Summary of the ESG Bird & Bird Academy

Introduction

The ESG Bird & Bird Academy met once again on 21 November 2023. During a workshop entitled "Part I - ESG Legislation Vol. 2. Part II - Interpretation of ESG Legislation", we gave a brief summary of the ESG legislative framework, focusing on the three directives that form its core:

• Directive 2013/34/EU of the European Parliament and of the Council of 26 June 2013 on the annual financial statements, consolidated financial statements and related reports of certain types of undertakings, amending Directive 2006/43/EC of the European Parliament and of the Council and repealing Council Directives 78/660/EEC and 83/349/EEC;
• The NFRD Directive – Directive 2014/95/EU of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups; and
• The CSRD Directive - Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting.

The preambles of these three directives provide valuable information on the process of adopting and implementing ESG (environmental, social and governance) principles. We used these as a basis for discussing key aspects of each of the directives and their implications for companies and institutions.

Directive 2013/34/EU: we focused on the mandatory disclosure of non-financial information. We discussed what has to be reported, reporting methods, and the benefits of transparency. This directive is crucial for building stakeholder trust and sustainable development.

The NFRD Directive: we highlighted its role in providing guidelines for non-financial reporting, and looked at a company’s role in disclosing information on ESG issues.

The CSRD Directive: in the next sessions, we will interpret its objectives and assumptions in the context of all of the ESG regulations.

A directive as secondary EU law

We emphasised that a directive is an act of secondary EU law aimed at harmonising the rules of the Member States, and delved into the structure of directives: preamble, articles and annexes.

The preamble, which is a ceremonial introduction to a legislative act, plays an important role in how the law should be interpreted:

• It suggests a direction for interpreting the regulations and sheds light on the directive as a whole;
• It may contain justifications of specific legal solutions that make it easier to understand the logical sequence of the provisions;
• It indicates what interests were taken into account in the legislative process; these affect how the legal and institutional context is to be understood;
• it highlights the social and economic context from which a need to adopt the directive may have arisen, including information on public consultations and expert opinions from recognised authorities or research institutions, etc.
• It often makes reference to the legal bases on which it stands, furthering our understanding of its legal and institutional context.

Attorneys Sandra Sekuła-Barańska and Michał Szczepanowski drew attention to the key terms in ESG directives, such as: transposition, implementation, incorporation into the national legal system, transposition deadline, and harmonisation of legislation.

All in all, the session showed that understanding the structure and role of the preamble in the ESG directives is crucial when navigating the various ESG regulations, whether in legal practice or business.

The ESG Bird & Bird Academy helps students acquire the knowledge and tools they need to effectively manage and implement the sustainable development regulations.