ASCG to challenge the recommendations of the Technical Expert Group on Sustainable Finance

The ASCG has sent its Comment letter to the Technical Expert Group on Sustainable Finance (TEG) of the European Commission.

In its report of 10 January 2019, the TEG has developed proposals to include the disclosures recommended by the Task Force on Climate-related Financial Disclosures (TCFD) in the Commission’s non-binding guidelines on non-financial reporting.

In its comment letter, the ASCG addresses, among other issues, the coherence of the TCFD recommendations to the requirements of the Non-Financial Reporting Directive (NFRD). The TCFD, for example, focus on the impact of climate change on an entity’s business, whereas the new reporting elements of the NFRD target the impact of an entity’s business activities on non-financial aspects (e.g. climate). Although it is helpful and clearly necessary for companies to deal with climate-related issues, conceptual weaknesses in the non-binding guidelines will not foster their acceptance, according to the ACSG letter.

Background: Already in the “Action Plan: Financing Sustainable Growth”, the European Commission had announced that it plans to include the recommendations of the TCFD in the non-binding guidelines on non-financial reporting. The TEG, set up by the Commission, published its report and recommendations to the Commission on 10 January 2019. On this basis, the European Commission will revise the non-binding guidelines. The draft amendments are expected to be exposed for consultation in the first quarter of 2019. The final changes to the non-binding guidelines are to be completed by mid-June 2019.