The Board will discuss the following:

• Financial instruments with characteristics of equity
• Rate-regulated activities
• Disclosure initiative — Targeted standards-level review of disclosures
• Post-implementation review of IFRS 9 — Classification and measurement
• Post-implementation review of IFRS 9 — Impairment
• Primary financial statements
• Dynamic risk management
• Maintenance and consistent application
• Management commentary
• Contractual cash flow characteristics
• Goodwill and Impairment

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries, as well as observer notes from the meeting on this page as they become available.

The Board will discuss the following:

• Consultation on agenda priorities
• Climate-related Disclosures and General Sustainability-related Disclosures

The full agenda for the meeting can be found here. We will post any updates to the agenda, our comprehensive pre-meeting summaries, as well as observer notes from the meeting on this page as they become available.

GRI 13 is the first global and holistic sustainability reporting standard for all companies in the upstream production of crops, animals and seafood.  It addresses:

• The topics likely to be material for any agriculture, aquaculture or fishing organization, based on the impacts of these sectors.
• New disclosures on food security, land and resource rights, living wage and income, natural ecosystem conversion, animal welfare, soil health, and pesticides use.
• The multiplying effect of the sectors when it comes to the Sustainable Development Goals (SDGs) – supporting companies to make the connections between their impacts and all 17 Global Goals.
• Policy implications for responsible business, based on international frameworks – as set by the UN Food and Agriculture Organization (FAO), International Labour Organization (ILO), International Maritime Organization (IMO) and others.

GRI Sector Standards will initially cover 40 sectors and Standards for coal, oil and gas have already published. A Mining Standard is currently under development, while projects for food & beverage, and textiles & apparel, will begin soon.

Please click to access the Standard and a cor­res­pond­ing press release on the GRI website.

The research, which is based on 55 asset managers and owners, found that both groups are very positive about the impact of the Code and that there was strong evidence of material changes to practice in the areas of governance and resourcing of stewardship, stewardship activities, processes and outcomes, and monitoring and reporting of stewardship.  The research, which included a survey with asset managers and interviews with asset managers and asset owners conducted between May and September 2021, focused on five themes – governance, resourcing, engagement, collaboration, and escalation, monitoring and reporting and organisational context.

The key findings were:

• Governance: companies indicated that they had recently reviewed and updated their governance arrangements and that the governance of stewardship had become more consolidated within their companies.  All of the companies within the sample had identified some form of organisational restructuring to better integrate stewardship within their investment decision-making.  Examples of the types of changes include establishing oversight committees, improving reporting and transparency, appointing a head of sustainable/responsible investment, and giving internal conflicts management greater attention.  The research also found that stewardship integration differs between assets managers depending on their size. 
• Resourcing: both asset owners and asset managers reported increases in the resourcing of stewardship, typically identifying overall research budget increases, the growth of stewardship teams and the use of external experts.  Although resourcing is still considered a challenge for some, many participants in both the survey and interviews were largely positive about the future of stewardship resourcing, expecting growth in areas of staffing and research budgets.  Interviewees also acknowledged the opportunity for more formal career progression and training in stewardship.
• Engagement, collaboration and escalation: respondents noted that the development of the Code has been useful for their engagement practices, with all respondents undertaking some form of engagement and escalation with companies. A variety of engagement techniques were reported by respondents with most identifying collaborative engagement as an increasingly important escalation tool.  Themes being prioritised by asset managers and owners during engagement are climate change, governance, diversity, and biodiversity.
• Monitoring and Reporting: Eighty-five per cent of surveyed asset managers and all interview respondents indicated that they now set stewardship and engagement objectives and report on their progress. Respondents indicated that their stewardship reporting has improved particularly in how they report on their monitoring (asset owners) and their engagement (asset managers).  Whilst reporting has improved, many participants identified certain barriers to successful stewardship reporting such as data quality, a lack of agreed standards, and the time taken to produce reports. 
• Credibility of the Code: the research identified a number of motivations for applying the Code. Key motivating factors for respondents applying to become signatories included increased market expectations, for example from asset owners and investment consultants, to demonstrating good practice and avoiding reputational risk.  Many reported a positive impression of the Code with several referring to it as a ‘gold standard’ for stewardship.  Whilst sixty-five per cent saw no regulatory or legal barriers to stewardship, some expressed concerns over the volume of reporting required and the overlap in the requirements for initiatives and frameworks, including the Code.

The FRC, along with the Financial Conduct Authority, the Department of Work and Pensions and the Pensions Regulator – will carry out a review of the regulatory framework for effective stewardship including the operation of the Code, from 2023 as confirmed by the Government in its response to its White Paper Restoring trust in audit and corporate governance.  Additionally, later this year the FRC will engage asset owners and investment consultants to understand how they use asset managers’ stewardship reporting for decision making and monitoring.

A press release and the report are available on the FRC website.

During this online event, two parallel sessions will take place: one on draft environmental ESRS EDs and the other on draft social ESRS EDs. 

Attendees will have the choice to join one of these sessions and will be able to interact and raise questions.

For further details, and to register for the event, visit the EFRAG website.

The newsletter covers the Lab's focus for the year (ESG disclosures and Digital Reporting), provides an update on recent publications (such as its insight into supply chain disclosures) and provides and update on upcoming an ongoing projects including:

• An upcoming report on digital security risk which will set out how companies can provide useful disclosures to investors and avoid generic disclosures.
• An upcoming report on ESG data production which will discuss the processes and systems companies are using to generate and collect ESG data.
• An upcoming report in Digital Reporting.
• Progress on its net zero project.
• Current updates to XBRL taxonomies including tags for the digital reporting of IFRS 17 Insurance Contracts, improved tags and guidance for initial and interim reporting and filleted accounts, alongside a new tag for medium-sized entities

The newsletter also includes a reminder about recent legislation on climate-related financial disclosures effective for financial years commencing on or after 6 April 2022. 

The full newsletter is available on the FRC website here. 

The objective of the CSRD is to improve sustainability reporting to better exploit the potential of the European single market and to contribute to the transition to a fully sustainable and inclusive economic and financial system in line with the European Green Deal and the UN Sustainable Development Goals.  

The CSRD brings in more extensive mandatory sustainability reporting for a wide range of companies and requires assurance on this information.

The Regulations include the following:

• Extended scope of the CSRD requirements to all large public-interest undertakings as defined by the Accounting Directive and all large undertakings and undertakings that are listed on regulated markets in the EU (including all listed SMEs, but not micro entities). Certain third-country (non-EU) undertakings “generating a net turnover of EUR 150 million in the EU and which have at least one subsidiary or branch in the EU” should also provide sustainability information (see below).
• Updated and new reporting requirements on sustainability matters (such as environmental rights, social rights, human rights, work ethics and governance factors) and the process used to identify this information, using sustainability reporting standards developed by the European Financial Reporting Advisory Group (EFRAG).
• Audit and certification requirement for sustainability reporting to be provided by an accredited independent auditor (either the statutory auditor or another statutory auditor) or a certifier, and assurance to be obtained also on reporting by non-EU companies.
• Requirement to report as from
• 1 January 2024 for companies already subject to the EU non-financial reporting directive;
• 1 January 2025 for companies that are not presently subject to the EU non-financial reporting directive but fall within the CSRD’s enlarged scope;
• 1 January 2026 for EU listed SMEs, EU small and non-complex credit institutions and captive insurance undertakings, and if opt-out as from 1 January 2028 for SMEs
• 1 January 2028 for non-EU companies
• Once ready and translated, EU Member States will have 18 months to transpose the CSRD into their national rules.

For non-EU companies listed on EU regulated markets, it is expected that the requirements will be effective from 1 January 2025 (i.e. with periods ending 31 December 2025).

For other non-EU companies (referred to as third country undertakings in the Regulations), the requirement to provide a sustainability report applies from 1 January 2028 to all third country undertakings generating a net turnover of more than €150 million in the EU and which have at least one large or listed EU subsidiary or a EU branch generating a net turnover of more than €40 million.

It will be the EU subsidiary or EU branch of the non-EU undertaking that is responsible for publishing the sustainability report of the third country undertaking. The specific information required to be in these sustainability reports has not been finalised. The Regulation says it should be prepared in accordance to “standards to be adopted by 30 June 2024 by the EC”. There will also be the option to report in accordance with the EFRAG sustainability standards or standards which are deemed equivalent. What may be deemed ‘equivalent’ is yet to be determined by the Commission. 

For additional information, please see the press releases published by the two bodies on their websites.  The text of the CSRD is included below and within the European Council updated press release below:

• European Parliament
• European Council
• Text for the CSRD

The UKEB draft UK Endorsement Criteria Assessment covers the following narrow scope amendments to IFRS Accounting Standards:

• Disclosure of Accounting Policies (Amendments to IAS 1 Presentation of Financial Statements and to IFRS Practice Statement 2 Making Materiality Judgements).
• Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors).
• Deferred Tax related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12 Income Taxes).

The UKEB secretariat's tentative initial assessment concludes that:

• the 2021 Amendments meet the criteria of relevance, reliability, comparability and understandability required of the financial information needed for making economic decisions and assessing the stewardship of management, as required by SI 2019/685 (see Regulation 7(1)(c)); and
• application of the 2021 Amendments is not contrary to the principle that an entity’s accounts must give a true and fair view as required by SI 2019/685 (see Regulation 7(1)(a)).

Additionally the UKEB tentatively concludes that the 2021 Amendments are likely to be conducive to the long-term public good in the UK.

Comments on the draft UK Endorsement Criteria Assessment are requested by 3 October 2022.

For more information, see the Invitation to Comment and draft UK Endorsement Criteria Assessment on the UKEB's website.

In May the Department for Business, Energy & Industrial Strategy (BEIS) published the government's response to last year's White Paper ‘Restoring trust in audit and corporate governance’. 

The FRC will soon be publishing a Position Paper setting out how it will support the Government’s reforms as it transitions into the Audit, Reporting and Governance Authority (ARGA).

The webinars will feature discussion of the FRC's proposed approach and next steps across key policy areas.  Both webinars will cover the same content. 

Further details and information on how to register are available on the FRC website.

The update reports on the EFRAG Financial Reporting Board webcast meeting on 1 June, the EFRAG Financial Reporting TEG webcast meeting on 29 June and the EFRAG Financial Reporting TEG and EFRAG Consultative Forum of Standard Setters (CFSS) joint webcast meeting held on 28 June. The update also covers EFRAG’s sustainability reporting and related activities as well as webinars and online outreaches.

Please click to download the June EFRAG Update from the EFRAG website.