Corporate sustainable reporting and EU Taxonomy: a compass for the recovery of Europe? - PowerPoint Presentation

1. Corporate sustainable reporting and EU Taxonomy: a compass for the recovery of Europe? Practical implications for the EU, investors and companies14th September 2021 11:00 – 12:30

2. Preliminary remarks The event is recorded and will be shared.You can ask your questions to the panelists via the “Questions” box.

3. Welcome addressDominique RiquetMEP, Renew EuropeCo-Chair of the Sustainable, Long-term Investments & Competitive European Industry Intergroup

4. Keynote speechJohn BerriganDirector-General of Financial Stability, Financial Services and Capital Markets Union, European Commission

5. Panel discussion :Corporate sustainable reporting and EU Taxonomy: a compass for the recovery of Europe? Practical implications for the EU, investors and companiesModerated by Laurent Zylberberg, Chair of the European Long-Term Investors Association (ELTI) Patrick de Cambourg Chair of the Autorité des normes comptables Michael Zimonyi External affairs & Policy Director, Carbon Disclosure Standards Board (CDSB) and Co-chair of the Informal Working Group on Sustainable finance Jana BourEuropean Policy Manager, European Public Real Estate Association (EPRA) Stella BenfattoAdvisor – Wholesale Markets - Investment Lead, Eurelectric

6. European Sustainability Reporting Standards: ambitions and roadmapHigh-level conference of the intergroup on Sustainable, Long Term Investments & Competitive European Industry of the European ParliamentPatrick de Cambourg, 14 Septembre 2021

7. 3 efforts still running in parallelNew mandate given in May 2021 to PTF-ESRS to implement the PTF-NFRS recommendations, in line with the key CRSD requirements Preparatory work for standardisation21 April 2021Proposal for a CSRD February 21 ReportFebruary 21 ReportMoving from preparation to elaboration phase71st set of standards Proposal for revised governanceAdoption CSRD Elaboration / Revision NFRD1 23Preparatory phaseReorganisation for early 2022Dedicated EFRAG Task Force1st set of standards Elaboration phaseQ1/Q2 2022EFRAG JP. GauzèsEuropean CommissionHandoverPTF-NFRSPTF-ESRS

8. 8The key CSRD requirements… (1/3)The CSRD states the following (article 19b 1.):Those sustainability reporting standards shall specify the information that undertakings are to report in accordance with Articles 19a and 29a and, where relevant, shall specify the structure in which that information shall be reported.By 31 October 2022, adoption of delegated acts specifying the information that undertakings are to report in accordance with:paragraph 1 of article 19a (Scope and double materiality)and paragraph 2 of article 19a (reporting areas, intangibles, materiality assessment, time horizon).and at least specifying information corresponding to the needs of financial market participants subject to the disclosure obligations of Regulation (EU) 2019/2088 (SFDR).By 31 October 2023, adoption of delegated acts specifying (article 19b and 19c):complementary information […] where necessary;information […] that is specific to the sectorsustainability reporting standards for SMEsCovering quality information and all topics (article 19b 2.).

9. 9… are in line with the PTF-NFRS proposals and confirm the proposed target architecture …. (2/3)The “rule of three”…Three layers: from sector agnostic, to sector specific to entity specificThree reporting areas: Strategy, Implementation and Performance measurementThree topics: ESG+… and the appropriate reporting structure.1. SECTOR AGNOSTIC2. SECTOR SPECIFIC3. ENTITY SPECIFIC3 REPORTING AREASStrategy, Implementation, Performance measurement3 TOPICSEnvironmental, Social, Governance+3 LAYERSSUSTAINABILITY REPORTINGSustainability Statements

10. The “enhancement of content” approach… Progressive depth of coverage on each topicFollowing sets not contradicting earlier sets… towards the “faithful representation” reporting platform10… and roadmap (3/3)First two CSRD setsFollowing CSRD sets

11. Combining alignment with EU priorities and convergence with international initiatives 11Alignment with EU priorities is ensured viaThorough mapping and onboarding of current and expected European legislation and regulation resulting in sustainability information requirements Participation of the European Public Authorities (ESMA, EBA, EIOPA, BCE, EIB, EEA, FRA, CEAOB) to the PTF-ESRS clusters and Plenary meetingsRegular connections with the Platform on Sustainable Finance to ensure proper alignment between the Taxonomy (existing regulations and more recent considerations and proposals) and the future sustainability reporting standardsContact with relevant European Commissions DGs under FISMA coordinationWhile convergence with international initiatives is sought throughStatement of cooperation signed with GRI and Shift, ensuring their representation and participation to relevant clusters Ongoing discussions with the IFRS Foundation and SASB towards cooperation as with GRI and ShiftInformal and initial contacts made with the US SECFrom a general standpoint, promotion of a co construction approach with willing international initiatives

12. Internal process based on consensus building and transparency, mirroring EFRAG’s Due Process12Initial prototype drafting by clustersResearch and proposals under each cluster responsibilityWorking papers then shared with the whole PTF for review and consensus building (through review panel and tailored questionnaires)Revised prototypes presented and debated in Plenary meetings become V0 draft standardsV0 draft standard submitted to initial and limited expert inputV0 draft standard incorporating PTF comments then submitted for feedback and input to Expert Working GroupsBack and forth work session between clusters and the relevant Expert Working Groups deliver a V1 pre-exposure draft V1 pre-exposure draftResult of interaction with the Expert Working Group becomes a V1 pre-exposure draft to be reviewed by the PTF prior to handover to EFRAG institutional bodies

13. Initial prototype drafted by clustersReview by a review panel and PTF-wide questionnaireConsensus building debates in Plenary meetingExpert Working Group’s inputJune 15 RelaunchJune 9Early 2022Oct 15Substance + V0 draftingExperts & partners inputNov 30V1 Pre-exposure draftHandover to EFRAG Board and TEGOverall process and tentative timelineStep 1Step 2Step 3Step 4Combining internal consensus building and co-construction with international initiatives

14. Key Challenges 14Ambitious timeline set by the draft CSRDFirst set of standards covering all topical and sector agnostic information by October 2022Ramping up expertise and resources quickly enough35 PTF membersInitially the equivalent of 18 Full Time secretariat members, now 25Possibly up to 30 after initial call for candidates issued in JulyNeed for additional expertise in some areas to be delt with via the call for candidates for the Expert Working GroupsPrioritisation of content in terms of depth and timing for set 1 and set 2Capacity to promote elements of common international platform in a short timeframeTiming of handover to EFRAG still to be finalised

15. Panel discussion :Corporate sustainable reporting and EU Taxonomy: a compass for the recovery of Europe? Practical implications for the EU, investors and companiesModerated by Laurent Zylberberg, Chair of the European Long-Term Investors Association (ELTI) Patrick de Cambourg Chair of the Autorité des normes comptables Michael Zimonyi External affairs & Policy Director, Carbon Disclosure Standards Board (CDSB) and Co-chair of the Informal Working Group on Sustainable finance Jana BourEuropean Policy Manager, European Public Real Estate Association (EPRA) Stella BenfattoAdvisor – Wholesale Markets - Investment Lead, Eurelectric

16. Closing remarksPaul TangMEP, Group of the Progressive Alliance of Socialists and Democrats