In the United States, the Securities and Exchange Commission (SEC) has been active in providing guidance and publishing new environmental, social, and governance (ESG) requirements. But the European community continues to lead the way in relation to regulation and guidance. Nowhere is this more apparent than with the Sustainable Finance Disclosure Regulation (SFDR), a comprehensive set of rules adopted in 2019 aimed at improving transparency regarding sustainability claims.[1] Application of its main provisions began in 2021, but additional SFDR and related requirements are phased in from 2022 to 2024.
Further, the Corporate Sustainability Reporting Directive (CSRD) goes into effect in 2023.[2] The CSRD will enhance existing requirements relating to disclosures on how companies operate and manage social and environmental challenges. Additional developments include a proposal on corporate sustainability due diligence, as well as guidelines on lending that consider environmental issues and an entire taxonomy regulation that establishes a framework to facilitate sustainable investment.
This is only a partial list of examples of recent developments affecting the complex regulatory environment surrounding ESG matters in Europe.
Guidance on many of these issues will be on full display at SCCE’s 11th Annual European Compliance & Ethics Institute (ECEI), scheduled for March 20–22 in Amsterdam. ECEI will include numerous ESG sessions delivered by European compliance, audit, and ESG professionals who are immersed in these issues every day. There will be sessions on the following topics—and more—as they relate to ESG:
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Human rights and child labor
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Greenwashing
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Supply chain risks
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Ethical labor audits
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The assurance and advisory roles of internal audit in ESG
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International corruption
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Balancing the three components of ESG
Climate change and related issues often take the limelight in discussions on ESG. But as European regulation and the preceding sessions at ECEI 2023 illustrate, all three components of ESG are evolving at a rapid pace. And nowhere is this more apparent than in Europe.
1 Eurosif, “SFDR,” accessed December 28, 2022, https://www.eurosif.org/policies/sfdr/.
2 European Commission, “Corporate sustainability reporting,” accessed December 28, 2022, https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en.
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