Global: ISSB promises further harmonisation of the sustainability disclosure reporting landscape

At the IFRS Foundation Conference, which commenced on 24 July 2024 coinciding with London Climate Action Week, the International Sustainability Standards Board (ISSB) announced the launch of its two-year work plan, alongside the publication of its feedback statement on the IFRS sustainability disclosure standards. Here are some points of interest:

• During the next two years, the ISSB will deliver further harmonisation and consolidation of the disclosure reporting landscape through closer ties with other standards and reporting bodies. The ISSB plan to support work to “streamline and consolidate frameworks and standards for disclosures about transition plans…the focus of the ISSB in this regard will continue to be on the provision of high-quality, decision-useful information about the plans that companies have, consistent with the focus of IFRS S2, rather than requiring that companies engage in transition planning, per se."

• The IFRS has agreed that it will assume responsibility for disclosure-specific materials developed by the UK-focused Transition Plan Taskforce. This means that the TPT resources for best practice will become part of the complementary ISSB resources for sustainability standards and brings the technical work of the TPT to a close. The TPT will continue to support the UK's Transition Finance Market Review over the coming months.

• In the near term, the IFRS Foundation expects to use the relevant TPT materials to develop educational materials for users and preparers of transition plans. Over time, the IFRS Foundation may make further use of these materials when considering the need to enhance the formal application guidance within IFRS S2.

• The IFRS will host TPT materials on its IFRS Sustainability Knowledge Hub, to help streamline global transition planning.

Global: TNFD and EFRAG publish correspondence mapping

On 20 June 2024, the Taskforce on Nature-related Financial Disclosures (TNFD) and the European Financial Reporting Advisory Group (EFRAG) have jointly published a Correspondence Mapping for the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD) and the TNFD’s recommended disclosures. Their press release highlights that all 14 TNFD recommended disclosures are reflected in the ESRS. The mapping focuses on those ESRS disclosure requirements that correspond to the disclosures recommended by the TNFD. It is aimed at helping companies understand the commonalities between the two frameworks. It should also assist European companies in scope of the CSRD considering alignment with TNFD. The mapping highlights that there is a strong consistency between the TNFD’s core global disclosure metrics and the related metrics in the ESRS. For more details, see our blog post.

Global: PwC survey demonstrates benefits and challenges companies see in the CSRD

PwC published Global CSRD Survey 2024. The survey demonstrates that companies see multiple business benefits flowing from the EU Corporate Sustainability Reporting Directive (CSRD), including better environmental performance, improved engagement with stakeholders and risk mitigation. About one-third of survey participants expect CSRD implementation to lead directly to revenue growth and cost savings. Significantly, those further along in their implementation journey are more optimistic about the business benefits across all dimensions. Although respondents to the survey express a high degree of confidence, their answers also reveal potential challenges - including low completion rates for some early-stage activities, lack of senior stakeholder involvement at some companies and low rates of adoption for technologies that support efficient ongoing reporting.

Global: Deloitte survey shows the increasing role of ESG in M&A

In 2022, Deloitte launched its inaugural survey, ESG’s evolving role in corporate M&A decisions, analysing ESG’s influence on the M&A process across corporate organizations in the United States. In 2024, Deloitte launched a second ESG survey involving 500 global M&A leaders from the US, Europe, Middle East and Asia Pacific regions as well as various industries and a specific focus on impacts to PE. The results of the survey showed that across the deal life cycle, better data, improved measurement, and a deeper understanding of ESG are key factors shaping dealmaking for M&A leaders. Corporate and private equity leaders have a growing appreciation for the ways environmental, social, and governance factors can drive value. With the availability of increased data and the assistance of more precise, consistent measurement tools, mergers and acquisitions leaders are better positioned to understand the impact of ESG on valuations, targeting, portfolio management, and other areas across the M&A life cycle. ESG’s impact on a potential acquisition or divestiture is becoming a standard consideration as well for dealmakers. More than half of the organizations surveyed (57%) are measuring ESG with clearly defined metrics, an increase from 39% two years ago. Being able to capture better, more relevant data and measure ESG value and metrics is providing organizations with more confidence in planning and executing transactions. More than three-quarters (78%) of organizations with clearly defined measurement metrics say they have a very high confidence in their ability to evaluate a target’s ESG profile. Almost three-quarters (74%) of companies say they have evaluated their portfolios or investments from an ESG perspective when acquiring or searching for acquisition targets, and almost as many (67%) say the same about their divestiture strategies. These percentages are a notable increase over the results reported by respondents in 2022.

Grantham Research Institute publishes its 2024 report on Global Trends in Climate Litigation

The Grantham Research Institute on Climate Change and the Environment published its 6th annual Global Trends in Climate Change Litigation: 2024 Snapshot Report (the “Report”). The Report focuses on the calendar year 2023 and provides (i) a numerical analysis of how many cases have been filed globally, where, and by whom and (ii) a qualitative assessment of trends and themes in the types of cases filed. It also contains commentary on important cases filed or decided in the first five months of 2024. Key insights include the following:

• At least 230 new climate cases were filed globally in 2023. Many of these are seeking to hold governments and companies accountable for climate action. However, the number of cases expanded less rapidly last year than previously, which may suggest a consolidation and concentration of strategic litigation efforts in areas anticipated to have high impact.

• Climate cases have continued to spread to new countries, with cases filed for the first time in Panama and Portugal in 2023. The United States remains the country with the highest number of documented climate cases, with 1,745 cases in total, and 129 new cases filed in 2023. After the US, the countries with the highest number of recorded cases filed in 2023 were the UK, Brazil and Germany. More than 200 climate cases were recorded from Global South countries, comprising around 8% of all cases.

• 2023 was an important year for international climate change litigation, with major international courts and tribunals being asked to rule and advise on climate change. Just 5% of climate cases have been brought before international courts, but many of these cases have significant potential to influence domestic proceedings.

• Strategic climate cases continued to be filed against companies, with about 230 such cases now identified from 2015 to the present. The number of cases concerning ‘climate-washing’ has grown in recent years. These cases have met with significant success, with more than 70% of completed cases decided in favour of the claimants. Nearly 50 of the more than 230 cases filed in 2023 are not aligned with climate goals. Some cases challenge climate action; others do not challenge climate action per se, but are concerned with the way in which it is implemented.

EU: ESAs unveil their findings on greenwashing in the financial sector

The European Supervisory Authorities (EBA, ESMA and EIOPA) have published their Final Reports to the European Commission on greenwashing in the financial sector. These Final Reports, together with their June 2023 Progress Reports, which set out the ESAs’ common high-level understanding of greenwashing (reiterated in the final reports) and map areas more exposed to greenwashing risks across the Sustainable Investment Value Chain (SIVC), serve as a response to the European Commission’s 2022 request for input related to greenwashing risks and the supervision of sustainable finance policies. The Final Reports offer practical guidance on applying these principles, with examples of good and bad practices throughout the insurance and pension lifecycle. For more information, see our blog post.

EU: Council adopts its negotiating position on the Green Claims Directive

17 June 2024 marked a significant milestone in the EU’s fight against greenwashing, as the Council adopted its negotiating position (also known as its “General Approach”) on the Green Claims Directive. The Directive aims to combat greenwashing by establishing minimum criteria that companies must meet when making claims to EU consumers about the environmental benefits and performance of their products or services (i.e., substantiation, communication, and verification of environmental claims). It also sets minimum criteria for environmental labelling schemes. One of the key changes introduced by the Council to the draft Directive concerns climate related claims and, in particular, a different approach to the requirements for claims based on carbon credits. Both the Council and the Parliament are now ready to enter into negotiations (known as “trilogues”) in order to reach a final agreement on the text. Hungary, which will succeed Belgium to the Presidency of the Council of the EU as of 1 July 2024, aims to achieve the greatest progress in the negotiations of the Green Claims Directive, but given the differences between the positions, negotiations might very well be complicated. A final agreement is expected at the end of 2024 or beginning of 2025 at the earliest. For more information, see our blog post.

Global: ICMA releases new resources on Sustainability-Linked Bonds, Green Bonds and Sustainability-Linked Loans financing Bonds

On 25 June 2024, the International Capital Market Association (ICMA) released new materials and guidance to support the Green, Social, Sustainability and Sustainability-Linked Bond Principles (“the Principles”). New materials and guidance released today include:

• Guidance for Green Enabling Projects: This publication is directed at projects which are not themselves explicitly green but which enable a Green Project’s implementation or development (so called ‘Green Enabling Projects’) and includes guidance around induced and avoided emissions as well as management of environmental and social risks. Additional guidance is also included relating to the interaction with the Green Bond Principles and provides a non-exhaustive list of indicative sectors for which Green Enabling Projects could apply.

• Guidelines for Sustainability-Linked Loans financing Bonds (SLLBs): Together with the Loan Market Association (LMA), ICMA has introduced guidelines for SLLBs to enhance the transparency and credibility of this developing market. SLLBs are bonds where the proceeds are used to finance or re-finance a portfolio of new or existing eligible Sustainability-Linked Loans (SLLs) aligned with the LMA’s Sustainability-Linked Loan Principles (SLLP).

Further guidance has also been published on specific aspects of the Principles, including a 2024 update of the Sustainability-Linked Bond Principles, updates to the SLB KPIs Registry and a 2024 edition of the Guidance Handbook. Finally, a new Annex has been added to the Handbook – Harmonised Framework for Impact Reporting highlighting the processes for identifying environmental and social risks associated with eligible project categories for green bonds. For more information, see our blog post.

EU: ECB is considering whether to impose fines on banks for failure to address the impact of climate change

On 29 May 2024, Bloomberg reported (see here, requires a subscription) that the European Central Bank (ECB) was preparing to impose fines on several lenders for failures to meet deadlines set by the ECB for assessing their exposure to climate risks but that the amounts of the fines had not yet been finalised but that these could accrue on a daily basis and amount to as much as 5% of a lender’s daily average revenue. On 5 June, in an interview with Spanish publication Cinco Dias (see here), Kerstin af Jochnick, a Member of the Supervisory Board of the ECB, was asked whether any banks had been fined already. Ms af Jochnic replied that: “We have notified a few banks that, based on our current assessment, they have not met the interim milestones, which means they face the prospect of having to pay a so-called pecuniary penalty. Supervisors will need to assess the documents that banks submit and the total number of days that they might have failed to comply past the deadlines we gave them. This will form the basis for any potential penalty, which would need to be decided upon by the Supervisory Board. So it’s a process that is not over yet.” For more information on the ECB’s expectations, see our previous blog post.

EU: ESA’s recommendations on SFDR

When the European Supervisory Authorities (EBA, ESMA and EIOPA) published their Final Reports to the European Commission on greenwashing in the financial sector, they noted that a joint opinion setting out recommendations to the Commission on the Sustainable Finance Disclosures Regulation (SFDR) was also in production – that opinion has now been published. This opinion comes at the ESAs’ own initiative (as opposed to at the request of the Commission) and is to be read in the context of the Commission’s own ongoing comprehensive review of the SFDR framework. The ESAs’ recommendations include proposals for the introduction of “simple and clear categories” and/or sustainability indicators for financial products, clarity to the key definition of “sustainable investment” and the disclosure of further information around key adverse impact indicators. A key focus for the ESAs is clarity for investors, particularly retail investors – particularly given recent consumer testing which shows that SFDR disclosures to investors may be complex by nature and difficult to understand. Their recommendations on the SFDR framework itself are therefore also accompanied by recommendations for rigorous consumer testing and consultation. No doubt the recommendations will provide plenty of food for thought for the Commission as it considers next steps in its review of the SFDR. Timing on this however remains unclear – it will be for the next Commission to comment on whether it will take the SFDR review forwards, and if so the content or timescale of such review. For more information, see our blog post.

EU: Stocktake of the EU Taxonomy in action

The European Commission published a factsheet evidencing the market’s uptake of the EU Taxonomy. The results (gleaned from reporting by entities in scope of the EU’s new rules requiring reporting against the EU Taxonomy) are encouraging. The EU finds that companies, public entities and other market participants are increasingly using the EU’s Taxonomy for their business strategies, transition planning and investing and lending activities. For more information, see our blog post.

EU: Council formally adopts Nature Restoration Law

On 17 June 2024 the Council of the EU formally approved the Regulation on Nature Restoration, commonly referred to as the “Nature Restoration Law”. The Regulation outlines a framework that requires Member States to implement effective, area-specific nature restoration measures. The goal is to restore at least 20% of land and sea areas by 2030, aiming to address all ecosystems requiring restoration by 2050. It establishes legally binding restoration targets and obligations across various ecosystems, including terrestrial, marine, freshwater, and urban areas. The Council approval followed an initial setback on 25 March 2024, when several Member States expressed opposition to the Regulation. On 17 June 2024, the Regulation narrowly passed in the Council vote, concluding months of impasse. The Austrian vote was instrumental in obtaining the necessary majority. However, the Council’s adoption of the Regulation is now facing internal challenges in Austria. For more information, see our blog post.

EU: the Regulation and the Directive improving the EU’s electricity market design published in the OJEU

On 26 June 2024, the Regulation and the Directive as regards improving the Union’s electricity market design were published in the Official Journal of the EU. These legal acts aim to stabilise energy prices by providing more predictable long-term price signals. They seek to empower consumers and suppliers to participate more actively in the power and balancing markets, among other things through demand-response and storage solutions. To achieve that, they do not intervene directly in the market mechanisms that regulate price formation on the short-term (spot) markets. Instead, these legal acts introduce a variety of measures aimed at providing more predictable long-term price signals, empowering and shielding consumers from price spikes and accelerating the deployment of renewables. Both the Regulation and the Directive will enter into force on 16 July 2024.

This Regulation and the Directive are part of a wider reform, which also includes the Regulation to improve the EU's protection against market manipulation in the wholesale energy market (REMIT). The revised REMIT enhances the ability of the European Union Agency for the Cooperation of Energy Regulators (ACER) and national regulators to monitor the wholesale energy market integrity and transparency, investigate and sanction (cross-border) market abuses, in order to ensure competitive markets and transparent price-setting. All these legislative changes are part of the Green Deal Industrial Plan which aims to upscale and speed up development of green technologies needed to meet the EU’s net-zero goals (for more information on the Green Deal Industrial Plan, see our previous blog post).

UK: Institute of Directors consult on new code of conduct

On 6 June 2024, the Institute of Directors (IoD) published a consultation paper on a new voluntary code of conduct. This aims to assist directors of entities of all sizes with their decision-making and to promote high levels of integrity. It is hoped that, in turn, this will also build and maintain public trust in business activities, following high profile corporate scandals, including recently at the Post Office, and in previous years relating to the collapses of Carillion and BHS. However, the code is not meant to replace other best practice guidance. Instead, the IoD's Director General has described it as written “by directors for directors" as a roadmap for making the right decisions in the face of increasingly complex challenges and trade-offs (including in relation to sustainability and social issues). The proposed new code is structured around six key principles (leading by example, integrity, transparency, accountability, fairness, and responsible business), which are underpinned by a number of specific undertakings. The consultation closes on 16 August. For more information, see our client briefing.

New thought leadership series by Linklaters Diversity Faculty

The Diversity Faculty – Linklaters’ advisory practice for clients on issues relating to diversity, equity, and inclusion (DEI) - launched a new thought leadership series: DEI: Where now? Navigating a safe legal path in challenging times. The series will feature regular insights and commentary covering the most complex and challenging legal and regulatory aspects of DEI for UK and global employers. For its debut, the series offers a video where our specialists discuss how employers can lawfully and safely take positive action in a challenging geopolitical landscape, and a client guide containing an overview of what amounts to lawful positive action vs unlawful positive discrimination, with practical examples and best practice guidance for employers.

UK: FCA changes its approach on diversity and inclusion

The FCA has confirmed to the Treasury Committee that it will be pausing further action on the diversity and inclusion proposals set out in its September 2023 consultation but will be pressing ahead with other aspects of the consultation relating to non-financial misconduct. For more information, see our blog post.

Climate Change Litigation

There were several significant developments in lawsuits involving climate change-related harms in June. On 10 June 2024, the California Attorney General filed an amended complaint in California state court in a lawsuit against oil and gas companies for harms related to climate change. The complaint alleges that the oil and gas company executives suppressed information about the catastrophic effects of widespread combustion of fossil fuels from the public and policymakers and actively pushed out disinformation on the topic. Also on 10 June 2024, a federal judge for the U.S. District Court for the District of Oregon granted the County of Multnomah’s motion to remand its case against oil and gas companies back to state court. The lawsuit seeks damages for the companies’ alleged decades-long climate misinformation campaign to conceal the dangers posed by their fossil fuel products. The court rejected arguments that the complaint was fraudulently crafted to include a specific defendant in order to evade federal jurisdiction and found that the plaintiff county alleged sufficient facts to establish state court jurisdiction. On 25 June 2024, a Colorado state court declined to dismiss a case brought by local governments against international oil and gas companies that “primarily seek[s] money damages to compensate the Local Governments for their past and future damages and costs to mitigate the impact of climate change.” Especially of note is the court’s rejection of the businesses’ challenge to jurisdiction in Colorado state court, finding that while none of the companies had their principal place of business or headquarters in the state, their advertisements and engagements with franchises to sell their products in the state were sufficient contact to put them under the court’s jurisdiction.

PFAS Pollution Litigation

Litigation related to PFAS (Per- and Polyfluoroalkyl Substances) pollution continues to rise, with both individuals and business entities bringing lawsuits. On 3 June 2024, an utility provider filed a complaint in the U.S. District Court for the Western District of Missouri against an industrial goods manufacturer, alleging that the manufacturer has been discharging pollutants into groundwater in violation of its discharge permits and the Clean Water Act (“CWA”). The complaint asserts that these pollutants pose a danger to human health, and requests injunctive relief through the installation of technology at the city's water treatment plant to meet regulatory requirements related to the pollutants at issue. On 10 June 2024, a suit against a major beverage retailer alleging its juice products contained PFAS was dismissed in the U.S. District Court for the Southern District of New York. The lawsuit, brought by a consumer, was dismissed due to lack of standing, with the court ruling that the complaint needs "specific facts concerning the third-party testing forming the basis of his allegations that the Product contains PFAS chemicals.” However, the case was dismissed without prejudice, and the Plaintiff was granted leave to refile until 10 July 2024. Also in June, a consumer class action complaint was filed in the U.S. District Court for the Northern District of California against a personal hygiene product manufacturer, alleging it had violated numerous state and federal laws by advertising its children's toothpaste as "natural" and "safe to swallow" despite containing "high levels" of PFAS.

Pollution-Related Claims

Other pollution lawsuits are also on the rise. On 10 June 2024, an environmental organization filed a complaint in the U.S. District Court of Massachusetts against two beverage manufacturing and bottling facilities, alleging claims under the CWA. The plaintiff claims that the defendants have discharged and continue to discharge wastewater and stormwater into water bodies in Massachusetts in violation of the CWA. The plaintiff is seeking civil penalties, and declaratory and injunctive relief.

On 13 June 2024, the U.S. federal government, the State of Washington, and a coalition of tribes filed a complaint in the U.S. District Court for the Western District of Washington against three companies that operated or owned a sawmill facility in Port Gamble Bay, Washington. The plaintiffs allege that the operations at the facility led to releases and discharges of hazardous substances in water areas adjacent to, and in, Port Gamble Bay that have caused injury to, destruction of and loss of use of natural resources including fish, shellfish, invertebrates, birds, surface water and sediments, and resources of cultural significance. The plaintiffs are seeking monetary damages for the injury to natural resources and assessment costs.

On 17 June 2024, a New Mexico state court rejected a motion to dismiss filed by the State of New Mexico in a lawsuit brought by a coalition of indigenous peoples, youth, frontline community members and environmental groups alleging that the State of New Mexico, state agencies and legislature failed to uphold their constitutional duty to control pollution in the state. The complaint alleges that the defendants failed to control the despoilment of the air, water, environment and natural resources of New Mexico from the impacts of oil and gas pollution and that they authorized oil and gas production and pollution in a manner that violates the plaintiffs’ constitutional rights to life, liberty, property, safety, happiness and equal protection under the law.

Legal Challenges to the EPA

The U.S. Environmental Protection Agency (“EPA”) faced several legal and enforcement challenges over the past month.

On 9 May 2024, 27 U.S. states and industry trade groups filed multiple lawsuits against the EPA in the U.S. Court of Appeals for the District of Columbia Circuit challenging the EPA’s final rule to regulate greenhouse gas emissions from fossil fuel-fired power plants (the “Final Rule”), which was released on 25 April 2024 and includes robust emission standards for certain subcategories of facilities based on implementation of carbon capture and sequestration. On 17 May 2024, the D.C. Circuit denied a motion for an administrative stay of the Rule while the court considers whether to impose a longer stay order for the duration of the litigation. You can read more about the rule in our ESG Newsletter May 2024 edition, and about the ongoing litigation in our ESG Newsletter June 2024 edition.

On 6 June 2024, a group of farmers and ranchers sued the EPA in the U.S. District Court for the District of Columbia, alleging that the agency failed to identify and regulate PFAS in sewage sludge that may adversely affect public health or the environment. The plaintiffs alleged that PFAS from sewage sludge “contaminated [their] land and water, killed and sickened their livestock and farmed fish, injured their health, threatened their livelihoods, and devalued their property.” The plaintiffs seek declaratory relief and an order requiring the EPA to timely identify and regulate PFAS as outlined throughout the complaint.

On 29 May 2024, a group of NGOs submitted a complaint to the EPA to investigate the City of Baltimore’s Department of Public Works’s 10-Year Solid Waste Management Plan, alleging that the plan disparately impacts residents of the predominantly Black and Hispanic communities throughout several neighborhoods in South Baltimore. The complaint requests the EPA to, inter alia, require the city to disclose the accounting information for funds used to develop city composting facilities, investigate the health impact of operating the Baltimore Refuse Energy Company (“BRESCO”) plant, and mandate the city to launch and comply with a timeline for the development of waste diversion practices and associated infrastructure. Also in May, an environmental NGO filed an administrative complaint against the EPA, alleging that the agency issued false statements that the EPA did not find any PFAS in the pesticide products it had tested.

States and industry organizations also filed challenges to curtail enforcement of new EPA rules and regulations. On 10 June 2024, two chemical industry associations filed a petition for review of the EPA’s new PFAS National Primary Drinking Water Regulation, arguing that it “exceeds the agency’s authority under the Safe Drinking Water Act of 1974 []; it is arbitrary, capricious, and an abuse of discretion; and it was promulgated without observance of procedures required by law.” On 28 May 2024, a group of eight states sued the EPA in the U.S. District Court for the District of North Dakota to challenge the EPA’s Final Rule on Water Quality Standards Regulatory Revisions To Protect Tribal Reserved Rights, which finalizes “the [CWA] water quality standards (WQS) regulation to add requirements for states establishing WQS in waters where Tribes hold and assert rights to CWA-protected aquatic and aquatic- dependent resources reserved through treaties, statutes, or Executive orders.” The states argue that the Final Rule exceeds the EPA’s authority under the CWA and “unconstitutionally disrupts state-tribal relationships by compelling states to evaluate and protect claimed but undefined, and virtually unknowable, rights which the federal government may have reserved for the tribes.” On 13 June 2024, a coalition of industry groups and businesses filed a petition for review of the EPA’s new rule titled “Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles” in the U.S. Court of Appeals for the District of Columbia. The petition alleges that the rule “exceeds the agency’s statutory authority and is otherwise arbitrary, capricious, an abuse of discretion, and not in accordance with law” and asks the court to vacate the rule.

Shareholder Suits

On 31 May 2024, a complaint was filed in the U.S. District Court for the Middle District of Florida against a major international car rental service and two of its executives. The class action complaint alleges that the company made false and misleading statements that led investors to believe demand for their electric vehicles was stronger than it actually was, failed to disclose that it had too many electric vehicles in its fleet to remain profitable. The proposed class would include all investors who purchased securities in the company between 27 April 2023 and 24 April 2024.

On 6 June 2024, two prominent environmental non-governmental organizations voluntarily moved to dismiss their petition for review of the U.S. Securities and Exchange Commission (“SEC”) rule, “The Enhancement and Standardization of Climate-Related Disclosures for Investors in the United States” in the U.S. Court of Appeals for the Eight Circuit. The unopposed motion to voluntarily dismiss the petition asserts that while the organizations had sought review of “several discrete deficiencies in the rule[,]” they now believe they should be focusing on advocacy for improved investor protections outside of the courtroom.

On 17 June 2024, the U.S. District Court for the Northern District of Texas dismissed a suit by an energy giant against an activist investor. The energy company had sued the investor following its proposal at an annual shareholder meeting to accelerate the company's pace of emissions reductions. While the proposal was quickly withdrawn, the company moved forward with a suit against the investor alleging that its proposal constituted an intrusion into the company's ordinary business operations. You can read more about the proposal and following lawsuit in our ESG Newsletters February 2024 and March 2024 editions. The Court agreed to dismiss the lawsuit as moot after the investor submitted multiple letters and promised during oral arguments not to re-submit the proposal.

Legislative Developments

On 30 May 2024, Vermont Governor Phil Scott allowed for the Climate Superfund Act to become law by failing to sign or veto the bill during the constitutionally-mandated five-day consideration period. The bill, which will go into effect on 1 July 2024, establishes the Climate Superfund Cost Recovery Program in Vermont and will secure compensatory payments from parties that were engaged in the trade or business of extracting fossil fuel or refining crude oil from 2000-2019 and were determined to be attributable to for more than one billion metric tons of covered greenhouse gas emissions. The payments shall be proportional to the cost sustained by the State of Vermont from greenhouse gas emissions resulting from the use of fossil fuels extracted, produced, or refined during the defined period. These payments will then be deposited into a Climate Superfund Cost Recovery Program Fund, which be used to provide funding for climate change adaptive or resilience infrastructure projects.

On 18 June 2024, the U.S. Congress passed the Accelerating Deployment of Versatile, Advanced Nuclear for Clean Energy (ADVANCE) Act to accelerate the deployment of nuclear energy capacity, including by accelerating permitting and licensing and creating new incentives for advanced nuclear reactor technologies, among them small modular reactors. The ADVANCE Act will also support efforts to further modernize the U.S. Nuclear Regulatory Commission, which has oversight of the existing U.S. nuclear reactor fleet, as it prepares to review an ever-increasing number of applications for license renewables, power uprates, and next-generation nuclear deployments. The Senate introduced the ADVANCE Act in March 2023, and the House of Representatives passed the Fire Grants and Safety Act, which contains the ADVANCE Act, on 8 May 2024. The ADVANCE ACT will go to President Joe Biden for signature.

Regulatory Developments

On 1 May 2024, the White House Council on Environmental Quality (CEQ) published its Bipartisan Permitting Reform Implementation Rule (the “Rule”), which is also known as the Phase 2 National Environmental Policy Act (“NEPA”) rule. The Rule is the second part of a CEQ rulemaking process to revise its NEPA implementing regulations and reverse many, but not all, of the rollbacks promulgated under the Trump administration. The Rule is aimed at accelerating project permitting and modernizing the NEPA regulations to meet the challenges posed by climate change, environmental injustice, and biodiversity loss. The Rule will apply to projects beginning environmental review on or after 1 July 2024, and will not affect environmental review processes currently underway.

Mainland China: The Ministry of Finance publishes for consultation corporate sustainability disclosure guidelines

On 27 May 2024, the Ministry of Finance released for public consultation the draft Guidelines for Sustainability Disclosure: Basic Principles (the "Draft Guidelines"). The Draft Guidelines set out the framework and basic standards for Chinese enterprises to disclose ESG information. The Draft Guidelines are drafted by reference to the international standards, primarily ISSB S1 (General Requirements for Disclosure of Sustainability-related Financial Information) while tailored to fit in with the PRC market. The Draft Guidelines proposes a phased approach to implementation, expanding coverage from listed companies to the non-listed companies in the PRC, from large companies to the small and medium companies, and from voluntary disclosure to mandatory disclosure. It is expected that a national uniform sustainability disclosure standard system will be established in China by 2030.

Mainland China: China’s State Council issues Energy Conservation and Carbon Reduction Action Programme 2024-2025

On 29 May 2024, China’s State Council issued the Energy Conservation and Carbon Reduction Action Programme 2024-2025 (Mandarin language only). For 2024, the government aims to reduce energy consumption and carbon dioxide emissions per unit of GDP respectively by 2.5% and 3.9%. For 2025, the government has set a target for non-fossil energy consumption to reach roughly 20%, with energy-saving and carbon-reducing reforms in key sectors to reduce 50 million tonnes of coal equivalent and 130 million tonnes of carbon dioxide emissions. To achieve the above targets, the plan has set out respective implementation measures for each of the key sectors, including fossil energy, non-fossil energy, steel, petrochemistry, non-ferrous metal, building materials, construction, transportation, public institutions, energy products and equipment.

Mainland China: Ministry of Ecology and Environment announces carbon footprint management plan

On 4 June 2024, the Ministry of Ecology and Environment (MoEE), in cooperation with 14 other Chinese national government bodies, announced a carbon footprint management plan (the Plan), with the aim of contributing to the development of international rules for carbon footprints by 2030. According to the Plan, China aims to establish a preliminary unified national system for managing carbon footprints by 2027, including developing national guidelines for calculating product carbon footprints in accordance with international standards and calculation rules and standards for key products. The Plan also includes setting up an institutional system for product carbon footprint labelling, authentication and tiered management.

The Hong Kong Stock Exchange proposes enhancements to the corporate governance code

The Hong Kong Stock Exchange (the Exchange) has proposed to enhance certain corporate governance requirements in a consultation paper published on 14 June 2024. The proposed changes continue the recent governance themes that aim at enhancing the efficiency of boards, promoting periodic board refreshment, fortifying the presence of independent voices on issuers’ boards and fostering overall diversity within issuers’ workforce. If the proposals are adopted, the Exchange targets an effective date of 1 January 2025. This means the proposed amendments will apply in respect of financial years starting on or after 1 January 2025, so that calendar year-end companies will report on it in 2026. The Exchange proposes to allow a longer transition period of three years regarding the phasing out of Overboarding and Long Serving INEDs. This means, if adopted, the relevant rules will apply from 1 January 2028, with compliance required by the conclusion of the AGM following calendar year-end 31 December 2027 at the latest.

Singapore: Environmental Crimes Money Laundering National Risk Assessment

On 29 May 2024, Singapore issued the Environmental Crimes Money Laundering (ML) National Risk Assessment (NRA) which identifies the key threats and vulnerabilities in environmental crimes ML that Singapore is exposed to, and outlines mitigation measures which governmental agencies, financial institutions and Designated Non-Financial Businesses and Professionals can develop to address the risks.

Singapore announces at least 300 megawatts increase in data centre capacity with a focus on green energy

On 30 May 2024, as part of Singapore’s Green Data Centre Roadmap, Singapore’s Infocomm Media Development Authority announced that Singapore aims to add at least 300 megawatts of data centre capacity in the near term. The Singapore government previously announced a moratorium on data centre development in 2019 to evaluate how to manage the growth of data centres in a sustainable manner in line with its goal to achieve net-zero emissions by 2050. The moratorium was lifted recently in 2022. As a regional data centre hub, with over 70 data centres, Singapore’s Green Data Centre Roadmap represents its commitment in creating a sustainable digital economy. For data centre operators, employing energy and water-efficient technologies is no longer just environmentally friendly but a crucial strategic element in securing their place in Singapore's digital growth landscape. Those seeking to expand their data centre footprint in Singapore would need to place sustainability at the forefront of their data centre design and operations. For more information, see our blog post.

Singapore: BIS and MAS set out blueprint for a climate risk platform for financial authorities

To tackle the challenges of integrating climate risk analysis into financial stability surveillance, the Bank for International Settlements (BIS) and the Monetary Authority of Singapore (MAS) announced Project Viridis in January 2022 to explore the development of a climate risk platform that could help central banks and authorities identify and assess material climate-related financial risks. On 12 June 2024, the BIS and MAS published the report outlining a blueprint which sets out key features and metrics required for a climate risk platform that can be used to identify, monitor and manage climate risks in the financial system. Project Viridis explores the integration of regulatory data with climate data extracted from corporate disclosure documents using natural language processing techniques to provide insights into climate-related financial risks, financial institutions’ risk exposures, and areas that may require deeper risk assessment. The Viridis climate platform prototyped the development of several features such as banking and financial system-wide views of financed emissions, consolidation of emissions data from key counterparties and mapping of geographical asset distribution to assess entities’ transition risk exposure.

Taiwan: FSC issues reference guidelines for anti-greenwashing for financial institutions

On 30 May 2024, Taiwan’s Financial Supervisory Commission (the FSC) issued their Reference Guidelines for Anti-Greenwashing for Financial Institutions (available in Mandarin only). The Guidelines set out five principles to assist financial institutions conduct self-reviews and prevent greenwashing, and focus on areas including correctness, completeness, and comparability when making sustainability or green claims. The FSC has also reminded financial institutions they should conduct internal reviews or through third-party verification before making any “sustainability” or “green” statements, with regular or continuous monitoring to ensure they remain compliant with such “sustainability” or “green” statements.

Philippines: Committee created to investigate and promote human rights protection

On 11 May 2024, Philippines President Ferdinand Marcos Jr established a “super body” to promote human rights protection. The Special Committee on Human Rights Coordination will investigate alleged human rights violations by law enforcement agencies, expand civic space and engage with the private sector, as well as take human rights-based approaches towards drug control and counter-terrorism.

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