Global Trustee and Fiduciary Services Bite-Sized Issue 8 2023

Global Trustee and Fiduciary Services Bite-Sized | Issue 8 | 2023 12 QUICK LINKS ANTI-MONEY LAUNDERING CBDC COSTS & CHARGES CRYPTOASSETS CULTURE & CONDUCT CYBERSECURITY EMIR FINTECH FSB FUND LIQUIDITY MIFID II/MIFIR SUSTAINABLE FINANCE/ ESG AUSTRALIA ASIA IRELAND NORTH AMERICA UNITED KINGDOM FRC Publishes Thematic Review on Quality of Climate-related Metrics and Targets Disclosures On 26 July 2023, the Financial Reporting Council (FRC) published a thematic review assessing the quality and maturity of climate-related metrics and targets disclosures. The review analysed the Taskforce on Climate-related Financial Disclosures (TCFD) disclosures from 2022 annual reports across four sectors – materials and buildings, energy, banks, and asset managers. The review identifies areas of better reporting practices as well as opportunities for improvement. The FRC outlined there was an incremental improvement in the quality of companies’ disclosure of net zero commitments and interim emissions targets. However, the FRC said that disclosures of concrete actions and milestones to meet targets were sometimes unclear, and comparability of metrics between companies remains challenging. The FRC review also highlights that: • Given the large volume of information presented, many companies are finding it challenging to explain their plans for transitioning to a low-carbon economy clearly and concisely; and • That explanations of how climate targets affect financial statements still need improvement; for example, boilerplate language on climate being ‘considered’ provides little insight on impacts. Link to Media Release here Link to Thematic Review here BaFin Issues Leaflet on Mapping Approach for Certain Life Insurance Pension Entities Under SFDR On 25 July 2023, the German Federal Financial Supervisory Authority (BaFin) published a leaflet on the application of the mapping approach by certain life insurance and pension entities under the EU Sustainable Finance Disclosure Regulation. The BaFin outlines that the mapping approach is optional and describes how specific investments can be allocated to specific financial products for disclosure purposes only. The BaFin describe that the focus is on classic life insurance products that are advertised with at least ecological and/ or social features. Link to BaFin Homepage here Link to Announcement (German) here Link to Leaflet (German) here IFRS Foundation: Comparison of IFRS S2 with TCFD Recommendations On 24 July 2023 the International Financial Reporting Standards Foundation (IFRS Foundation) published a comparison of the requirements in IFRS S2 Climate-related Disclosures , issued by the International Sustainability Standards Board (ISSB), and the recommendations of the Task Force on Climate-related Financial Disclosures (TFCD). The comparison found that the requirements in IFRS S2 are broadly consistent with the four core recommendations and 11 recommended disclosures published by the TFCD. Areas where IFRS S2 differs from the TCFD recommendations reflect differences between IFRS S2 and the TCFD’s guidance, not the TCFD’s core recommendations or recommended disclosures. The IFRS explains that companies that apply the ISSB Standards will meet the TCFD recommendations and so do not need to apply the TCFD recommendations in addition to the ISSB Standards. The IFRS also explains that, although the work of the TCFD is completed, the TCFD recommendations remain available for companies to use should they choose to, and some companies may still be required to use the TCFD recommendations. Going forward, the Financial Stability Board has asked the IFRS Foundation to take over the monitoring of the progress on companies’ climate-related disclosures from the TCFD. Link to Comparison here