The moment of truth is approaching for European Sustainable Reporting Standards as they face a challenge brought by international standards!
The scope of sustainable finance continues to grow rapidly. The volume of sustainable bond issuance worldwide has exceeded $1 trillion in 2021, up 75% from 2020.
But at the same time, accusations of "greenwashing" are growing, based on a few clear examples and many confusions about the definition of sustainability.
In order to clarify the situation, the European Union has for several years been making legislative efforts to promote transparency in corporate communication. The aim is to develop ESG (Environment, Social, Governance) communication standards, also known as sustainable communication standards, in the coming years. They will serve to direct funding towards the most virtuous companies in this area.
We can therefore understand the importance of defining these standards.
In this area, the European Union has taken the lead by starting to define its standards in a series of regulatory texts that are not yet complete, including those relating to sustainable taxonomy.
As both the ISSB, the new international standard-setter and EFRAG (the EU advisory group for the European Commission) have published their first draft standards for consultation which will continue until August 2022, we take an overview of the challenges and risks to be considered in this competition for sustainable standards.