ESG related FAQs by EU, Nature Restoration Law and BAM Reporting
FAQs on the EU Corporate Sustainability Reporting Regulation
The European Commission has published FAQs to help companies better understand and implement the EU’s corporate sustainability reporting rules. The document addresses common concerns such as scope, application dates and possible exemptions, with the aim of reducing the administrative burden on companies. It also clarifies situations where companies can use estimates instead of collecting detailed value chain data from suppliers.
Recommendation:
Companies should review these FAQs in order to simplify compliance with the EU’s reporting requirements, with a particular focus on clarifications regarding exemptions and data estimation to minimize operational burden
EU Adopts Nature Restoration Law (Regulation 2024/1991)
The EU has adopted Regulation (EU) 2024/1991, known as the *Nature Restoration Law*, to restore ecosystems across the Union. This regulation, which came into force on June 24, 2024, sets ambitious targets to restore at least 20% of land and sea areas by 2030, with full restoration of all degraded ecosystems by 2050. The legislation supports the recovery of biodiversity and contributes to climate change mitigation and adaptation. Member states are required to develop national restoration plans to achieve these goals and ensure the long-term and resilient recovery of ecosystems.
Next steps and recommendations:
Member states must begin developing national restoration plans that focus on specific actions to achieve the 2030 and 2050 targets. Businesses should align their environmental practices with the new restoration targets, while policymakers and stakeholders must ensure that the biodiversity and climate change commitments set out in the European Green Deal are met.
BAM Reporting: New updates and FAQs available
The European Commission has updated its FAQs to help importers and manufacturers comply with the Carbon Border Adjustment Mechanism (CBAM). From July 1, 2024, importers will be required to report actual emissions for all CBAM goods imported into the EU. The updated FAQs provide guidance on how to deal with situations where suppliers don’t provide the required emissions data, including possible alternative reporting methods and steps to ensure compliance. In addition, the FAQs address ways to strengthen collaboration within the supply chain to promote transparency and accuracy in emissions reporting.
Recommendation:
Importers should review the updated FAQs to ensure compliance and work closely with suppliers to meet CBAM reporting requirements. With the next reporting deadline on October 31, timely action is critical.
ISSA 5000: New global standard for sustainability assurance approved
The International Auditing and Assurance Standards Board (IAASB) has approved the International Standard on Sustainability Assurance 5000 (ISSA 5000), the first global standard for the assurance of sustainability reports. The new standard, which is expected to be finalized and published by the end of 2024, will help auditors ensure the accuracy of companies’ sustainability claims, including key areas such as greenhouse gas emissions and human rights. ISSA 5000 aligns with the International Ethics Standards Board for Accountants’ (IESBA) sustainability-related standards, establishing a global baseline for sustainability assurance.
Recommendation:
Auditors should familiarize themselves with ISSA 5000 and related IESBA standards to ensure accurate, ethical, and globally aligned sustainability assurance, especially as these requirements become mandatory in many regions.
CEAOB issues new guidelines on limited assurance for sustainability reporting
The Committee of European Auditing Oversight Bodies (CEAOB) has issued interim guidance on limited assurance for sustainability reporting. These guidelines will help auditors and assurance providers navigate the requirements of the Corporate Sustainability Reporting Directive (CSRD) until formal standards are adopted in 2026. The guidelines cover key issues such as ethics, fraud risk, material misstatement and forward-looking information. They aim to ensure consistent practices across EU member states and improve the reliability of sustainability reports, particularly those prepared under the European Sustainability Reporting Standards (ESRS).
Recommendation:
Auditors should familiarize themselves with the CEAOB guidelines to ensure proper compliance with the limited assurance requirements of the CSRD. By focusing on ethical standards and targeted risk assessments, they can enhance the quality and reliability of sustainability reports during this transitional period.
Simona Reggiani
- Italy
- Ecovis in Genoa
- +39 010 55 32 41