Speech by Commissioner McGuinness at EU side event at COP28 on European Sustainability Reporting Standards

European Sustainability Reporting Standards COP28

Ladies and gentlemen, it is a pleasure to join you for today ' s event.

Since the last COP, we've seen significant changes in sustainable finance and in particular in sustainability reporting.

So in my brief opening remarks, I will give you an update you on what the European Union has done in this area over the past year.

And I'll look forward too, while showing how our work fits into the global picture.

The Commission adopted the first set of European Sustainability Reporting Standards in July.

We ' re the first in the world to have a comprehensive, mandatory set of sustainability reporting standards.

Now we focused on getting the balance right: making sure that the requirements for companies are reasonable, while keeping the environmental ambition high.

Large European companies now have mandatory standards in place for their reporting from financial year 2024.

This sets the stage for a more transparent and accountable business environment.

Now as you likely know, in the EU we take a ‘double materiality' perspective.

So under these standards, companies will report on their impact on people and the environment – as well as about the risks they face from climate change and other sustainability issues.

These standards are not just about compliance.

They will allow companies to plan and manage their sustainability performance, and report on how they're doing, and what they plan to do next.

These standards underpin the European Green Deal – and that's the EU ' s plan to reach climate neutrality by 2050.

Now moving briefly to the next steps.

I think first and foremost we look at implementation.

We want to help companies apply these new standards and make sure they meet their objective.

The Commission asked our technical advisory group, the European Financial Reporting Advisory Group or EFRAG, to make guidance for companies a top priority.

There's good progress to report here – with the development of an online Q&A platform that companies can go to with practical questions.

The Commission ' s next priority is standards for small and medium-sized companies.

Because these standards will help SMEs respond to requests they may get from banks, large company customers and others on their sustainability record.

Sector-specific standards are also on the horizon.

And these should be based on the key information required in specific economic sectors.

As set out in law, we will also develop separate standards for use by certain non-EU companies with a significant presence in the European Union.

These companies generate over 150 million euros on the EU market and have either a large branch or subsidiary in the EU.

The requirements for these large non-EU companies will begin in financial year 2028.

And finally, I want to mention a really important topic: the global picture on sustainability reporting.

We are committed to global standards that are coherent and comprehensive.

In particular, we ' re working closely with the International Sustainability Standards Board and the Global Reporting Initiative.

The Commission and the ISSB have both confirmed that our climate reporting standards align very closely.

At a global level, we can together make sure that global sustainability reporting works effectively.

So today is an opportunity to talk about what the EU has done on sustainability and climate reporting – but also what more we need to do.

We also look forward to learning about other initiatives – not just in Europe but around the world.

And we look forward to listening to those driving sustainability reporting forward, right across the globe.

So thank you and I wish you a very fruitful event.