The Make-or-Break Decade for the SDGs has begun

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“ Insights into the New EU Reporting Obligations Since the EU Commission’s introduction of the climate taxonomy and the CSRD, discussions concerning an upcoming European reporting standard have shown no signs of dying down. Who, what, when, and about what will be reported on in the future? Three interviews with experts. In the last weeks we saw European climate objectives set, with both a climate taxonomy and a Cooperate Sustainability Reporting Directive (CSRD) being approved. Now you will have to take a moment to briefly guide us through all these decisions! We have a climate strategy, we have a taxonomy, and we have reporting obligations. How are they all related? Christoph Töpfer: That’s true, they are basically all connected, but it is difficult to actually classify the individual processes. The actual points of contact repeatedly represent a challenge, even for those who are closely connected with the processes. With its introduction of the European Green Deal in 2019, the Commission put forward a massive work program. The various subsections are currently being worked through, one by one, and in a tight time frame at that. Now to the classification: The recently adopted European climate law states that the European Union will achieve greenhouse gas neutrality by 2050. Interim goals will also be set for 2030. The EU reporting obligation – known as the CSRD, the Corporate Sustainability Reporting Directive – as well as the EU taxonomy for green and sustainable economic activity are tools that will significantly contribute to reaching these overarching goals. Perhaps we could hone in on these two instruments? Töpfer: The EU taxonomy is a classification system that enables financial market players in particular to assess whether the activities in which they would like to invest are environmentally friendly and if they would even be sustainable in a greenhouse-gasneutral economy. Is that green or just a transitional solution? This taxonomy has now been adopted through a legislative act that is primarily focused on climate change. Taxonomies regarding other climate objectives will follow. 26 Global Goals Yearbook 2021
FRAMING THE DEBATE Christoph Töpfer was a member of the EFRAG Task Force responsible for preparing the European sustainability reporting standards. However, the reporting obligation is just a fundamental tool. In order to make sustainable investment decisions, one needs good and comparable data from companies, information concerning their sustainability and environmental efforts. Information about the sustainabilityrelated risks to which the companies are exposed are especially important. According to the EU Commission’s analysis, the current reporting obligations have not fulfilled these requirements, which is also in line with our assessment at the UBA [German Environment Agency]. Investors aren’t the only ones interested in the data. Other target groups such as non-governmental organizations, public authorities, and, of course, customers want to have access to this information. A very important point of discussion is the aspect of materiality. There are different approaches – the classical investor’s perspective or double materiality: Which is favored by the European Commission. What is meant by "double materiality"? Töpfer: Understanding the concept of materiality is key. It determines when and what information is to be included in the report. There is also the classical perspective of financial reporting, which requires information that is pertinent to decision-making in terms of financial effects for the companies or which entail corresponding risks. So that is what is meant by the term “financial materiality.” Then we have the opposite perspective, which concerns the effects of a company’s activities on its surroundings, the environment, and society with its products and services. That is materiality from the perspective of the environment and sustainability. This information is just as relevant and is increasingly being requested by investors. The European Commission would like to see both of these perspectives reflected in the reports. This is what they refer to as “double materiality.” The German CSR Directive Implementation Act (CSR-RUG) is much more restrictive in this regard. The debate on the term “materiality” came up quite often in the German context because people asked themselves: If we were to picture this as a Venn diagram, do we only report on the points that intersect or do we have to report on both areas in their entirety? Now we have a clear statement. The intersecting areas are no longer the issue, the focus has to be on both perspectives from here on out. Understanding the concept of materiality is key. It determines when and what information is to be included in the report. >> Global Goals Yearbook 2021 27
Page 1 and 2: GLOBAL GOALS GLOBAL GOALS YEARBOOK
Page 3 and 4: “ H.E. António Guterres UN Secre
Page 5 and 6: ZOOMING IN 38 What Does Good SDG Ma
Page 7 and 8: FRAMING THE DEBATE Sustainability B
Page 9 and 10: FRAMING THE DEBATE You can’t do b
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Page 13 and 14: FRAMING THE DEBATE Jonathan Fordyce
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Page 17 and 18: Measuring Stakeholder Capitalism Ma
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Page 21 and 22: FRAMING THE DEBATE Sarah Kaplan, fr
Page 23 and 24: FRAMING THE DEBATE MATERIALITY DEFI
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ZOOMING IN CO 2 CLIMATE CHANGE Clim
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Race to Zero - but only if we accel
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more than 1,000 lives a year. “Th
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TECH COMPANIES TAKE ON CLIMATE CHAN
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ZOOMING IN SUSTAINABLE CITIES The w
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Recruitment Policy emphasizes provi
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EXPANSION OF INFRASTRUCTURE IN NORT
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entire portfolio climate-neutral by
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ZOOMING IN SUPPLY CHAIN Supply chai
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in practice. Commissioned by the so
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who can, in turn, further cascade t
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GLOBAL GOALS YEARBOOKS
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The Make-or-Break Decade for the SDGs has begun

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