EU corporate sustainability regulations: a key step towards accountability

The document discusses the potential of the EU's CSRD and CSDDD to hold corporations accountable for their negative sustainability impacts through a 'double materiality' approach. It warns that the International Sustainability Standards Board's (ISSB) focus on financial materiality poses a risk to these ambitions and outlines Reclaim Finance's recommendations to EFRAG for strengthening climate-related reporting standards.

• The Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) together could move corporate regulation beyond transparency toward accountability. While the CSRD requires companies to publish granular data on negative sustainability impacts using a "double materiality" approach, the CSDDD introduces "hard" law obligations for companies to identify and mitigate negative impacts along their value chain or face liability.
• The draft CSDDD may provide a legal basis for vulnerable communities to seek redress for sustainability harms and requires companies to ensure their business models are compatible with the Paris Agreement's goal of limiting global warming to 1.5 °C.
• The International Sustainability Standards Board (ISSB) presents a risk to EU ambitions because its goal to establish a "global baseline" for sustainability reporting focuses exclusively on financial materiality—the impact of sustainability issues on enterprise value—rather than the impact of companies on the environment.
• Reclaim Finance has urged the European Financial Reporting Advisory Group (EFRAG) to improve the CSRD's climate-related draft standards by adding mandatory indicators for mitigation, strengthening the scientific basis of transition plans, clarifying scope 3 concepts, improving GHG removal disclosures, removing references to avoided emissions, and using more granular risk scenarios.

APA

Martin, L. (2022). EU corporate sustainability regulations: a key step towards accountability. Reclaim Finance. https://reclaimfinance.org/site/en/2022/07/26/eu-corporate-sustainability-regulations-a-key-step-towards-accountability/

Chicago

Martin, Léo. EU corporate sustainability regulations: a key step towards accountability. Reclaim Finance, 2022. https://reclaimfinance.org/site/en/2022/07/26/eu-corporate-sustainability-regulations-a-key-step-towards-accountability/.

Wikipedia

{{cite press release |last1=Martin |first1=Léo |title=EU corporate sustainability regulations: a key step towards accountability |publisher=Reclaim Finance |date=26 July 2022 |url=https://reclaimfinance.org/site/en/2022/07/26/eu-corporate-sustainability-regulations-a-key-step-towards-accountability/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{martin2022corporate, author = {Martin, Léo}, title = {{EU corporate sustainability regulations: a key step towards accountability}}, publisher = {Reclaim Finance}, year = {2022}, month = jul, url = {https://reclaimfinance.org/site/en/2022/07/26/eu-corporate-sustainability-regulations-a-key-step-towards-accountability/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }