2 emissions
- climate neutral … offset all emissions
- net zero … reduce/remove all unnecessary emissions first then offset remaining
Comparing Sustainability
- financial reporting is mainly there to compare companies
- which company will give me the highest return?
- in sustainability that is not quite the same
- comparability only if same markers are collected for all companies
- only really works between
- comparability will be even more difficult when different countries have different mandatory reporting standards
- Interoperability
- IFRS SDS and ESRS are mainly aligned
- digital tagging with ESEF
- digital reporting standard
- comparing 50 companies means importing 50 digital reports
- then a simple comparison with alike-tagged data
Levels of Regulation
- supranational
- country level
- exchange level
- e.g. just a single stock exchange
Regulatory Developments
timeline:
- 2014 NFRD
- 2019 SFDR - for banks
- 2019 Pillar-3 Discolsures - for financial institutions, very specific
- 2020 EU Taxonomy Regulation
- 2022 CSRD → NFRD overhauled
- 2023 CBAM regulation
- 2023 IFRS SDS
- 2023 ESRS
- 2024 CSDDD
Environmental Factors
- legal system
- government
- how serious is the current government about sustainability
- societal norms
- markets
- financial reporting
- firms