Guide to Sustainable Financing by Ispra Scientists
In an effort to support businesses and investors in navigating the evolving landscape of environmental sustainability, a new handbook titled "The Environmental Challenge for Sustainable Finance" has been released. Prepared by researchers from the Higher Institute for Environmental Protection and Research, Ispra, this comprehensive guide provides structured guidelines and tools for reporting on environmental sustainability under the new European regulatory framework.
The handbook aligns primarily with the Sustainable Finance Disclosure Regulation (SFDR) and related standards, offering technical support for implementing sustainability discipline. It covers key topics related to both environment and finance, and is available for download from the Ispra website.
One of the key features of the handbook is the Principal Adverse Impacts (PAIs) Reporting. Entities must publish a dedicated statement following a prescribed disclosure framework, comprising six sections, detailing the summary, description of PAIs, policies to identify and prioritize them, engagement policies, references to international standards, and a historical comparison.
Another significant aspect is the Double Materiality Analysis, which requires reporting to consider both how sustainability risks affect the company (financial materiality) and how the company impacts the environment (environmental materiality).
The handbook also encourages entities to disclose detailed information on climate-related transition strategies under IFRS S2 standards, including mitigation and adaptation plans, and whether the entity has a strategy for transitioning to a low-carbon economy.
Moreover, the handbook recommends that environmental impact reporting should be clear, quantifiable, and transparent, based on recognized methodologies such as life cycle analysis, including avoided emissions assessments and other performance indicators.
The framework emphasizes transparency, standardization, and alignment with internationally recognized standards while helping businesses meet evolving regulatory demands and investor expectations in sustainable finance. The focus on standardized disclosures, rigorous indicator use, and governance policies supports comparability and reliability in environmental sustainability reporting under the new European regulations.
The handbook also includes guidelines for the coexistence of finance and sustainability, tools for businesses, investors, and Supervisory Authorities, and new rules and indicators to respect and goals to achieve. It covers the sectors included in the taxonomy: energy, transport, water and waste, buildings, agriculture and forests, ICT, industry and materials. It also discusses the Paris Agreement, European Green Deal, Sustainable Finance Action Plan, NFRD CSRD directives, and SFDR and Taxonomy EU.
With the new handbook, businesses and investors now have a valuable resource to start the process of reporting on environmental sustainability and to illustrate a scenario where finance and sustainability coexist. The handbook aims to help navigate the changing world under the banner of sustainability, addressing the risks of sustainability on business life and the choices of investors.
- The new handbook titled "The Environmental Challenge for Sustainable Finance" offers technical support for businesses and investors, aligning with the Sustainable Finance Disclosure Regulation (SFDR) and related standards.
- One of the key features of the handbook is the Principal Adverse Impacts (PAIs) Reporting, which requires entities to publish a detailed statement on the impact of their activities on the environment.
- The handbook also encourages entities to disclose detailed information on climate-related transition strategies, including mitigation and adaptation plans, and whether the entity has a strategy for transitioning to a low-carbon economy.
- The framework proposed in the handbook emphasizes transparency, standardization, and alignment with internationally recognized standards, aiming to help businesses meet evolving regulatory demands and investor expectations in sustainable finance.
