Global: COP28: what was decided and what does it mean in practice for business?

Nearly 200 countries and over 80,0000 attendees gathered in Dubai in December 2023 for COP28, the annual UN climate summit. The two-week conference, hosted by the UAE, was the biggest COP so far with unprecedented numbers of attendees including many from the private sector. In a historic first, the COP28 final text sends a clear signal to the market that the direction of travel is towards renewables and away from fossil fuels. For the key takeaways from COP28, see our blog post. See our COP28 page for further coverage of the conference.

EU: Parliament adopts directive on greenwashing and new consumer rights to promote sustainable products

On 17 January 2024, the European Parliament adopted a Directive on Empowering Consumers for the Green Transition. The Directive will now also need to be adopted by the Council before it can come into force. The aim of the Directive is to improve consumer information on product durability, as well as ban greenwashing and other unfair commercial practices. In order for consumers to be empowered to make better-informed decisions, they should not be misled about a product’s environmental or circularity aspects, such as durability, reparability or recyclability. The Directive does this by amending the Unfair Commercial Practices Directive and the Consumer Rights Directive to address a number of marketing practices related to greenwashing and the early obsolescence of goods. For more information, see our blog post.

EU: Emergency energy measures extended by one year

On 10 January 2024, a Regulation extending the application of Council Regulation (EU) 2022/2577, which lays down a framework to accelerate the deployment of renewable energy, was published in the Official Journal of the EU. This Council Regulation, introduced at the end of 2022, implemented a number of measures to address complex administrative procedures, identified as key obstacles hampering the clean energy transition in the EU. The Commission reviewed this Regulation at the end of 2023 and concluded that it has positively contributed to accelerating the pace of renewable energy source deployment within the EU. Consequently, these measures have been extended to 30 June 2025. For more information on the initial framework, see our blog post.

EU: Parliament and Council strike a deal on far-reaching ecodesign requirements

On 4 December 2023, the EU Parliament and the Council reached a provisional political agreement on the revised Ecodesign Regulation. The new regulation will replace the existing Ecodesign Directive from 2009, which was limited to energy-using appliances, with directly applicable performance and information requirements for all kinds of products placed on the EU market. It aims to make products more durable and reliable, easier to reuse, upgrade, repair and recycle, and use less resources. The provisional agreement still needs to be endorsed and formally adopted by both the Parliament and the Council before being published in the Official Journal of the EU and entering into force 20 days later. For more information, see our blog post.

EU: European Parliament and Council agree on revision of Energy Performance of Buildings Directive

On 7 December 2023, the European Parliament and the Council reached a political agreement on the proposal to revise the existing Energy Performance of Buildings Directive. The revised Directive, which forms part of the “Fit-for-55” package, seeks to decarbonise the EU's building stock and facilitate the renovation of homes, schools, hospitals, offices and other buildings across the EU to reduce GHG emissions and energy bills, improving quality of life of those living in the EU. For more details on the Commission proposal, see our previous blog post. According to the Council press release, the co-legislators have agreed: (i) on deployment of suitable solar energy installations in new buildings, public buildings and existing non-residential ones which undergo a renovation action that requires a permit; (ii) that in 2030 all non-residential buildings will be above the 16% worst performing and by 2033 above 26%; (iii) that Member States will ensure that the residential building stock will reduce the average energy consumption by 16% in 2030 and a range between 20-22% in 2035, while 55% of the energy reduction will have to be achieved through renovation of the worst performing buildings; and (iv) to include in the National Building Renovation Plans a roadmap with a view to phase out of fossil fuel boilers by 2040. The provisional agreement now needs to be formally adopted by both the Parliament and the Council.

EU: Council approves its negotiating position on packaging and packaging waste

On 18 December 2023, the European Council agreed its negotiating position on a Proposal for a Regulation on packaging and packaging waste. The Regulation aims to tackle the increase in packaging waste generated in the EU, while harmonising the internal market for packaging and boosting the circular economy. It considers the full lifecycle of packaging and covers all packaging, regardless of the material used, and all packaging waste, regardless of its origin (including industry, manufacturing, retail, households). It requires all packaging to be recyclable and that the presence of substances of concern is minimised, and sets labelling requirements and binding reuse targets. According to the Council press release, amendments suggested by the Council include categorising packaging as recyclable when it is designed for material recycling, and when the waste packaging can be separately collected, sorted, and recycled at scale (the latter condition will apply from 2035). The Council also introduced certain exemptions, such as an exemption from the requirement to introduce deposit return schemes for single-use plastic bottles and metal beverage containers for Member States with a rate of separate collection above 78% reached in 2026, and the possibility for Member States to set out exemptions from the restrictions on certain packaging formats under certain circumstances, including for organic fruit and vegetables. The Council extended the date of application of the Regulation to 18 months after its entry into force. The Parliament adopted its negotiating position on 22 November 2023. The Council will now enter into informal trilogue negotiations with the Parliament to finalise the Regulation.

UK: Government announces introduction of CBAM by 2027

Having consulted over summer 2023 on a range of potential domestic carbon leakage mitigation measures, the UK government has announced that it will put in place a Carbon Border Adjustment Mechanism (CBAM) by 2027. The UK CBAM will apply a charge on the carbon emissions embodied in imports from the following sectors: aluminium, cement, ceramics, fertiliser, glass, hydrogen, iron and steel. The liability applied by the CBAM will depend on the greenhouse gas emissions intensity of the imported good and the gap between the carbon price applied in the country of origin (if any) and the carbon price that would have been applied had the good been produced in the UK. Liability will lie directly with the importer of imported products within scope of the UK CBAM on the basis of emissions embodied in imported goods. The system will not involve the purchase or trading of emissions certificates but the UK government states that the CBAM will work cohesively with the UK Emissions Trading Scheme, including free allowances, to ensure imported products are subject to a carbon price comparable to that incurred by UK production. Further details on the design and delivery of the UK CBAM will be subject to consultation in 2024. For further information, see the Government Factsheet.

UK: Re-Powering the CfD Regime: Proposed Amendments for Allocation Round 7

The seventh allocation round (AR7) for the UK’s contract for difference (CfD) auction is due to open for applications in March 2025. In advance of this, the Government has launched a consultation to seek the views of market participants both on specific changes for the AR7 auction as well as on longer-term policy considerations for future allocation rounds. In part, this longer-term planning reflects the reduced time that Government will have to implement policy changes in future as it shifts to more frequent, annual CfD rounds. For more information, see our blog post.

UK: Quicker and cheaper enforcement for environmental offending via variable monetary penalties

Variable monetary penalties (VMPs) are discretionary civil fines that can be imposed by the Environment Agency (EA) to sanction the commission of environmental offences. They may be used as an alternative to prosecution where there are strong mitigating factors, or where the criminal standard is not met. Changes to VMPs came into force on 1 December 2023 by statutory instruments amending the Environmental Permitting (England and Wales) Regulations 2016 and the Environmental Civil Sanctions (England) Order 2010. As of 11 December 2023, the EA can now impose potentially significant financial penalties on companies that pollute the environment without bringing criminal proceedings. The previous £250,000 cap on VMPs under the Environmental Civil Sanctions (England) Order 2010 has been removed, and the range of offences for which VMPs can be imposed has been expanded. For more information, see our blog post.

EU: Political agreement on the regulation of ESG ratings providers

On 11 January 2024, trilogue negotiations started on the Proposal for the authorisation and regulation of ESG ratings providers. For more information on the Commission proposal, see our previous blog posts here and here. In December 2023, both the Council and the EU Parliament had agreed their respective negotiation positions (see here and here). On 6 February 2024, it was announced that the co-legislators have reached a political agreement (see the Council’s press release). Formal adoption is expected to occur before the EU elections in June. We will cover this development in more detail in the March edition of the ESG Newsletter.

EU: Commission provides guidance on EU Taxonomy disclosures

On 21 December 2023, the European Commission published a draft guidance document with FAQs on the interpretation and implementation of the Taxonomy Disclosures Delegated Act. The guidance is intended to help financial market participants prepare their first mandatory reporting in 2024. It considers: (i) the scope of entities subject to the reporting obligations; (ii) reporting obligations of large financial undertakings and financial undertakings admitted to trading on EU markets relating to how they finance, invest in or insure taxonomy-aligned activities; (iv) taxonomy assessment of specific exposures such as to retail clients, local authorities and exposures to individual undertakings and groups; and (v) rules pertaining to the verification and evidence of compliance with the EU Taxonomy. The draft guidance states that it was approved in principle by the Commission on 21 December 2023 and its formal adoption in all the official languages of the EU will take place as soon as the language versions are available.

EU: ESAs propose amendments to SFDR RTS

On 4 December 2023, the European Supervisory Authorities (the ESAs) published their final report with proposed amendments to the SFDR RTS. In this final report, the ESAs propose adding new social PAI indicators, streamlining the framework for the disclosure of PAI of investment decisions on the environment and social, new product disclosures regarding greenhouse gas emissions reduction targets and further technical revisions to the SFDR. For more information, see our briefing and watch our webinar where our experts discuss the proposed changes. The Commission has to decide whether to endorse the RTS within the next three months. However, at a European Parliament session held on 23 January 2024 to facilitate the Parliament’s scrutiny of the draft SFDR RTS, Hélène Bussières, Deputy Head of the Asset Management Unit at the Commission, indicated that approval of the draft will be delayed (see our blog post for more details on the delay).

EU: ESMA postpones adoption of ESG and sustainability-related terms in fund names guidance until Q2 2024

On 14 December 2023, ESMA published a statement providing an update on the status of ESMA’s guidelines on ESG and sustainability-related terms in fund names, including details on the timing of their publication and details of where the proposals are headed. In summary, adoption of these guidelines has been delayed to Q2 2024 to follow the finalisation and publication of the EU AIFMD II and revised UCITS rules. For more information, see our blog post.

EU: ESMA consults on guidelines on enforcement of sustainability information

On 15 December 2023, ESMA published a consultation paper on draft guidelines for the enforcement of sustainability information, as required by the CSRD. According to the press release, the main objectives of the draft guidelines are to: (i) ensure that national competent authorities carry out their supervision of listed companies' sustainability information in accordance with the CSRD, the European Sustainability Reporting Standards (ESRS), and Article 8 of the Taxonomy Regulation in a harmonised manner; and (ii) establish consistency in, and equally robust approaches to, the supervision of listed companies' sustainability and financial information in order to enhance connectivity between the two types of reporting. ESMA has sought to align the guidelines as closely as possible with ESMA's guidelines on enforcement of financial information. The consultation period closes on 15 March 2024. ESMA expects to publish the final guidelines in Q3 2024. They will apply to the enforcement of sustainability information published from 1 January 2025.

EU: EBA consults on draft guidelines for banks on the management of ESG risks

On 18 January 2024, the European Banking Authority (EBA) launched a consultation on “Draft Guidelines on the management of ESG risks” in accordance with CRD6 (see EBA press release). The draft guidelines: (i) aim to enhance the identification, measurement, management and monitoring of ESG risks by institutions and at supporting their safety and soundness as they are confronted with the short, medium and long-term impact of ESG factors; (ii) contain requirements as to the internal processes and ESG risks management arrangements that institutions should have in place, including specific plans to address the risks arising from the transition and process of adjustment to relevant sustainability legal and regulatory objectives; and (iii) include minimum reference methodologies to be developed and used by institutions to measure ESG risks. The focus is on the main features of key types of methodologies, whilst flexibility is left to institutions regarding specific details. They also provide a common understanding of what a risk-based (transition) plan entails in the prudential space - according to the EBA, CRD-based prudential plans aim at ensuring that institutions comprehensively assess and embed forward-looking ESG risks considerations in their strategies, policies and risk management processes, including by taking a long-term perspective and with a view to ensuring their soundness and resilience to the risks faced. The EBA note that the goal of prudential (transition) plans is not to force institutions to exit or divest from carbon intensive sectors, but rather to “prepare and adapt” for climate transition risks and opportunities. The consultation closes on 18 April 2024 and the final guidelines are expected by the end of 2024. The application date will depend on the CRD6 application date. For more information, see our blog post.

EU: ECB assessment of risks from misalignment of banks’ financing with the EU climate objectives

A study published by the European Central Bank (ECB) has found that many European banks could face higher legal and reputational risks by deviating from the wider transition away from carbon-intensive industries. The study, which analysed 95 EU banks covering 75% of euro area loans, found that the credit portfolios of roughly 90% of banks were “substantially misaligned with the goals of the Paris Agreement”. Banks should adopt Paris-aligned transition plans with realistic, transparent, and credible goals that can be implemented in a timely manner. These should incorporate concrete intermediate milestones from now until 2050, with key performance indicators that allow management bodies to monitor and act upon risks. For more information, see our blog post.

EU: EBA advises the Commission on green loans and mortgages

On 15 December 2023, the EBA published an opinion and a report in which it recommended the introduction of a new EU green loan label over the next one to two years. The EBA acknowledged that the Green Loan Principles already set out market standards for green loans but highlighted that they do not define what counts as a green purpose. The EBA suggested that a definition should be produced by reference to the EU Taxonomy, but with a degree of additional flexibility (reflecting that the EU Taxonomy sets a high bar). The EU green loan label could then be applied to green loans which fall within that definition. The EBA also noted that the sustainability-linked loans market is considerably larger than the green loans market and indicated that a policy framework for sustainability-linked loans could be developed over a longer timeframe of two to five years.

EU: EIOPA consults on anti-greenwashing opinion for insurance and pension sectors

The European Insurance and Occupational Pensions Authority (EIOPA) has published a consultation paper on its proposed approach to tackle greenwashing in the insurance and occupational pensions sectors. The draft opinion describes four principles that EIOPA believes should be observed when providers (i.e. insurers and pension providers) make sustainability claims. It includes guidance to competent authorities on how to identify misleading sustainability claims and monitor greenwashing throughout the relevant product lifecycle. EIOPA has also listed examples of good and bad practices against each of the proposed principles. The deadline for comments on the draft opinion is 12 March 2024. For more information, see our blog post.

EU: EIOPA consults on prudential treatment of sustainability risks

The European Insurance and Occupational Pensions Authority (EIOPA) has published a consultation paper as part of its work to assess the potential for a dedicated prudential treatment, within the Solvency II framework, of assets and activities associated substantially with environmental or social objectives. EIOPA previously published a discussion paper in this area in December 2022 (see our previous briefing). In its consultation, EIOPA concluded that fossil fuel-related shares and bonds have an elevated risk profile and set out other policy options to mitigate the higher risks. It also has found that there is insufficient evidence to support a dedicated prudential treatment of the property risk connected with differences in the level of the energy performance of buildings and the influence of climate-related adaptation measures (e.g. anti-flood doors) on non-life underwriting risks. EIOPA also provided an initial analysis of the extent to which Pillar II and III requirements under Solvency II could cover social objectives, to identify potential areas for further work. The stakeholders should submit their comments by 22 March 2024 through EU Survey Tool.

UK: PRA 2024 supervisory expectations for banks and insurance sector

The UK’s Prudential Regulation Authority (PRA) has sent “Dear CEO” letters setting out its supervisory priorities for UK deposit takers, international banks and the insurance sector. A common theme that underpins its 2024 priorities is the need for robust governance, risk management and controls at firms to enable the effective and proactive identification, assessment and mitigation of risks in an increasingly challenging and changeable operating environment. The PRA have identified that, in the context of the financial risks arising from climate change, whilst firms are progressing in their approach to managing these risks, further work is still required. For more information, see our blog post.

ISDA publishes sustainability-linked derivatives clause library

ISDA published the Sustainability-linked Derivatives Clause Library on 17 January 2024 in response to market demand for standardised provisions for sustainability-linked derivatives. For more information, see our client briefing.

Global: Updates to the SASB Standards

In December 2023, the ISSB published updates to the SASB Standards to enhance their international applicability. The updates remove and replace jurisdiction-specific references and definitions without substantially altering the structure or intent of the SASB Standards. The changes are intended to help preparers apply the SASB Standards (which cover 77 industries) regardless of their geographic location. The ISSB’s IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) requires preparers to refer to and consider the SASB Standards in identifying sustainability-related risks and opportunities, if no relevant IFRS sustainability disclosure standard is available.

Global: List of early adopters of TNFD framework for nature disclosures

In January 2024, the Taskforce on Nature-related Financial Disclosures (TNFD) published a list of “early adopters”. Over 300 organisations (including corporates, banks, and asset managers) have indicated that they intend to adopt the TNFD’s recommendations and start making disclosures on their nature-related risks and opportunities in their annual corporate reporting starting in either FY2024 or FY2025. However, this does not necessarily mean that early adopters will cover all 14 recommended disclosures. As was the case with the TCFD at the start, the expectation is that companies will get started with some of the nature disclosures and will increase these over time. The TNFD has also published draft sector guidance for eight priority sectors (including oil and gas, metals and mining, and forestry and paper), which are open for feedback until 29 March. There is also draft additional guidance for financial institutions, which is open for feedback until 27 February. For more information on the TNFD recommendations, see our previous blog post.

EU: Amendments to the monetary size criteria for companies in the Accounting Directive published in the OJEU

The Delegated Directive, amending the Accounting Directive to adjust the monetary size criteria (balance sheet and net turnover) for micro, small, medium-sized, and large companies by 25% in order to account for inflation has been published in the Official Journal of the EU on 21 December 2023 (for more details on the Directive, see our previous blog post). Generally, Member States shall apply the new thresholds starting from the financial year beginning on or after 1 January 2024. However, they can allow companies to apply these provisions from the financial year beginning on or after 1 January 2023. Member States must enact the legislation necessary to comply with the Directive by 24 December 2024.

France is the first member state to transpose CSRD

The Corporate Sustainability Reporting Directive (CSRD) has been partially transposed into French law by an ordinance (ordonnance) dated 6 December 2023. France is the first EU member state to transpose the CSRD into national law. Except for certain specified provisions, the French Ordinance will enter into force as from 1 January 2024. Other implementing texts, notably a decree (décret) and several orders (arrêtés), are still expected to be finalised to complete the transposition of the CSRD into French law. For more information, see our blog post.

EU: Latest developments on implementation of ESRS under the CSRD

The Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) will start applying in relation to the 2024 financial year for the first cohort of EU listed companies and large public interest entities. The next steps for the CSRD largely relate to the development of further reporting standards. Here is the status of the ESRS as of the end of January 2024:

• On 22 December 2023, the first set of the European Sustainability Reporting Standards (ESRS) was published in the Official Journal of the EU. These sector-agnostic reporting standards specify the sustainability information that companies will need to report on in accordance with the CSRD. They are directly applicable in all Member States and will apply from 1 January 2024 (for financial years beginning on or after 1 January 2024). For more details on the ESRS, see our previous blog post.
• The CSRD requires the Commission to adopt by 30 June 2024: (i) sector specific ESRS, which will set out the information specific to the sectors in which a company operates; and (ii) ESRS to be used by certain non-EU companies with business in the EU meeting certain thresholds. In October 2023, the Commission published a proposal to delay the adoption of these two ESRS to 30 June 2026. On 24 January 2024, the Legal Affairs Committee of the European Parliament approved the two-year delay. The proposal still needs to be approved by the full Parliament and the Council. For more information, see our blog post.
• On 22 December 2023, EFRAG published drafts of the first three implementation guidance documents. These guides aim to support the application of the sector-agnostic ESRS and are open to feedback until 2 February 2024.
  • Draft EFRAG IG 1: Materiality assessment implementation guidance describes the reporting requirements on the materiality assessment including the illustration of possible steps of the process. It also contains FAQs on the double materiality assessment to provide practical implementation guidance.
  • Draft EFRAG IG 2: Value chain implementation guidance outlines the reporting requirements related to the value chain during the materiality statement, for impacts, risks and opportunity management as well as metrics and targets. It discusses the reporting boundary of the group for sustainability reporting, including operational control, and includes FAQs to provide additional information. The 'value chain map' summarises the value chain implications per disclosure requirement.
  • Draft EFRAG IG 3: Detailed ESRS datapoints implementation guidance, along with an accompanying explanatory note, presents a complete list of all disclosure requirements in the sector-agnostic ESRS in an Excel format.
• On 24 January 2024, EFRAG launched a public consultation on the Exposure Draft ESRS for listed SMEs. This will be issued as a delegated act and will be effective on 1 January 2026 with an additional two-year opt out. These ESRS aim to set reporting requirements that are proportionate and relevant to the scale and complexity of the activities and to the capacities and characteristics of listed SMEs. EFRAG also opened a public consultation on the Exposure Draft for the voluntary reporting standard for non-listed SMEs. It proposes a simple reporting tool to assist non-listed micro-, small- and medium-sized enterprises (non-listed SMEs) in responding to requests for sustainability information that they receive from business counterparts (i.e., banks, investors or larger companies for which non-listed SMEs are suppliers) and support them in having better access to lenders, investors and clients. The consultation on both ESRS will be open until 21 May 2024.
• On 24 January 2024, EFRAG also announced that it will hold a series of online workshops in February 2024 to collect feedback on the current version of the draft ESRS – SEC1 Sector Classification, which is expected to be shared for consultation in the coming months.

EU: European single access point legislative package published in Official Journal

On 20 December 2023, the European Single Access Point (ESAP) Regulation along with the ESAP Omnibus Directive and ESAP Omnibus Regulation were published in the Official Journal of the EU. The legislative package amends existing EU legislation in financial services, capital markets and sustainability to enable the functioning of ESAP. The ESAP will provide free, centralised, and digital access to information about financial services, capital markets, and sustainability, which entities and competent authorities are required to make public. This is intended to facilitate the decision-making process for investors, including retail investors. The ESAP itself does not impose additional reporting requirements on companies. The ESAP platform is expected to be available from summer 2027. The ESAP Regulation, ESAP Omnibus Regulation, and ESAP Omnibus Directive each entered into force on 9 January 2024. Member states have until 10 January 2026 to transpose the ESAP Omnibus Directive into national law. However, the deadline for transposing Article 3, which relates to the Transparency Directive, is set for 10 July 2025.

On 8 January 2024, the ESAs published a consultation paper on the draft Implementing Technical Standards specifying certain tasks of collection bodies and certain functionalities of the ESAP. The consultation closes on 8 March 2024. The ESAs need to submit the draft standards to the Commission by 10 September 2024.

EU: Political agreement reached on the CSDDD

On 14 December 2023, the European Parliament and the Council reached a political agreement on the Corporate Sustainability Due Diligence Directive (CSDDD or CS3D). This will impose far-reaching obligations for in-scope companies to carry out due diligence and mitigate actual and potential adverse impacts on human rights and the environment. For companies operating in the EU and their business partners, this is an extremely important turning point and they should prepare carefully for the entry into force of the new obligations. The provisional agreement reached in December still needs to be endorsed and formally adopted by both the Parliament and the Council before the final text of the Directive is published in the Official Journal and enters into force 20 days later. For more information, see our blog post.

EU: Trilogues to start on the Forced Labour Regulation

On 26 January 2024, the Council reached its negotiating position on a proposal for a Regulation prohibiting products made with forced labour on the EU market (Forced Labour Regulation). The forced labour ban, proposed by the Commission on 14 September 2022, would apply to all products, whether made in whole or in part with forced labour, across all sectors, and irrespective of the provenance of the goods (including those made within the EU). For more details on the Commission proposal, see our previous blog post. According to the Council press release, it has clarified the scope of the Regulation by including products offered for sale at a distance, envisaged the creation of a forced labour single portal, and reinforced the role of the Commission in investigating and proving the use of forced labour, while aligning the proposed measures with both international standards and EU legislation. The Parliament reached on its negotiating position on 16 October 2023. The co-legislators can now start trilogue negotiations, although it is not clear whether they will be able to finalise the Regulation before the European Parliament elections this summer.

UK: Private Members’ Bill proposes human rights due diligence obligations

On 15 December 2023, Baroness Young of Hornsey introducing a Private Members’ Bill in the House of Lords – the Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill. Although the UK government had previously announced that it does not intend to replicate the EU’s Corporate Sustainability Due Diligence Directive (CSDDD), the Bill, if passed into law, would go beyond the CSDDD and introduce a duty for both commercial organisations (of all sizes) and public authorities incorporated or operating in the UK to prevent human rights and environmental harms in their own operations, those of their subsidiaries and in their value chains. For more information, see our blog post.

UK: Benchmark on modern slavery reporting

At the end of November 2023, the CCLA, which is an investment manager whose stated purpose is to help its clients maximise their impact on society by harnessing the power of investment markets, published its first benchmark on modern slavery. The benchmark is based on the assessment of the 100 largest UK-listed companies reporting under section 54 of the Modern Slavery Act 2015. The benchmark itself assessed the companies’ statements (with some review of associated public disclosures e.g., annual ESG reports and human rights policies) on the degree to which they: (i) conformed with the requirements of section 54; (ii) disclosed information outlined in the accompanying Home Office Guidance on Modern Slavery; and (iii) provided disclosures on how they “find”, “fix” and “prevent” modern slavery. One of the main findings was that there was a focus on policy over practice. The benchmark made recommendations for companies on the back of these findings. For more information, see our blog post.

UK: First agreement proceeds under the UK’s competition and sustainability rules

The Competition & Markets Authority (CMA) has published its first piece of informal guidance under its Green Agreements Guidance, giving the Fairtrade Foundation UK the green light for a sustainability collaboration for sourcing Fairtrade bananas, coffee and cocoa products. The Green Agreements Guidance which was published in October this year has already given sustainability professionals more confidence in what is and isn’t permitted under the competition rules (see our survey results here). This is the first of a number of collaborations which we understand the CMA is considering to be published and serves as a useful blueprint for how the CMA is going to approach such collaboration going forward. As more informal guidance is made available, it will (hopefully) create a virtuous circle with higher levels of certainty giving more businesses the confidence to work together on sustainability projects. For more information, see our blog post.

UK: Evidence and context – the key to green advertising claims in the UK in 2024

UK agencies were busy in the last weeks of 2023.The Advertising Standards Agency (ASA) called out a number of adverts in the aviation and energy sectors which it found amounted to greenwashing and issued guidance on “green disposal claims”. And the Competition and Markets Authority (CMA) opened an investigation into green claims by a consumer goods company. Regulators’ activity on green claims, in particular in the UK, is likely to gather pace in 2024. For more information, see our blog post.

UK: Preparing for 2024 AGM season: a guide for UK-listed companies

We have published AGMs Update - A guide for UK-listed companies in 2024, which focuses on issues for UK listed companies to consider as they prepare for their 2024 AGMs. Topics covered include recent trends in shareholder engagement, the latest investor views on issues such as climate and other environmental issues, diversity, and remuneration. The guide also includes practical tips on managing a successful AGM.

UK corporate reporting 2023/24: recent developments and guidance for listed companies

For many companies, new rules on diversity information and performance against diversity targets, as well as new requirements on publishing TCFD-aligned climate information, will apply for the first time in their 2023/24 annual reports. Companies will again be reporting against the background of economic and geopolitical uncertainty. Many of the messages in regulators’ guidance on reporting will be familiar from last year. Our briefing summarises recent developments and guidance from regulators and investors to help UK listed companies prepare their 2023/24 annual reports.

UK: FCA publishes detailed proposals for listing regime reform

The UK’s Financial Conduct Authority (FCA) has published its feedback on CP 23/10 and a further consultation on detailed provisions for reform (including the first tranche of draft rules). Many of the proposals are broadly as they appeared in CP 23/10 and the new rules adhere to the philosophy of investor protection through disclosure rather than regulation – focussing on investors making informed decisions and holding company boards to account. Where the FCA had previously been more cautious in relation to dual-class share structures, it is now taking a more permissive approach. However, not all the proposals reflect further relaxations. The FCA has sought to strike the right balance and increased notification requirements proposed in relation to class 1 transactions, are an example of this re-evaluation. Recognising that the new single segment will mean a step-up in regulation for existing standard listed issuers, the FCA proposes a “transition” listing category, meaning no existing issuers will be forced to de-list. For more information, see our client briefing.

EU Platform Work Directive: Council and Parliament agree on rules for gig-economy workers

On 13 December 2023, the EU legislators reached a provisional agreement on the Platform Work Directive. This marks a significant step in the ongoing debate over how gig-economy workers should be classified - as employees or as self-employed. The Directive also introduces the first ever EU-rules on algorithmic management in the workplace. The agreed text must now be formally adopted by both the Parliament and the Council before it will be published in the Official Journal of the EU and enter into force. For more information, see our blog post.

Rising anti-ESG litigation

Anti-ESG litigation remains on the rise. In December 2023, the State of Tennessee filed suit in state court against a global asset management company, alleging that the company misled consumers about its ESG considerations in violation of the Tennessee Consumer Protection Act. The complaint alleges that the company falsely conveyed that certain funds do not incorporate ESG considerations when they in fact do and overstated the true extent that ESG provides financial benefits to investors. The state seeks injunctive relief, civil penalties, disgorgement, and restitution.

Oil and gas companies are increasingly bringing anti-ESG litigation. In January, an oil and gas company filed a complaint in the U.S. District Court for the Northern District of Texas seeking declaratory judgment that it can exclude a shareholder proposal from its proxy statement filed with the SEC and not present it for a shareholder vote at the annual shareholder meeting. The shareholder proposal, which was filed in December 2023 for consideration at the company’s 2024 annual shareholder meeting, is related to “accelerating the pace of emission reductions in the medium-term for its greenhouse gas (GHG) emissions across Scope 1, 2, and 3.” The complaint alleges that the shareholders behind the proposal have missions related to climate change and are pursuing a so-called “Goldilocks Trojan Horse Strategy,” in which they become shareholders to campaign for change through shareholder proposals. The complaint notes that the proposal is designed to “shrink the very company in which they are investing” and force the company “to change the very nature of its ordinary business or to go out of business entirely,” and that similar proposals by the parties were overwhelmingly rejected in 2023 and 2022. Soon after the complaint was filed, the shareholders announced they would withdraw the proposal. However, the company recently stated it would still pursue this lawsuit given that “there are still important issue for the court to resolve”. Also in December, an Oregon state appeals court ruled in favor of two natural gas companies challenging the Oregon Department of Environmental Quality's (DEQ) rules establishing the Climate Protection Program, which created a “cap and reduce” program for distribution of fossil fuels and required certain sources to limit industrial process emissions. The court agreed that the Environmental Quality Commission, the policy and rulemaking board for the DEQ, did not meet certain disclosure requirements and therefore the rules are invalid. In January 2024, the DEQ announced that it will not appeal and will instead be moving through the rulemaking process to reinstate the Climate Protection Program.

Federal agencies: new rules and increased challenges

In January 2024, the U.S. Department of the Interior (DOI) proposed a rule intended to streamline the “inefficient and inflexible” system for settlements currently in place under the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA). The purpose of the CERCLA is to facilitate settlements for environmental damage which result from pollution. The DOI’s Office of Restoration and Damage Assessment’s proposed changes would expand opportunities to use CERCLA's Type A path for settlements, which had previously been for the exclusive use of aquatic and coastal environments with US$100,000 or less of damage, to more environments with damages of US$3m or less. The proposed rule will be open for public comment running through 5 March 2024.

Federal agencies are encountering challenges from both anti-ESG and pro-ESG parties. For instance, a group of 18 states recently requested that a Kentucky federal judge block the U.S. Department of Transportation's (DOT) recently finalised Greenhouse Gas Performance Measure Rule (the Rule), which requires state departments of transportation and metropolitan planning organisations to establish declining targets for carbon dioxide emissions associated with transportation. The states argue that the DOT does not have authority to regulate greenhouse gas emissions and that the Rule is arbitrary and capricious, and request that the court temporarily restrain the Rule from going into effect on its scheduled date of 1 February 2024 while their lawsuit proceeds. However, also in December, 18 youth plaintiffs filed a complaint in the U.S. District Court for the Central District of Washington against the U.S. Environmental Protection Agency (EPA), claiming that the agency exceeded its delegated authority and violated their constitutional rights by permitting unsafe levels of climate pollution to enter and accumulate in the nation’s air. The plaintiffs argue that they are “burden[ed] with a lifetime of hardship” by long-time exposure to toxic contaminants, chemicals, and polluted air because as minors, they do not have political power to influence or alter climate policy. The youth plaintiffs seek declaratory relief.

Energy litigation: increased challenges from Native American tribes and other parties

Native American tribes are increasingly filing lawsuits against energy companies. On 20 December 2023, the Makah Indian Tribe and the Shoalwater Bay Indian Tribe filed separate lawsuits in Washington State Superior Court against five major oil and gas companies, alleging that the companies “misled consumers and the public about the central role of fossil fuels in causing climate change.” The complaints allege that the companies engaged in a climate deception campaign that led to heightened fossil fuel consumption and an increase in greenhouse gas emissions, substantially worsening climate-change effects and causing the tribes to incur damages to their property, public health, and natural resources. The plaintiffs seek monetary damages and abatement of public nuisance.

Also in December 2023, the U.S. District for the Northern District of Oklahoma granted summary judgment in favor of the U.S. Government and the Osage Nation, permitting the ejectment of 84 wind turbines from Osage County, Oklahoma. The order is part of a long-running dispute between the Osage Nation and a wind energy company and its subsidiaries concerning the tribe’s claims that the company’s wind farm deprived the tribe “of access to and the right to develop the mineral estate” in 2011. The court noted that the defendants’ excavation and alteration of natural size and shape of rocks for structural support in the wind turbine construction constituted mineral development and mining that required a mineral lease that the defendants did not have, holding the defendants liable for the claims of trespass, continuing trespass, and conversion. A trial for damages will be held at a later date.

Pollution and PFAS litigation

Lawsuits related to pollution and PFAS remain topical in the new year. In December 2023, an oil and gas company and an environmental NGO settled claims brought in the U.S. District Court for the District of Massachusetts alleging toxic pollution at the company’s storage terminal after numerous motions to dismiss were denied. The complaint alleged that the oil and gas company failed to adequately prepare the facility for the effects of climate change that would increase the amount of toxic pollutant discharge from the terminal into nearby waters. While the terms of the settlement agreement are confidential, the plaintiff indicated in a press release that the settlement agreement included a provision that permanently restricts the site from being used for bulk storage of oil or other fossil fuels.

In January 2024, five companies agreed to settlements with the U.S. Department of Justice totaling over US$7.2m to resolve claims related to the discharge of pollutants at a water site near Toledo, Ohio. The complaint alleged that the companies are liable for industrial discharges of oil or hazardous substances, including polycyclic aromatic hydrocarbons (PAHs) at the site that could cause damage to the local wildlife and ecosystem. Also in January, the State of Connecticut filed two lawsuits in state court against multiple chemical manufacturers, alleging that the companies knowingly contaminated state waters and natural resources with per- and polyfluoroalkyl substances (PFAS) and aqueous film forming foam (AFFF). The plaintiffs claim that the chemical manufacturers concealed information about the harms to human health and the environment caused by PFAS and AFFF products from consumers and the public to delay regulatory efforts and scientific investigations. The state seeks injunctive, monetary, and other equitable relief.

U.S. Securities and Exchange Commission

While the U.S. Securities and Exchange Commission (SEC) may have removed ESG as a focus from its list of 2024 examination priorities (despite it having been listed as a priority for the three previous years), recent reports indicate that the SEC continues to take action in the space. For instance, it recently became public knowledge that the SEC’s Division of Corporation Finance sent comment letters in August and September 2023 to at least 12 large corporations requesting additional information on the impact of climate change on their business, and questioning why the annual financial reports they submitted to the SEC contained less information about their climate risk than the corporate sustainability reports published separately by the companies. In some of these correspondences, the SEC requested additional information such as the manner in which the companies determine the importance of climate-related issues and how climate risks impact consumer demand for their products.

The SEC’s most recent regulatory agenda also indicates that adoption of its long-awaited climate change rules, which would require SEC registrants include statements on climate-related risks likely to have a material impact in their annual reports, has been pushed to April 2024. In January 2024, the U.S. House of Congress Financial Services Committee’s Oversight and Investigations Subcommittee held a hearing on the proposed rule and indicated in the hearing memorandum that it would examine the “the limited economic analysis used by the SEC to develop the rule and the rule’s impact on U.S. business” and “the cumulative impact of rushed rulemaking on our markets.” For more information about this regulatory update, see our client briefing.

Hong Kong Monetary Authority publishes guidance to banks on distributing green products

The Hong Kong Monetary Authority (HKMA) has issued a circular with an appendix of FAQs setting out its expected standards in relation to the sale and distribution of green and sustainable investment products. The FAQs are particularly helpful in clarifying the applicability of the circular and consider customer sustainability preferences and how the circular interplays with the suitability requirement. For Registered Institutions (RI) who are in-scope of the circular, they should comply as soon as practicable, and ensure full compliance by 29 November 2024. For more information, see our blog post.

Hong Kong SAR’s Cross-Agency Steering Group announces key initiatives to support scaling sustainable finance

On 8 January 2024, the Green and Sustainable Finance Cross-Agency Steering Group (the Steering Group) announced its key initiatives for the year ahead. Its three key initiatives are aimed “to capture financing and investment opportunities from the Asia-Pacific Region’s low carbon transition” and are (i) adopting the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards locally, as appropriate; (ii) leveraging technology to support sustainability reporting and data analysis; and (iii) supporting the development of transition finance to consolidate Hong Kong’s role as a leading sustainable finance hub. For more information, see our blog post.

The Monetary Authority of Singapore launches the Singapore-Asia Taxonomy for Sustainable Finance

On 3 December 2023, the Green Finance Industry Taskforce (GFIT), convened by the Monetary Authority of Singapore (MAS), launched the Singapore-Asia Taxonomy for Sustainable Finance (the Taxonomy). The Taxonomy sets out detailed thresholds and criteria for defining green and transition activities that contribute to climate change mitigation across eight focus sectors (being (i) energy, (ii) real estate, (iii) transportation, (iv) agriculture and forestry/land use, (v) industrial, (vi) information and communication technology, (vii) waste/circular economy, and (viii) carbon capture and sequestration). The Singapore-Asia Taxonomy is one of the first taxonomies globally to include the concept of a “transition” category through a “traffic light” system - an important development in efforts to accelerate the flow of capital to transition activities in the region. For more information, see our blog post.

The Monetary Authority of Singapore publishes code of conduct for providers of ESG rating and data products

On 6 December 2023, the Monetary Authority of Singapore (MAS) published its responses to the public consultation (the Responses) and the finalised Code of Conduct for ESG Rating and Data Product Providers (the Code), together with a checklist for providers to self-attest their compliance with the Code. The public consultation ran from June to August 2023 (see our previous client briefing on the consultation). The Code, which sets a voluntary standard of best practice within the ESG data and ratings market, builds upon the International Organisation of Securities Commissions’ (IOSCO) recommendations for such providers published in November 2021. The Code aims to establish baseline industry standards for transparency in methodologies and data sources, governance, and management of conflicts of interest that may compromise the reliability and independence of the products. For more information, see our blog post.

Singapore launches the Singapore Sustainable Finance Association

On 24 January 2024, the Singapore Sustainable Finance Association (SSFA) was launched with 150 representatives from the financial sector, corporates, industry bodies, non-governmental organisations, and government bodies. The SSFA’s aim is to collaborate across the financial and real economy sector with four strategic objectives – (i) galvanise the development of a sustainable finance ecosystem and promote best sustainable finance practices, (ii) facilitate collaboration between the financial and non-financial sectors for sustainable finance to support the low carbon transition and sustainable economic growth, (iii) bolster Singapore as an international thought leader in sustainable finance, and (iv) support the deepening of sustainable finance capabilities for the industry. For further information, see SSFA’s press release.

Singapore announces the Financing Asia’s Transition Partnership (FAST-P)

Singapore is establishing a blended finance platform called Financing Asia’s Transition Partnership (FAST-P) in collaboration with key public, private and philanthropic sector partners. The FAST-P aims to mobilise up to US$5bn to de-risk and finance transition and marginally bankable green projects in Asia. At a speech given by Mr Ravi Menon, Managing Director, Monetary Authority of Singapore (MAS) at COP28, he explained that the FAST-P will target the following three key areas of green and transition investments: (i) the “Energy Transition Acceleration” theme will cover transition projects such as the managed phase-out of coal together with renewable energy replacement; (ii) the “Green Investments” theme will invest in projects involving mature technologies, such as scaling renewable energy, grid modernisation, and electric vehicle infrastructure; and (iii) the “Clean Technologies” theme will focus on more emerging green technologies that are being piloted, such as the use of hydrogen and carbon capture, utilisation and storage. The intention is for financiers and investors to form partnerships, managed by an asset manager, with dedicated investment and impact objectives for each investment theme. See below for details of partnerships established under the FAST-P at COP28.

On 3 December 2023, Allied Climate Partners (ACP), International Finance Corporation (IFC), the MAS and Temasek announced their intention to establish a “Green Investments Partnership” under the FAST-P. The parties signed a Memorandum of Understanding (MOU) with the aim of identifying and developing a pipeline of investments in sectors including renewable energy and storage development, electric vehicle infrastructure, sustainable transport, water and waste management that were previously only marginally bankable, and unable to attract commercial financing on their own merits.

On 5 December 2023, MAS, the Asian Development Bank (ADB) and Global Energy Alliance for People and Planet (GEAPP) also announced their intention to establish a blended finance partnership as part of FAST-P. The parties signed a MoU to set up an “Energy Transition Acceleration Partnership” with the aim of mobilising concessional capital from the philanthropic and public sectors, de-risk projects, and crowd-in private capital globally to finance energy transition projects in Asia such as the early phaseout of coal assets to be replaced with renewable energy, and decarbonisation projects in hard-to-abate sectors as well as exploring using high-integrity transition carbon credits.

The Monetary Authority of Singapore launches coalition and announces pilots to develop transition credits for the early retirement of coal fired plants

On 4 December 2023, the Monetary Authority of Singapore (MAS) announced the launch of the Transition Credits Coalition (TRACTION) and two pilot projects to test the use of high-integrity transition credits in transactions for the early retirement of coal-fired power plants (CFPPs). TRACTION and the pilot projects will build upon the concepts laid out in the working paper jointly published by the MAS and McKinsey & Company in September 2023. TRACTION’s aim is to identify the challenges and propose solutions to scale the early retirement of CFPPs in Asia through high-integrity carbon credits so that such carbon credits are used as credible financing instruments. In addition, MAS announced two pilot projects in collaboration with (i) ACEN Corporation and Coal-to-Clean Credit Initiative, to accelerate the retirement of the South Luzon Thermal Energy Corporation coal plants in Philippines; and (ii) the Asian Development Bank, which is advising the Government of Philippines over the retirement of a coal plant in Mindanao under its Energy Transition Mechanism.

The Network for Greening the Financial System publishes recommendations to scale blended finance in emerging markets and developing economies

On 4 December 2023, the Network for Greening the Financial System (NGFS) published a Technical Document on “Scaling Up Blended Finance for Climate Mitigation and Adaptation in Emerging Market and Developing Economies (EMDEs)”. The Technical Document identifies recommendations aimed at addressing key barriers to scaling blended finance in EMDEs and showcases demonstrative projects from various EMDEs that have successfully crowded in private capital into climate financing projects.

GFANZ Asia Pacific Network publishes guidance on financing the managed phaseout of coal fired power plants in APAC

On 4 December 2023, the GFANZ Asia Pacific Network published a guide entitled “Financing the Managed Phaseout of Coal-Fired Power Plants in Asia Pacific” (the Guide). The Guide is aimed at financial institutions looking to provide financing to support plans for the accelerated phaseout of coal-fired power plants (CFFPs) in APAC, by setting clear expectations for relevant stakeholders, including the owners and operators of CFPPs. The Guide focuses on “managed phaseout” strategies for the early retirement of CFFPs and proposes recommendations financial institutions can apply when setting expectations for an entity-produced coal phaseout plan. These recommendations are organised into a three-step approach: (i) credibility (ensuring the credibility of the relevant energy transition and coal phaseout commitments and plans); (ii) impact (optimising “meaningful” outcomes across climate impact, financial viability and socio economic considerations); and (iii) accountability (achieving transparency and accountability for coal phaseout plans in line with the GFANZ NZTP framework).

Singapore Exchange Regulation and NUS Centre for Governance and Sustainability publish Sustainability Reporting Review 2023

The Singapore Exchange Regulation (SGX RegCo) and the NUS Centre for Governance and Sustainability have jointly released the Sustainability Reporting Review 2023, which assesses sustainability reporting by issuers listed on the Singapore Exchange (SGX) as of 31 July 2023. The review strongly focuses on climate-related disclosures, which many SGX-listed issuers have begun reporting from FY2022. It includes short case studies featuring a range of different issuers from large cap issuers to smaller entities, tips to help investors analyse sustainability reports, as well as a list of frequently asked questions on greenwashing. The review also examines issuers’ climate transition plans.

Singapore, Verra and Gold Standard collaborate on developing a playbook for carbon crediting under the Paris Agreement

On 11 December 2023, Singapore’s National Climate Change Secretariat announced in a joint press release that it is working with Gold Standard and Verra’s Verified Carbon Standard (VCS) Program to develop a “playbook” outlining standard operating procedures that countries can use to increase their use of existing carbon crediting programs to achieve their NDCs under the Paris Agreement. As the operationalisation of Article 6 of the Paris Agreement develops, how governments and carbon crediting programs should work together is still being development. To avoid the risk of divergent approaches being developed, this collaboration aims to define the respective roles of national registries and crediting program registries, setting out how information should be exchanged and offering a consistent approach to implement and comply with Article 6 rules. The three organisations intend to seek feedback from other countries and independent carbon crediting programs, with the aim of completing the playbook by mid-2024.

Singapore publishes eligibility list for international carbon credits under the carbon tax regime

On 19 December 2023, the Ministry of Sustainability and the Environment and the National Environment Agency have published the “Eligibility List under the International Carbon Credit (ICC) Framework”. The ICC Framework was introduced in November 2022 to allow carbon tax-liable companies to offset up to 5 per cent of their taxable emissions through the use of eligible ICCs. Following the publication in October 2023 of the Eligibility Criteria under the ICC Framework, this publication includes a list of eligible host countries (in this case, Papua New Guinea), carbon crediting programmes and methodologies that adhere to the Eligibility Criteria.

China relaunches the China Certified Emission Reduction (CCER) program

After a seven-year hiatus in the trading of voluntary emission reductions under the China Certified Emission Reduction Scheme (CCER), China’s voluntary carbon market was relaunched on 22 January 2024 allowing companies in certain industries to trade their carbon emissions reductions after voluntarily engaging in emission-cutting activities. Initially launched in June 2012, CCER was suspended in March 2017 due to low trading volumes and a perceived lack of standardisation in carbon project methodologies and verification. However, last year there were regulatory developments paving the way for the relaunch (see our previous blog post). The CCER scheme sits alongside China’s national emission trading system (ETS) which was launched in July 2021. During the initial phase, the CCER will consist of four sectors: forestation, solar thermal power, offshore wind power and mangrove vegetation creation. We understand that on the first day of CCER trading, the total transaction volume was 375,315 tons and the total transaction value was 23,835,280 Renminbi. The trading participants included energy companies, financial institutions, manufacturing companies and carbon trading service institutions.

China publishes biodiversity conservation plan for 2023 to 2030

On 18 January 2024, the Ministry of Ecology and Environment released the China’s Biodiversity Conservation Strategy and Action Plan (2023-2030) (Plan). Among other objectives, the Plan aims by 2030 to: (i) restore at least 30% of China’s degraded terrestrial, inland-water, coastal and marine ecosystems, (ii) increase the area of nature reserves to approximately 18% of China’s total land area, and (iii) ensure that the “red lines” designating special ecological conservation zones will encompass at least 150,000 square kilometres of China’s marine territory. The Plan further outlines measures in various priority areas, including laws and regulations, publicity, social participation, and monitoring and evaluation, so as to achieve timely fulfilment of these objectives.

The Insurance Association of China publishes the first self-regulating guidance on ESG disclosures for the insurance industry

On 13 December 2023, the Insurance Association of China published the “ESG Disclosure Guidelines for the Insurance Industry” (Guidelines). The Guidelines are the first self-discipline ESG disclosure document of the insurance industry. The Guidelines echo with the disclosure requirements in the Guidelines for Green Finance in Banking and Insurance Sectors, and take reference from the Statistical System for Green Insurance Business and the Green Insurance Classification Guidelines (2023 Edition). Among others, the Guidelines provide standards for insurance companies to disclose ESG information through 23 Tier 1 indicators and 49 Tier 2 indicators, and incorporate metrics including carbon peak and carbon neutrality, green finance, and green operation into its ESG information disclosure system.

China outlines penalties for production safety accidents

China published the Regulations on Penalties for Work Safety Accidents (Regulation) on 10 January 2024. The Regulation will take effect from 1 March 2024 and replaces the existing Regulations on Penalties for Work Safety Accidents (For Trial Implementation) adopted in 2007 (and as amended in 2011 and 2015). The Regulation applies to companies engaged in production activities in China, and specifies the penalties for different scenarios in the event of a production safety accident as classified under the Law on Work Safety and the Regulations on the Reporting, Investigation and Handling of Work Safety Accidents. Compared with the current iteration of the Regulation, among other matters, the revised rules adopt different discretionary benchmarks for penalties in different scenarios and raise the amount of penalties in general.

China adopts revised Company Law with ecological and environmental protection provisions

On 29 December 2023, the National People’s Congress voted to adopt the revised Company Law, which will take effect from 1 July 2024. Among others, the revised Company Law expressly requires companies to take into consideration public interests such as ecological and environmental protection when engaging in business operations, and encourages companies to participate in public welfare activities and publish social responsibility reports. The ESG-related provisions in the revised Company Law are only high-level at this stage. Further implementing measures may be expected but timing is unspecified.

Thai Bankers’ Association publishes industry handbook on climate change

On 14 December 2023, the Thai Bankers’ Association published the Industry Handbook re: Internalising Environmental and Climate Change Aspects into Financial Institution Business to assist Thai commercial banks in their integration of environmental and climate-related (E&C) risks into their business operations, in line with the “Policy Statement of the Bank of Thailand re: Internalising Environmental and Climate Change Aspects into Financial Institution Business” issued in February 2023. The Industry Handbook provides key definitions, practical guidance and illustrative examples of current industry practices on E&C risk management. It covers four main aspects: governance, strategy, risk management and disclosure. The Industry Handbook suggests steps that Thai commercial banks should take into account when building their systems, processes, data and capabilities. The Bank of Thailand expects the Thai banking industry to use the Industry Handbook to improve their climate and environmental risk management standards and support their clients’ transition.

COP28 reflections: a closer look at the Gulf region – Watch our videos

EU CSDDD political agreement reached at last – what was decided? – Watch our recording

ESG — Impact on capital raising of uncertainty – Read our article

Key ESG issues for the real estate sector: a pan-European guide – Read our guide

Fifty shades of Green? Sustainability and Antitrust – Read our briefing

Meet our ESG team: Kim Rybarczyk – Read our blog post

Meet our ESG team: James Marlow – Read our blog post