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Sustainability targets for companies doing business across Europe will have to widen if the bloc adopts standards proposed by the European Financial Reporting Advisory Group.
“The EU sustainability reporting standards are set to be the most ambitious standards globally,” Mirjam Wolfrum, director of policy engagement in Europe for CDP, said in a statement.
According to Wolfrum, about half of reported emissions in Europe are not covered by any targets.
“Just five percent of European companies disclosed strong targets covering their emissions, deforestation, and water use to CDP in 2021, so standardising disclosures on nature and biodiversity will be critical as nature clearly remains a blind spot for many companies,” Wolfrum said.
New standards for Europe
EFRA’s proposed standards were made public last Friday. The final drafts will be sent to the European Union’s executive European Commission by November, where they’re expected to be adopted into law.
The move is the latest in a string of efforts aimed at mitigating greenwashing. The International Sustainability Standards Board published draft standards in March, building on recommendations of the Task Force on Climate-Related Financial Disclosures aimed at incorporating industry-based disclosure requirements.
The proposals were developed to meet requests from G20 leaders to address sustainability-related risks and opportunities.
“When the ISSB issues the final requirements, they will form a comprehensive global baseline of sustainability disclosures designed to meet the information needs of investors in assessing enterprise value. The ISSB is working closely with other international organisations and jurisdictions to support the inclusion of the global baseline into jurisdictional requirements,” the group said.
In the U.S., the Securities and Exchange Commission also recently announced its draft disclosure rules, which will include reporting on Scope 3 emissions.
Replacing voluntary reporting norms
According to CDP, formerly the Climate Disclosure Project, the new EU standards will bring a cohesive effort to Europe, replacing the existing patchwork of voluntary reporting norms.
“Robust and constructive dialogue was also entertained with other leading international initiatives… with the common goal of both mutual understanding of approach and goals and search for ways to facilitate compatibility and convergence wherever possible,” EFRAG said.
Last month, a Harris Poll for Google Cloud survey revealed that more than half of CEOs said their companies were guilty of greenwashing at one point or another, despite the growing need for action.
According to the findings, 58 percent of leaders globally and 68 percent in C-suites surveyed in the U.S. said their companies were guilty of greenwashing. Another 66 percent questioned whether their company’s sustainability efforts were genuine.
Photo by Jonas Tebbe on Unsplash