On 6 February 2020, the European Corporate Reporting Lab (European Lab) released its first report on climate-related reporting. The European Corporate Reporting Lab was set up by the European Financial Advisory Group (EFRAG), following recommendations set out in the European Commission’s Sustainable Finance Action Plan, which was adopted in March 2018. The report was drafted by a project task force, set up in February 2019 by the Lab and led by Michèle Lacroix, Head of Group Investment Risk & Sustainability at SCOR, the 4th largest reinsurer in the world. Ms Lacroix is also a member of the French capital market authority’s committee on climate and sustainable finance.

Good reporting practices

The report provides an analysis of good practices for climate-related corporate reporting. In addition to the main report, there are two ‘supplements’: The first one provides examples of good practices in reporting on governance, strategy, risk management and metrics and targets while the second gives an in-depth review of scenario analysis reporting.

The Lab’s report is part of a broader Commission strategy to promote a more sustainable financial system that allocates public and private capital to the transition towards a climate-neutral economy by 2050. In 2019, the Commission issued non-binding guidelines on reporting climate-related information. It is now working on a proposal to review the directive on non-financial reporting. This is in line with the European Green Deal, which was adopted on 11 December 2019 and called for a revision of the directive during the course of 2020. A public consultation has been launched and will remain open for three months. All views and input are very welcome.

Developing standards

Earlier this year, Executive Vice-President Valdis Dombrovskis announced that the Commission will support a process to develop European non-financial reporting standards. The European Financial Advisory Group will begin preparatory work for these standards soon. Executive Vice-President Dombrovskis also said that European non-financial reporting standards should be developed in an open, transparent and inclusive manner. This will avoid fragmentation of global capital markets or a host of incompatible reporting requirements or standards being imposed on companies operating globally. ‘The EU is happy, of course, to take the lead,’ he said, but added that ‘we are also open to working with all organisations that have advanced the cause of sustainability and non-financial reporting’.

Read more on non-financial reporting