Eurosif and the Principles for Responsible Investment (PRI) have written to the EU institutions to emphasise the need for the Corporate Sustainable Reporting Directive (CSRD) to mandate robust disclosures about companies’ energy transition plans and net-zero commitments.
Their letter comes as negotiations on the CSRD are well underway between the European Parliament and the Council, including the Commission, with these so-called trilogues seen concluding possibly as soon as May, although the deadline is June.
Saying they were writing on behalf of the sustainable investment industry, Victor Van Hoorn, executive director of Eurosif, and Margarita Pirovska, director of policy at PRI, said the CSRD presented a “unique opportunity” to bring transparency to investors about companies’ plans to decarbonise their operations and value chain, at a time when an increasing number of companies had made public commitments to reach net-zero emissions by 2050.
“It is crucial that, at the end of the trilogue negotiations, CSRD mandates companies to prepare transition plans and disclose the scenarios used for these plans as well as the key assumptions underpinning these scenarios,” wrote Van Hoorn and Pirovska.
The requirements should, as a bare minimum, apply to companies with a net zero by 2050 commitment, they said.
Going into the trilogues the European Parliament’s position was the most ambitious with regard to company transition plans. According to campaigners, although the parliament’s position was disappointing in terms of questions of scope, it included some welcome improvements in the form of further specification of the disclosure of sustainability targets and transition plans in line with the Paris climate agreement.
“We hope differences will be bridged and in a satisfactory way,” Van Hoorn told IPE. “What we want to avoid as much as possible is a scenario where political time pressure prevents a proper substantive discussion of the matter, as it is an opportunity for the EU to show leadership on this point.”
Van Hoorn also noted that the final agreement on the CSRD will set the scope of the mandate for EFRAG and the Commission on the sustainability reporting standards accompanying the CSRD.
“The vaguer the mandate, the more uncertainty exists on the possible level of ambition of sustainability reporting standards,” said Van Hoorn. “We want to have less uncertainty by having more specific requirements in the Level 1 text.”