Progress in cracking down on green policies in Europe? EC publishes sustainability reporting standards but delays green requirements directive
The EU Sustainability Reporting Standards (ESRS), submitted to the European Commission by technical advisor EFRAG, were published yesterday (29 November). Their aim is to provide a common European framework for corporate disclosure of information on sustainable development efforts.
The guidelines were developed after an extensive multi-stakeholder process and were unanimously endorsed by EFRAG’s Sustainability Reporting Board, which includes representatives from the German Accounting Standards Board, the French Autorité des Normes comptables, the Netherlands Accounting Standards Board, the Organismo Italiano di Contabilità (OIC), as well as European stakeholders including Accountancy Europe, European Issuers, EFAMA, the European Banking Federation, as well as representatives of civil society and the European Trade Union Confederation, among others.
“Our aim was to strike the right balance between substantial progress and pragmatic implementation, and to drive progress in sustainability reporting by taking full account of the feedback received during our public consultations and discussions. We are confident that we will all benefit in time from this collective effort for greater transparency and accountability.” said Kerstin Lopata, former Acting Chair of EFRAG’s SRB.
In the next step, the EC will consult the EU bodies and Member States on the draft standards before adopting the final ESRS as delegated acts in June 2023.
ESRS makes life cycle analysis ‘cornerstone’ of sustainability reporting: NGO
The update was welcomed by a coalition of sustainability experts and NGOs, including WWF, Share Action and CDP. “They represent a major improvement for companies as well as users of sustainability information and address the biggest challenges in the quality and reliability of corporate reporting… They are indispensable for obtaining timely and reliable reporting on companies’ climate change plans and their compliance with 1.5 °C, companies’ exposure to financial risks related to sustainable development and actual and potential serious impacts on people and the environment in the value chain, and companies’ management of such impacts and risks, among others. This is essential to help investors, consumers, financial institutions and indeed society as a whole move towards a sustainable economy that works within the boundaries of the planet.”it is stated in the joint statement of the organizations.
Although they highlighted some weaknesses, NGOs and sustainability reporting experts noted that the proposals are in line with the ISSB’s draft international financial disclosure standards for sustainable development, adding that disclosures related to climate change mitigation and adaptation, includes volumes one, two and three. emissions and “always required”. This, they say, will allow reporting systems to capture the “true carbon footprint” of a large part of the economy.
The proposal also excludes “shadow offsets, carbon credits and carbon removals” from the corporation’s climate targets, and confirms that life cycle analysis is a “cornerstone” in assessing environmental sustainability in the EU.
“The proposed ESRS defines an urgently needed framework for sustainability reporting that meets international standards and addresses the most pressing conceptual and methodological challenges facing companies. Therefore, we call on the European Commission to adopt the ESRS framework and to approve it by the Parliament and the Member States. We warn against further cuts to the proposed standards, which would seriously undermine its functionality and hinder the EU’s efforts to build a more sustainable and fair economy.”the coalition said.
But the delay under the Green Requirements Directive points to a dispute over methodology
However, separate news from Brussels yesterday appeared to cast a more ambiguous light on the role methodologies such as life cycle analysis (LCA) are playing in the EU’s approach to measuring and communicating progress on sustainable development and greening washing.
“There are more than 200 eco-labels in the EU and more than 450 worldwide; there are more than 80 widely used initiatives and reporting methods for carbon emissions alone. Some of these methods and initiatives are reliable, some are not; they differ in the different issues they cover’according to the EC. “Another issue is green companies – companies give a false impression of their environmental impact or benefits. Greenwashing misleads market participants and does not give due advantage to those companies that make efforts to green their products and operations. This ultimately leads to a less green economy.”
However, European regulators are likely to delay the adoption of the Green Claims Directive, which aims to address these issues. In particular, the delay will allow regulators to reconsider the relevance of LCA, such as the Product Ecological Footprint (PEF) methodology, to assess environmental claims and measure the environmental impact of bio-based products such as food and textiles.
“Tackling greenwashing, providing meaningful information to consumers about the impacts of the food they buy, and encouraging producers to adopt truly sustainable practices are essential to the transition to sustainable food systems,”Jan Plagge, president of industry body IFOAM Organics Europe, said in response to the news.
However, Plagge welcomed the delay, arguing that the current methodology for calculating the ecological footprint of food production is insufficient. “These goals cannot be achieved based on the PEF methodology, which does not take into account the use of pesticides and the impact of different production methods on biodiversity, nor does it take into account the complexity of agri-food systems,”– he emphasized.
Highlighting the shortcomings that the organic sector sees in PEF methods, IFOAM Director Eduardo Cuoco added: “PEF does not properly account for factors such as pesticide use, the negative and positive externalities of different agricultural production methods on biodiversity, soil quality, deforestation and planetary boundaries. IFOAM Organics Europe supports the idea of protecting consumers from misleading claims for organic food, but believes that this needs to be properly discussed. The impact of the materials used should be considered and the provision of meaningful information to consumers should be part of the assessment.’
As always, the devil is in the details: different actors in the agri-food system support the methodologies for calculating sustainability reports that best suit their own purposes. But these differences are vital for policy development and the development of the future food system.
“Different methodologies point to different desired futures for agriculture and the food sector, and this needs to be openly discussed. The EU needs an open debate on the best methodologies to provide consumers with detailed, fair and unbiased information about the environmental impact of different agri-food production methods – while taking into account the main concerns of European citizens and the priorities of farm-to-fork and conservation strategies biodiversity”, says Eric Gall, Deputy Director of IFOAM Organics Europe.
https://www.foodnavigator.com/Article/2022/11/30/progress-on-europe-s-greenwashing-clampdown-ec-publishes-sustainability-reporting-standards-but-delays-green-claims-directive?utm_source=RSS_Feed&utm_medium=RSS&utm_campaign=RSS Progress in cracking down on green policies in Europe? EC publishes sustainability reporting standards but delays green requirements directive
