On 10 January 2019, the Technical Expert Group (TEG) set up by the European Commission ("Commission") to assist in four key areas of the Action Plan on Financing Sustainable Growth published its report on climate-related disclosures.
The report follows on from the European Commission's Action Plan, which committed to revising the non-binding guidelines of the Non-Financial Reporting Directive (2014/95/EU) regarding disclosure of environmental, social and governance-related information. In drafting the report on climate-related disclosures, the Technical Expert Group sought views of stakeholders through a number of outreach activities, including an open stakeholder meeting and meetings with banks and listed companies. The report proposes climate-related disclosures to assist the Commission in revising the non-binding guidelines. See also the Commission consultation on this revision, discussed below.
The guidance proposed by the TEG assists companies in developing climate-related disclosures that comply with the non-binding guidelines. For example:
- There is a high expectation that companies should disclose their governance process addressing climate-related risk and opportunities, how climate change is incorporated into their strategy and risk management processes, and their Scope 1 and Scope 2 GHG emissions.
- Companies should consider disclosing business segments' financially-material exposure to climate-related risks, the impact of the company's activity on climate change and potential mitigation or adaptation strategies, and key performance indicators such as GHG emissions breakdowns.
Comments on the report were due by 1 February 2019. The Group will then report to the Commission on the responses, and the Commission will then update the guidelines, taking into account the comments from the Group. The updated guidelines are expected to be adopted in June 2019.
The full report can be found here.
The press release can be found here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.