1.
December 20 | Tweet @CDSBGlobal
Presentation of key
findings of the review
Fiona Quinlan, Technical Manager

2.
December 20 | Tweet @CDSBGlobal
CDSB’s third annual review of
environmental disclosure in the EU
• CDSB has completed three annual reviews of environmental reporting
under the EU Non-Financial Reporting Directive (NFRD), to assess
its effectiveness and track progress in disclosure;
• The reviews provide evidence to policymakers on implementation of
the Directive and its effectiveness in providing decision-useful
environmental information to investors; and
• They also support companies globally through identifying good
practices in environmental disclosure, as well providing direct
feedback to individual companies included in the assessment.
• 2020 disclosures were the first following the introduction of the
Directive’s non-binding guidelines on reporting climate-related
information in 2019.
The state of EU disclosure in 2020

3.
December 20 | Tweet @CDSBGlobal
CDSB conducted a detailed review of 50
EU companies’ reports
The state of EU disclosure in 2020 3
Manual review of
reports in detail
NFRD content
categories and TCFD
Mainstream reports
US$ 3.5 trillion market
capitalisation

4.
December 20 | Tweet @CDSBGlobal
Findings summary
4
• Some aspects of disclosure have improved, but
other aspects of disclosure have not progressed
since 2019;
• Key gaps remain on TCFD aligned risk
disclosure, use of scenario analysis and
disclosure on topics beyond climate;
• Information on policies and risks relating to
deforestation and forest degradation or
biodiversity not commonly provided;
• Overall improvements are still required to
completeness, coherence and clear application
of materiality to support informed investor
decision-making.
The state of EU disclosure in 2020

5.
December 20 | Tweet @CDSBGlobal
Business model
• Growth in the number of companies providing
clear and specific disclosures on their
business model;
• However 48% continue to provide no or only
generic information which did not fully explain
the significance of environmental matters for
overall value creation;
• 78% included information at the outset of their
mainstream report.
The state of EU disclosure in 2020 5
A growing number of companies are able to demonstrate strategic integration of
environmental issues into their business model

6.
December 20 | Tweet @CDSBGlobal
Policies and due diligence
• 100% disclosed environmental policies and
94% due diligence;
• Clear policies key to driving a well-connected
and structured disclosure;
• 70% disclosed both board and management
responsibilities;
• Others disclosed only general or operational
due diligence; and
• Climate or environment-specific aspects of
governance often not clear.
The state of EU disclosure in 2020 6
Generally a stronger area of disclosure, but interpretation of the requirements varies

7.
December 20 | Tweet @CDSBGlobal
Policy outcomes
• 100% report some outcomes and 86% link
this back to their stated environmental
policies;
• Three quarters make use of indicators and
performance targets;
• Summary tables are an effective means of
concisely reporting progress;
• Balance of information that addresses
challenges often absent; and
• Considerable variations in reporting format
both within and across reports.
The state of EU disclosure in 2020 7
Many are balancing quantitative and qualitative disclosure well, but consistency and
material emphasis are often lacking

8.
December 20 | Tweet @CDSBGlobal
Principal risks
• Majority do disclose at least one principal
environmental risk and 74% now consider
both physical and transition climate risks;
• Risk descriptions often generic;
• 96% do not clarify risk time horizons;
• Business-specific impacts of identified risks
often not quantified or clarified; and
• Cross reference and integration between non-
financial and other risk disclosures key to
ensuring coherence.
The state of EU disclosure in 2020 8
Great specificity and quantification in environmental and climate risk disclosures is
required

9.
December 20 | Tweet @CDSBGlobal
Key performance indicators (KPIs)
• 74% now provide Scope 3 emissions
reporting, compared to 54% in 2019;
• 24% disclose quantitative environmental
targets linked to board remuneration;
• Climate-related financial metrics, such as low
carbon Capex or revenue still not commonly
reported; and
• Stark disparity in the inclusion of metrics on
biodiversity or forestry issues compared to
more established environmental topics.
The state of EU disclosure in 2020 9
Carbon, energy and water commonly disclosed, but few reporting on wider
environmental topics relating to nature

10.
December 20 | Tweet @CDSBGlobal
TCFD disclosure
The state of EU disclosure in 2020 10
68% now reference TCFD in their disclosures, but adoption of the
recommendations in full remains elusive
• Governance: 70% provide both Board and
Management level responsibilities;
• Strategy: Little change in the number clearly
disclosing resilience under different scenarios,
although 52% now provide some information;
• Risk Management: 88% now integrate
climate into risk management and 70%
disclose how they manage specific climate
risks;
• Metrics & Targets: 100% report GHG
emissions, but only 36% reporting financial
metrics linked to climate

11.
December 20 | Tweet @CDSBGlobal
Materiality and reporting format
The state of EU disclosure in 2020 11
Mainstream disclosure is the norm, but materiality approaches vary
• 82% provide their environmental disclosure
under the NFRD in the mainstream report;
• Average of 19 pages on environment in the
mainstream report, up from 14 in 2019;
• Growth in the number applying double
materiality, following the release of guidelines;
• Varied materiality perspective create
challenges in the comparability of reports; and
• Materiality perspective often had to be inferred
from vague information.

12.
December 20 | Tweet @CDSBGlobal
Recommendations for companies
The state of EU disclosure in 2020 12
1. Accompany policies with specific and measurable commitments which can then be used to structure non-
financial disclosures and provide transparent progress updates;
2. Disclose information on environment and climate risks in a business-specific manner, clarifying impacts
and time horizons
3. Focus disclosure of performance indicators in the mainstream report on those which are used to
measure progress on environment and climate policies and that are linked to material risks
4. Adopt the TCFD recommended disclosures in full, in particular integrating information into the
mainstream report where it is deemed material
5. Clarify the materiality of environmental and climate-related issues to the business, explaining how
mainstream, and wider sustainability reporting if appropriate, is informed by this; and
6. Disclose environmental and climate-related information deemed to be financially material in the
mainstream report, to ensure it is available to an investor audience and can be considered holistically
alongside overall strategic and financial performance.

13.
December 20 | Tweet @CDSBGlobal
Enhanced reporting Europe campaign
13
Access regular support from
experts in climate and
environmental mainstream
disclosure.
Access to experts
Improve climate and
environmental disclosure using
CDSB feedback.
Understand the policy context
and improve preparedness for
regulation and application.
Disclosure feedback Policy briefings
Learn from peers and experts
through country and region-
specific workshops.
Obtain resources directly post-
launch and notifications on
upcoming publications.
Resources Internal support
Receive tailored briefings for
reporting teams focused on
sustainability and/or finance
functions.
Workshops
https://www.cdsb.net/what-we-do/enhanced-reporting-europe
Nordic TCFD Reporting Summit

14.
December 20 | Tweet @CDSBGlobal
Recommendations for policymakers
The state of EU disclosure in 2020 14
1. Remove the exemption allowing the non-financial statement to be reported outside the mainstream
report, to support accessibility, consistency and comparability of disclosures;
2. Define key terms used in the Directive, including ‘policies’, ‘due diligence’ and ‘policy outcomes’ to ensure
consistent and comparable application of the content categories;
3. Explicitly embed the TCFD recommendations into the Directive, as non-binding guidelines are not driving
uptake at the necessary pace and scale to support investor decision-making;
4. Emphasise in the revision of the Directive the importance of ensuring that the different content elements
provide a connected overall view on how companies ensure sustainable long-term value creation;
5. Incentivise companies to do more to tackle environmental and climate issues, through ambitious policies
and rigorous due diligence processes, by ensuring policy coherence between the NFRD review and the
upcoming EU initiative on corporate governance; and
6. Ensure that environmental issues beyond climate, including biodiversity, water and forests, are clearly
integrated and addressed in the revision of the NFRD, to support wider EU policies.

15.
December 20 | Tweet @CDSBGlobal
Contact us
Fiona Quinlan
Technical Manager
Fiona.Quinlan@cdsb.net
Nontokozo Khumalo
Corporate Engagement Manager
Nontokozo.Khumalo@cdsb.net
Axelle Blanchard
Policy Manager
Axelle.Blanchard@cdsb.net
With the contribution of the
LIFE Programme of the
European Union.

16.
December 20 | Tweet @CDSBGlobal
Alliance for Corporate
Transparency
Filip Gregor, Head of Responsible
Companies Section at Frank Bold

17.
Content partners
Advisory group
Coordinator Technical partner

18.
18
Research on sustainability disclosures of EU
companies

19.
19
Scope
Financials
Energy and resource
extraction
Resource
transformation
Infrastructure
Transportation
Food &
Beverages

20.
Accessibility

21.
Strategic
perspective

22.
Climate change policies, outcomes and risks
Policies
Risks
Outcome
s
• 16% explain alignment with
science-based targets (41%
in the case of Spanish
companies)
• 32% describe specific risks
(but only 6.6% use below 2°C
scenario in their risk
assessment)
22

23.
Climate policies & procedures
23

24.
24
Risks

25.
25
Cross-regional analysis

26.
26
Other implementation issues
• No consistent application of criteria for either side of double
materiality
• Lack of comparability on Scope 3, GHG intensity, risk
exposure KPIs in financial sector
• Reporting on natural resources and biodiversity is not
contextualised

27.
27
Thank you!
Alliance for Corporate Transparency
Website: www.allianceforcorporatetransparency.org
Database: https://bit.ly/2Upitsh
Research report: https://bit.ly/3eM4lCN
Newsletter: http://eepurl.com/dJPBjQ
Frank Bold
https://en.frankbold.org/our-work/programme/responsible-companies
Contact: filip.gregor@frankbold.org
@EUCorpReporting
@purposeofcorp

28.
December 20 | Tweet @CDSBGlobal
Thank you!
With the contribution of the
LIFE Programme of the
European Union.
Follow us on social media
Subscribe to our newsletter
www.cdsb.net/newsletter
Contact us: info@cdsb.net

29.
December 20 | Tweet @CDSBGlobal
www.cdsb.net/NFRD2020