What will the collapse of Atlantic currents mean for the Nordics?

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Atlantic currents redistribute heat and cold. If it stops working, the results could be catastrophic. Source: Woods Hole Oceanographic Institution

New research suggests the risk of a breakdown in North Atlantic currents to be nearly four times higher than previously thought.

The most recent IPCC report said that the collapse of the AMOC was less than 10% likely before 2100. A new study, Shutdown of northern Atlantic overturning after 2100 following deep mixing collapse in CMIP6 projections, examines a longer timeframe and says that the chances are much higher. In the best-case scenario, with lower carbon emissions, a shutdown of the northern AMOC is still 25% likely by 2300. If emissions continue to increase, as they are currently, the likelihood of a shutdown jumps to 70%.

The Atlantic Meridional Overturning Circulation (AMOC) is the main ocean current system in the Atlantic. It brings warm salty water to Northern Europe from around the Gulf of Mexico (hence the name Gulf Stream) and returns cold less-salty water to the south.

As GHG emissions continue, the planet warms and ice sheets melt, releasing fresh water into the oceans. It is believed that this influx of fresh water will disrupt the entire system, breaking this process which redistributes heat to the North.

There is uncertainty here, because scientists aren’t sure 1) if AMOC will collapse, 2) when it will collapse and 3) what will happen if it does. Generally, current research suggests the Nordics will suffer from the following.

  • Overall cooling, particularly in the winter
  • More intense cold extremes; winter storms will strengthen
  • Larger day-to-day temperature fluctuations

Some of the possible results of these changes include:

  • Greater energy needs for heating
  • Higher maintenance costs on buildings, vehicles and infrastructure
  • More likelihood of power failures
  • Higher insurance costs
  • More transport disruptions
  • Damage to agriculture, aquaculture and forestry industries

Climate change really does have a financial cost to people, businesses and society. Any company doing long-term planning should be taking these increased risks and costs into consideration.

Want to talk green?

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How will America’s gutting of climate science impact businesses?

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Artist rendition of the Orbiting Carbon Observatory satellite OCO-2. Image by John Howard / JPL.

The United States is probably the world’s largest contributor to global climate change science and research. It provides a big chunk of ground-based data and is the largest single provider of satellite data. About a fifth of climate modelling and research comes out of American institutions. Much of this is on the chopping block.

The current American administration is proposing huge budget cuts to the National Oceanic and Atmospheric Administration, NASA, the National Science Foundation, the Environmental Protection Agency and many academic research grants and programmes focusing on the climate. Perfectly good satellites, like the Orbiting Carbon Observatory instruments, are planned to be destroyed, according to NPR. NASA alone will have €2.9 billion cut from its science budget.

The results of this will include the loss of critical data which is used by everyone from weather forecasters to farmers to insurance companies. In corporate reporting, many companies rely upon these datasets for their disclosures, risk analysis and transition plans. Much of the high-quality data collected by American government institutions is open access, free for anyone to use. Alternative sources, if even available, could be expensive and less reliable.

In recent years America has chosen to stop being a global leader in many areas. Could others pick up the slack?

China has its Fengyun and Gaofen series of satellites, which focus on meteorology and monitoring, respectively. India also has a fleet of modern Earth-observation satellites. Europe has EUMETSAT, the agency for monitoring weather, climate and the environment from space. It has a budget of €763 million, which is only about 23% of NASA’s science budget even after the cuts.

Some private companies, such as MSCI, S&P and a partnership between Intercontinental Exchange and Dun & Bradstreet, will sell climate data to businesses. Overall, though, these sources are likely to be poor substitutes compared to what we used to get.

Although the proposed dismantling of America’s climate science infrastructure has not yet been approved by Congress, it would be safe to start planning for the worst.

Want to talk green?

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EFRAG simplification 2

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EFRAG is working to make corporate sustainability reporting simpler and, in some cases, clearer and more relevant.

I’ve had the opportunity to go through the proposed new ESRS 2 and ESG standards. Again, this is not a comprehensive overview but some points which I found interesting.

Less granular approach to narrative disclosures

I like this change, as I like the narrative side of the reports.

Options for the disclosure of anticipated financial effects

I’m not sure about this one. The sustainability report is supposed to complement the financial report, but the problem is that quantifying financial effects is not easy. There is a lack of mature methodologies as well as concerns from some companies about disclosing commercially sensitive information. EFRAG has specifically asked for feedback on this, and I am interested to see what preparers and users think.

More focused reporting

Good; some of the previous language was too vague and all-encompassing.

Flexible approach to granularity and in terms of the level of aggregation

Note this does not apply everywhere, but it does add some power back to the report writer.

Voluntary datapoints are deleted

At first glance, the deleted datapoints were not uniform. For instance, I saw very little cut from the beginning of E1 Climate Change, but quite a bit from E2 Pollution. I began to carefully list and count the deleted datapoints, but there is still a lot of ambiguity.

Clarity between direct data and estimates

Another good change; I use many estimates for VSME reports for small businesses.

Public consultation

EFRAG has a questionnaire for preparers and users to give feedback on the proposed changes. The deadline for submission is 29 September 2025.

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First thoughts on the ESRS 1 simplification

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The proposed changes aren’t exactly cutting the Gordian Knot, but they are welcome improvements.

EFRAG has released their proposed simplification of ESRS. Here are my initial thoughts of the proposed ESRS 1 amendments.

EFRAG has boasted that their revision has:

  • Reduced mandatory datapoints by 57%
  • Cut full set of disclosures by 68%
  • Shortened the total length by 55%.

This will not be a comprehensive examination of the changes, but what I find interesting.

Undue cost or effort is clearer (sort of)

The idea is that complying with the CSRD shouldn’t be too big of a burden. ‘Undue cost or effort’ isn’t precisely defined, but we do have some clarifications. Basically, if you already have the information (or should have it), then it shouldn’t be a problem to use it for your sustainability report.

For example, a company might already have the information from:

  • Making their financial statements
  • Operations
  • Setting their strategy
  • Conducting sustainability due diligence
  • Managing impacts, risks and opportunities.

See ESRS Chapter 7.3

Member states could offer limited opt-outs

This is a curious addition in the section regarding classified and sensitive IP. It gives EU member states the ability to give companies the right to limit information if its release could be ‘seriously prejudicial to the commercial position’ of the company, provided the omission does not prevent a good understanding of the company.

There was already provisions for classified information, so it is interesting that this new section was added for individual countries to opt-out.

See ESRS Chapter 7.8

Sub-subtopics simplified

There has been some news about EFRAG cutting the sub-subtopics, but many were not exactly deleted. Here’s a simplified example.

Old

  1. Own workforce
    1. Working conditions
      • Secure employment
      • Working time
      • Work-life balance
      • Adequate wages

New

  1. Own workforce and workforce in the value chain
    1. Working conditions (adequate wages, work-life balance, working time, secure employment)

In this case, the sub-subtopics weren’t eliminated at all; they were simply moved up to the subtopic level. There isn’t anything wrong with this, but it is a bit disingenuous to claim this will reduce the burden on companies. The only thing this might change is the report’s layout.

See new Appendix A.

Miscellaneous improvements

  • Less unnecessary direct data collection from value chain
  • Simplify rules for M&A
  • Common sense relief for metrics
  • Executive summary allowed

I worked on several executive summaries which were unofficial, but now the rules specifically allow them as part of the reports.

Conclusion

Overall, I like what EFRAG has done. I just mentioned a few changes that caught my attention, but there are many other updates, as well as a big effort to simplify the language, clarify ambiguities and reorganise the information. I’ll follow up this post with one about ESRS 2.

Of course, keep in mind that these are only proposed changes. Nothing is official yet.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

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Swedish companies lead the way with SBTi commitments

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I used the SBTi dashboard to see how companies in the Nordics compare. It is probably no surprise that Sweden leads the way, but I didn’t expect Norway to be in last place.

  • Sweden: 482
  • Denmark: 306
  • Finland: 191
  • Norway: 157
  • Iceland: 12

In fact, Swedish companies make up for 42% of all 1,148 Nordics who have set targets or commitments.

If we compare these commitments to the relative size of our economies, Sweden still leads. Probably the big surprise to me is Norway. By many measures, Norway leads the world in sustainability initiatives. So why are they in last place here?

An interesting study titled Climate change adaptation in Norwegian businesses – Awareness, integration and barriers from last year doesn’t address SBTi directly, but looks at perceived barriers to climate change adaptation in Norwegian companies. Their analysis shows the main problems are:

  1. Costs
  2. Uncertainty related to effectiveness
  3. Staffing
  4. Lack of knowledge and competence
  5. Unclear regulations

Maybe the real problem is how net zero doesn’t conceptually work with oil and gas, which makes up about 20% of Norwegian GDP. The good news is that at least two of the biggest Norwegian firms, Kongsberg Gruppen and Telenor, have made SBTi commitments. SBTi just released their new standards for financial institutions, which should encourage other industries to commit.

Want to talk green?

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Greenwashing and Greta

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Don’t make an environmental claim about your product or company unless it can pass the Greta Test. Photo by Kushal Das via Wikipedia.

Companies have been keeping an eye on two greenwashing proposals coming out of Brussels this year. One has passed and one has not. Here is what is happening with the Green Claims Directive (GCD) and the Empowering Consumers for the Green Transition (ECGT) rules.

There seems to be a pattern of reducing sustainability rules in the EU recently. Corporate sustainability reporting is being cut back via the coming CSRD update, and now rules against deceptive environmental marketing are “on pause”, to use the polite terminology.

When it comes to greenwashing, there are two different proposals in which companies should be aware. The Empowering Consumers for the Green Transition (ECGT) set rules on environmental claims while the Green Claims Directive (GCD) was to explain how claims could be verified. The plan was for the GCD to require science-based verification, labelling schemes and third-party verification.

The GCD isn’t dead, but it isn’t breathing

The European People’s Party felt the GCD was too burdensome, particularly towards microenterprises. The main problem was the requirement for third-party verification of environmental claims, which could be expensive and time-consuming. Negotiations were paused and Italy has withdrawn support for the proposal.

The Commission has clarified the GCD has not been formally withdrawn, but its status is uncertain. This occurred close to the end of Poland’s presidency of the EU, so they passed the problem on to Denmark to worry about.

There is nothing specific about the GCD in Denmark’s programme for their presidency, although they pledge to cut back on the complexity of regulations. It is fair to wait and see if the GCD will be revived, but at this point it is flatlining and companies should treat it as such.

The ECGT is alive and well

However, the GCD was only one part of the anti-greenwashing agenda. The ECGT has been passed and companies must be compliant by September 2026. This updates the Unfair Commercial Practices Directive and the Consumer Rights Directive.

(Note the ECGT pertains to more consumer protections than greenwashing, such as software updates, planned obsolescence and the right to repair. I will only discuss greenwashing here.)

The ECGT updates the other directives to prohibit some specific acts, including:

1. Displaying a sustainability label that is not based on a certification scheme or established by public authorities.

2. Making generic, unproven environmental claims.

These are vague claims that suggest good environmental performance without providing any reliable proof, such as:

  • environmentally friendly
  • eco-friendly
  • green
  • nature’s friend
  • ecological
  • environmentally correct
  • climate friendly
  • gentle on the environment
  • carbon friendly
  • energy efficient
  • biodegradable
  • biobased
  • conscious
  • sustainable
  • responsible

These are not black-listed terms; they are merely used as examples when a claim might need to be verified. For example, it is perfectly appropriate to use the term ‘energy efficient’ if a product meets the requirements set out in the energy labelling directive.

3. Making an environmental claim about the entire product or business when it concerns only a certain aspect of the product or business.

The rules give some examples:

  • Claiming a product is ‘made with recycled material’, giving the impression that the entire product is made of recycled material, when in fact only the packaging is made of recycled material.
  • When a company suggests it is only using renewable energy when in fact it uses multiple sources, including fossil fuels.

4. Claiming that offsetting greenhouse gas emissions makes a product neutral, reduced or positive to the environment.

These claims are allowed only when they are based on lifecycle impact assessments of the product, and not based on offsetting emissions outside the product’s value chain. The update gives a few terms to be wary of in this context:

  • climate neutral
  • CO2 neutral certified
  • carbon positive
  • climate net zero
  • climate compensated
  • reduced climate impact
  • limited CO2 footprint

5. Presenting requirements imposed by law as a distinctive feature of the product or service.

The example they give is:

  • Advertising a product as not having a specific chemical, when that chemical is already forbidden by law.

What would Greta say?

What’s next? The ECGT already includes independent third-party verification, such as for forward-looking environmental statements, but with the GCD in a coma it isn’t clear how this will work in practice. If nothing else, companies should fall back on the existing rules against deceptive marketing and use their best judgement. If you aren’t sure about a claim, ask yourself what Greta Thunberg would say.

This is a rule of thumb I suggest for clients sometimes. Once I was in a meeting with executives from a major Nordic company who had contracted me to write an article for them. They wanted a rather eyebrow-raising environmental claim in their story. I suggested they ask themselves the following question.

What would Greta Thunberg say if she read this? Would you be happy with an environmental activist such as her discussing your claim in front of the media?

The executives looked at each other and changed their minds.

Sometimes the simplest solutions are the best. If your environmental claim won’t pass the Greta test, then maybe you shouldn’t claim it.

Want to talk green?

I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

info at davidjcord.com

Status of ESRS simplification

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A Green MEP is denounced in the European Parliament for suggesting the CSRD remain unchanged (dramatised).

In my career I have read (and contributed to) thousands of annual financial reports. I think I have become quite good at efficiently getting the information I want out of them. I could not be as quick and efficient with the current EU sustainability reports. Luckily help is on the way.

The new CSRD sustainability reports are problematic. They often are too burdensome on the reporting entity and too irrelevant for the reader. This spring, the European Parliament decided to take another look at the sustainability reporting requirements with the goal of simplifying them.

This decision was broadly welcomed by the corporate world. The Greens/European Free Alliance voted against it, with understandable worry that the requirements would be watered down.

Current status

The European Commission asked EFRAG to make recommendations how to reduce the sustainability reporting burden on companies without compromising the core goal. At the end of June 2025 EFRAG sent a progress report to the Commission. Here is my brief summary based on EFRAG’s list of goals:

I. Simplification of the Double Materiality Assessment

    There are too many ambiguities and uncertainties when companies do their assessments. It is becoming a compliance exercise, a checklist to follow and a process, with less focus on the outcome.

    Proposed solutions

    • Reduce complexity
    • Clarify information materiality
    • Emphasise usefulness to decision-making

    II. Better readability and inclusion into corporate reporting

    Currently, the ESRS are too granular, too focused on a myriad of tiny details. There can be dozens of pages of irrelevant EU Taxonomy disclosures in a report. Also, companies can’t tell their own sustainability story because they have to focus on the tiny details.

    Proposed solutions

    • Allow executive summary as introduction
    • Option to disclose most granular information in appendices
    • EU Taxonomy information in specific appendix
    • Reducing duplication of information

    III. Modification of Minimum Disclosure Requirements and topical specifications

    Again, the requirements are too burdensome, too granular and too ambiguous. There are too many overlapping disclosure requirements from different sections and topics.

    Proposed solutions

    • Reduce mandatory datapoints
    • Clarify when disclosures are necessary and when they are voluntary

    IV. Improved understandability, clarity and accessibility

    • Reduce voluntary disclosures
    • Clearly separate mandatory and non-mandatory content, restructure standards

    V. Miscellaneous burden reductions and clarifications

    • How to account for M&A
    • IFRS relief
    • Commercially sensitive information
    • Non-relevant datapoints from other EU regulations
    • Forced to report information even when it is irrelevant or unavailable; Reduce ‘undue cost and effort’
    • Exclude non-material activities from calculations
    • Clarify boundaries and responsibilities (leasing, pension funds; operational control approach; value chain estimates or direct data collection)
    • Forward-looking statements, anticipated financial effects

    VI. Enhanced interoperability between standards

    • ESRS and ISSB standards

    Cut by half?

    EFRAG hopes to reduce the number of mandatory datapoints by 50 per cent (some whispers say they are aiming for 66 per cent), which would be great if they can pull it off without reducing the usefulness of sustainability reports. Another goal is to reduce granularity and ‘boilerplate text’ to promote narrative disclosures, which is something I’m personally looking forward to.

    What’s next? Here is an updated timeline which takes into account the Commission’s pushing back their deadline for EFRAG’s suggestions by a month.

    Key dates

    14 April 2025: Legislation postpones reporting requirements

    May-July 2025: EFRAG works on Exposure Drafts to amend the ESRS

    11 July 2025: Commission adopts ‘quick fix’ act so wave one companies don’t have additional reporting in 2025 and 2026, compared to 2024

    August-September 2025: Publishing Exposure Drafts and public consultation

    30 November 2025: EFRAG delivers advice to EU Commission on revision and simplification

    31 December 2025: Unofficial goal to finalise simplification packages

    Early 2026: Conceivable time for final adoption

    Want to talk green?

    I can help you to stay compliant with changing sustainability reporting requirements, communicate what’s important, and find added value in the process.

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    The worse risks aren’t the hidden ones – they are the mispriced ones

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    The Science Based Targets Network can help uncover hidden risks, as well as price them.

    Source: SBTN

    Warren Buffett made his fortune by understanding and properly pricing risks. When Berkshire Hathaway takes a financial hit, Buffett almost always acknowledges the problem was not missing a risk; it was mispricing it.

    In 1997 he wrote: “A pernicious aspect of catastrophe insurance, however, makes it likely that mispricing, even of a severe variety, will not be discovered for a very long time.” We can replace the phrase “catastrophe insurance” with “climate change” and the statement is still valid.

    When you look through a company’s annual reports you can see they recognise the financial risks of climate issues. Most of these risks aren’t hidden, but are they properly priced?


    Here is where the Science Based Targets can help. The purpose of the SBTs is not to put a euro sign on these risks, but rather to identify, measure and mitigate specific pressures, including land/sea use change, resource exploitation, pollution, climate change and invasives species.

    The SBT process is extremely valuable in other ways, such as complying with the Corporate Sustainability Reporting Directive (CSRD) and pricing risks. The SBT process encourages companies to integrate climate-related issues into risk management and decision-making.

    These risks can include:

    • Higher cost of capital
    • Stranded legacy assets or business models
    • Higher insurance costs and higher chance of catastrophic events
    • Reputational damage
    • Loss of access to raw materials or critical resources
    • Litigation

    It is difficult to accurately price these risks, but it is nearly impossible to price them without first objectively measuring at-risk resources or processes, such as through the SBT process.

    In the SBTN’s excellent introductory module they have a slide which explains how their process can help a company identify risks. They should also emphasise how SBTs can be the first step in pricing those risks. There is a lot of added value from the SBT process which isn’t immediately apparent.

    Learning from failure: the net zero gap

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    You have more arrows. If you miss your mark then try again.

    Christoffer Wilhelm Eckersberg – Three Spartan boys practicing archery (1812)

    What happens when you realise you aren’t going to reach your climate goals? This uncomfortable question is becoming more urgent for companies and countries. Falling short on net zero promises is an embarrassment, but it is also a chance to improve.

    In June 2019, Finland was praised when the then-new Government announced an ambitious plan to be net zero by 2035. Six years later the annual review has admitted the country is far from meeting their goals. The Climate Change Performance Index estimates Finnish emissions are about 47% higher than they should be, based on the country’s own commitments.

    It is not only countries who are falling behind their goals: only 16% of large corporations are on track to be net zero by 2050. More companies are setting goals, with the number of companies applying to the Science Based Target Initiative (SBTi) up 30% year-to-date. This is good news, but setting a goal and reaching it are two entirely different things.

    So what happens when a country or company falls behind their goals? Here is a suggested process to follow so you can learn from your mistakes and improve your performance.

    1) Analyse the original goal-setting process

    Why did the organisation choose these goals?

    How were the goals decided?

    Who were the decision-makers, and did they have all the necessary information at the time?

    Were the goals realistic?

    2) Identify the problems

    Collect and analyse data to quantify what went wrong, and why.

    What was in your control?

    What wasn’t in your control?

    Did you identify potential risks and develop contingency plans? If so, how did that process work?

    3) Determine corrective actions

    Broadly, you can change your goals, change your behaviour or change both.

    There is nothing wrong with failing to meet a goal, it happens to every organisation which sets goals. In fact, if you meet every goal you aren’t being ambitious enough. The important thing is to use the lessons learned from your failure analysis for your path forward. In the race against climate change, transparency and course correction are just as important as ambition. Missing the mark doesn’t mean giving up; it means moving forward smarter.

    Want to talk green? Contact me at info at davidjcord.com.

    Voluntary reporting standard for SMEs (VSME)

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    Entrepreneurs have always struggled with authorities. These entrepreneurs in Victorian-era Leadenhall didn’t need to worry about sustainability disclosures, but many modern businesspeople do.

    Andries Scheerboom – Leadenhall Market, London (1865)

    Small European companies are not required to complete corporate sustainability reports, unless they are in specific regulated industries. However, there are good reasons to develop such reports, even if they are not legally bound to do so.

    The European Financial Reporting Advisory Group (EFRAG) created a voluntary standard which is inspired by the rules which govern large firms, the Corporate Sustainability Reporting Directive (CSRD).

    The Voluntary reporting standard for small companies (VSME) is for non-listed micro, small and medium enterprises. It is a simple and standardised framework that covers relevant environmental, social and governance (ESG) issues such as sustainability goals, energy and greenhouse gas emissions, biodiversity, resource use and workforce safety. There are two versions: a Basic module which covers eleven topics and a Comprehensive module which expands upon them.

    Benefits of completing a VSME

    • Understand your business better. Identify new value you can provide to your customers and ways to improve efficiency and lower costs in your operations.
    • Satisfy information requests from banks and investors. Improve access to green financing.
    • Satisfy information requests from large suppliers and customers. Meet their procurement criteria.
    • Market yourself as serious about sustainability to customers, suppliers, partners and potential employees.
    • Improve the management of sustainability issues you face. Identify and reduce potential risks.
    • Contribute to a more sustainable and inclusive economy.

    Example report

    If you would like to see an example of how a VSME could look, see the report we completed for our own operations.

    Författare David J. Cord’s VSME sustainability report 2024

    Want to learn more? Contact us at info at davidjcord.com

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