ESG and Sustainability Disclosure, Reporting and Regulation

Introduction

The objectives of this course are five fold

• Identify the dimensions of an organization ESG impact or performance: the activities/operations of the firm which create or destroy environmental and/or social value and the social, environmental and regulatory factors in that affect the organization’s activities and performance)
• Become familiar with the different regulatory and voluntary frameworks used to assess, disclose and report ESG risks, and the economic tools to measure the positive and negative impacts of ESG risks
• Provide an in dept coverage of the EU Taxonomy Regulation (TR), the associated directives for Non Financial Reporting Directive (NFRD) and the projected Corporate Sustainability Reporting Directive (CSRD) for corporations, as well as the Sustainable Finance Disclosure Regulation (SFDR) for financial products. Services.
• Cover the principles of greenhouse gas (GHG) and Carbon disclosures as proposed by the TCFD.
• Describe the main sources of ESG performance ratings, and discuss their uses and limitations.

A useful framework to help identify the ESG challenges and opportunities of organization is the UN Sustainable Development Goals (SDG). In the process of discussing how EU ESG related regulations apply to EU and non‐EU firms, we will develop and discuss specific examples of the application of the Taxonomy Regulation to both operating firms and financial products. By the same token discussion of the NFRD and CSRD, as well as of the SFDR and their implementation will be based on practical examples drawn from the European and Norwegian firms.

Course content

• General introduction to the sources of ESG Risk for corporations and investors
• Why measure ESG and sustainability risks and opportunities
  1. Risk management and strategic opportunites
  2. Regulatory requirements: EU and associated countries (Norway)
• Assessing ESG Risks and Opportunities
  1. Identifying an organization’s main impacts: where the organization creates (positive impact) or destroys value (negative impact), in terms of financial, environmental and social performance.
  2. Identifying the external social, environmental and regulatory factors that affect the organization’s operations
  3. Measuring impact and identifying what really matters.
     • Measurement frameworks: UN SDG, <IR>, ….
     • Materiality determination: SASB, …
• Reporting and Disclosing ESG Performance
  1. Voluntary Reporting Standards: <IR>, TCFD (Task force on Climate related Financial Disclosures), etc
  2. Sustainability compliance: EU Taxonomy
  3. Regulatory Disclosure Requirements
     • For corporations: EU Taxonomy, NFRD, CSRD
     • For financial products: EU Taxonomy, SFDR
• An integrated approach to ESG disclosure and risk management: the TCFD approach on governance, strategy and performance indicators on climate related impact.
• Assessing corporate ESG performance: ratings
  1. Main firm ESG performance data sources: KLD, Sustainalytics, Robeco, Refinitiv, Bloomberg, …
  2. Strengths and weaknesses of different sources.
  3. Parsing and combining ESG performance data for improved assessments.