A four-year plan is currently underway by Climate Disclosure Standards Board (CDSB) in a bid to bring natural capital, including climate change, into the heart of financial decision-making.
The project will pave the way for improving the quality of non-financial reporting across the European Union with the goal of enabling better corporate accounting for the use and impacts on water, air, soil, – including drivers of deforestation, – and biodiversity.
“To adequately assess the sustainability of their investments, investors need to see decision-useful information disclosed in the annual report, and there are still major gaps when it comes to quality of disclosure,” says Mardi McBrien, Managing Director at CDSB. “We must go beyond greenhouse gas (GHG) emissions, strengthen links to financial performance and include natural capital information to value companies better and influence better internal decision-making. We need to harmonise reporting standards and scale up the quality across Europe and beyond.”
Supported by the LIFE Programme of the European Union, this work underpins CDSB’s long-term mission to drive more effective and reliable environmental and climate reporting in the transition to a low carbon economy. To improve the ability of companies to report high-quality, decision-useful information to investors, CDSB will build on its well established and renowned workstreams and increase the delivery of evidence and technical outputs, corporate training and engagement, and policy capacity development to the support the market in the uptake of climate and natural capital financial disclosure at scale.
“To get to investor-grade information, we need two conditions: a wealth of experience on know-how, to report well, and effective regulation to make sure that investors have material information from companies across their portfolio. To facilitate this we need to make sure that policymakers and supervisors are further developing their expertise and knowledge to lay the foundations for more reliable corporate reporting practices,” says Michael Zimonyi, Director of Policy and External Affairs at CDSB.
Following the announcement of the EU Green Deal to increase climate and environmental disclosure by companies, CDSB and CDP jointly published an EU Environmental Reporting Handbook, highlighting good practice reporting in line with EU requirements. Other helpful resources provided by CDSB to guide companies are the online e-learning courses on the TCFD Knowledge Hub to bridge the knowledge gap and enhance understanding of disclosing climate-related financial matters. Three new e-learning courses are set to launch this summer including a dedicated course on the EU Non-Financial Reporting Directive.
This May, CDSB will release an extensive review of major European companies to assess the state of environmental and climate reporting. The findings of the review will be utilised to develop recommendations for companies and policy makers that can be successfully applied in Europe, in particular to the revision of the Non-Financial Reporting Directive, and beyond. This review will be closely followed by the release of guidance on climate change reporting and water application guidance to support the disclosure of water-related information in mainstream reports.