In the Loop: Corporates and CSRD, Indonesia’s JETP, empty net-zero promises

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Take my hand: Corporates and CSRD

EFRAG’s draft materiality assessment guidance is an improvement but “still too complex”, according to a corporate representative on the EU standard setter’s sustainability reporting board (SRB).

At a meeting this week, Philip International’s Simon Braaksma praised the latest iteration, describing the previous draft as “not presentable”.

Materiality assessments will be critical to the EU’s incoming corporate sustainability reporting standards (CSRD) following the European Commission’s decision to ditch mandatory reporting.

“We are writing this document for 49,000 companies that don’t have a clue what the materiality assessment is, let alone a double materiality assessment,” Braaksma said. “So we really need to take people by the hand.”

There was also grumbling among members of the SRB about the decision to publish the draft before their meeting.

As a person familiar told RI, given that the first CSRD reporting cycle starts in a few months, “companies and consultants will use it and refer to it, no matter how many watermarks and disclaimers they put in that is still a draft”.

The week in RI

A variety of hot-button ESG topics received an airing in RI this week.

On Monday, we reported that asset managers and Carbon Tracker had criticised the UK government for “mixed messages” on climate policy as part of a parliamentary investigation into net-zero investing.

Fox News was granted a reprieve after committing to hire a law firm to assess organisational risks. It had earlier faced a shareholder proposal from Arjuna Capital on the topic following the channel’s coverage of debunked election-rigging claims. This has now been withdrawn.

Continuing a theme from last week, company filings revealed that the PRI sees anti-ESG litigation as a threat to its operations.

There were also developments in a long-running saga involving SBTi, which saw the target-setting NGO agree to hear a complaint more than two years after its submission.

Meanwhile, deep-dive features covered the readiness of accountants to meet incoming demand for assurance of sustainability reports, as required under the EU’s CSRD, and the prospects of a US corporate governance push to give investors more time to vote at AGMs.

Quote of the week

“The climate change agenda is a hoax”

Strive AM co-founder Vivek Ramaswamy played the climate card in Wednesday’s US Republican presidential debate – to a surprisingly muted response from the otherwise supportive Fox News studio audience

Indonesia’s JETP delay

Indonesia and its international partners missed last week’s deadline to unveil investment plans for the $20 billion the country can access via the Just Energy Transition Partnership’s (JETP) climate finance mechanism, blaming a lack of data for the delay. Reports have also described tense behind-the-scenes disagreement over financing terms and amounts.

This does not come as a surprise to Putra Adhiguna, an analyst from the Institute for Energy Economics and Financial Analysis.

The deadline “has always sounded like a moonshot”, he said, particularly with the rising popularity of coal within local industries. But the delay could also allow time to address issues such as designing a reasonable grant component and ensure private financing capacity, he added.

On their part, the JETP organisers have characterised the delay as positive and are now considering a public comment period before finalising the plans, according to documents seen by RI.

Anjali Viswamohanan, policy director of the Asia Investor Group on Climate Change has said that a “participatory and transparent process in engaging with communities” is essential to understanding the social impacts of the transition. Balancing this with delivering investment returns would be a “significant challenge” for the initiative, she said.

‘Stupidity, cynicism or true belief?’

Net-zero commitments are driven by one of three things: stupidity, cynicism or true belief – that is, according to a representative of a large North American investor which has not made such a pledge.

Speaking to RI, they said their board was unwilling to sign up to net zero. “How can we commit to something which is so complex and not in our control?” they asked.

Today’s letter was prepared by the RI editorial team.