The corporate and investor sustainability laws and reporting standards set by the European Union (EU) are some of the strictest, most advanced, and most complex in the world. In an effort to combat climate change, foster sustainable innovation, and become the first continent to achieve climate neutrality by 2050, Europe is implementing a comprehensive set of policies under the banner of a “European Green New Deal.”
Since it can be challenging to track new sustainability legislation, here is a summary of the new major laws and reporting requirements in 2023.
Sustainable Finance Disclosure Regulation (SFDR)
The EU SFDR covers all EU investment management companies and advisors, including asset managers, banks, and insurers. It offers guidelines on how to accurately report the sustainability risks, features, and statistics underpinning investments. Additionally, it covers non-EU businesses that use the Alternative Investment Fund Managers (AIFM) Directive to target the EU market. Cycles for SFDR disclosure filings are determined by the calendar year. Filers must make available their data from each reporting period by June 30 of the following year. Data on performance, risk, and PAI, for instance, must be submitted by June 30 of the given year. All PAI-related indicators for each SFDR report must be computed and averaged at the end of each calendar quarter.
SFRD rules and requirements based on the type of organization:
There are two types of SFDR disclosures:
The EU’s Corporate Sustainability Reporting Directive (CSRD)
Companies are required by CSRD to monitor and report on their ESG activities using EFRAG-defined metrics (European Financial Reporting Advisory Group). The European Sustainability Reporting Standards are the name given to these EFRAG metrics (EU ESRS).
The CSRD will apply to all companies with:
EU Taxonomy for Sustainable Activities
a system of classification that compiles a list of economically viable environmental practices. It offers appropriate definitions of what constitutes environmentally sustainable economic activity for businesses, investors, and regulators.
The good news is that technology can now assist businesses quickly and easily, implementing these measurements. At Dayrize, we have the most advanced technology for rapid holistic and accurate impact measurement of consumer products. Our detailed assessments will assist companies in meeting EU regulations for measurement, tracking, and reporting.
Learn more about how we can help you achieve your sustainability goals