As of 5 January, the EU’s new Corporate Sustainability Reporting Directive (CSRD) entered into application. The directive will require 50,000 large public-interest companies and listed companies, including banks and insurance companies, to disclose their environmental, social and governance impact. For now this concerns only large companies but SME’s will follow.
Meanwhile, the EU’s Sustainable Finance Disclosure Regulation (SFDR) entered its level-2 phase on 1 January, with its Regulatory Technical Standards (RTS). These standards aim to protect end investors by improving disclosure to them on the adverse ESG impacts of investment decisions, and on the sustainability of financial products. Firms and financial players who fall under the SFDR have to explain why they label financial products ‘Article 8’ or ‘Article 9’, and have to strictly comply with the Regulatory Technical Standards’ detailed annual reporting requirements. All of this will hopefully enhance transparency and help prevent greenwashing.