Awareness around the benefits and challenges of measuring Scope 3 emissions – those connected with a company but not produced as a result of their own direct operations or energy consumption – has grown rapidly over the past year.
This article demonstrates how Scope 3 emissions are essential in determining who is at the forefront of the race to net-zero, and why material reporting is key in being able to accurately assess corporate decarbonisation progress.
To read the full article, click here.
Last month, the EU Parliament proposed stringent minimum requirements for verifying and communicating green claims, explicitly banning carbon offsetting-based claims. This move aims to ensure that environmental claims made by businesses are backed by credible evidence, fostering consumer trust in sustainable products and practices. In parallel, the European Commission (EC) adopted the Retail Investment Package, a comprehensive set of measures designed to safeguard long-term investments and enhance consumer protection. Addressing environmental, social, and governance (ESG) concerns, the European Supervisory Authorities submitted draft regulatory standards to the EC. These standards seek to enhance ESG disclosure in securitization regulations, enabling market participants to make more informed investment decisions aligned with sustainability goals. To facilitate access to vital financial and sustainability-related information, the EU reached provisional agreement to establish the European Single Access Point (ESAP). This centralized platform will provide investors with valuable insights into EU companies, planned to release in 2027.
Across the English Channel, the United Kingdom is undertaking a review of its non-financial reporting requirements. Seeking to streamline reporting burdens and align with the EU framework, the UK aims to create a general framework that measures non-financial performance, benefiting companies operating within the EU.
In North America, Canada has taken a pivotal step to combat issues of forced labour and child labour in supply chains by enacting the ‘Fighting Against Forced Labour and Child Labour in Supply Chains Act’.
Meanwhile, the New Zealand government launched a consultation to reform the Emissions Trading Scheme (ETS) considering changes such as auction limits, reserve prices, and cost containment mechanisms. Taking a page from OECD’s Guidance on responsible business conduct, Japan’s Ministry of Environment released a complementary handbook on environmental due diligence. This is just a snapshot of the ESG policy updates that we are featuring this month. Scroll further to read more.
Europe
EU Parliament to ban green claims based on carbon offsetting
The Commission and EU Parliament have proposed minimum requirements for businesses to verify and communicate green claims. The proposed rule aims to promote environmentally friendly choices and sustainable products. If enforced, companies would have to provide independent verification of environmental impacts related to their products. The EU Parliament also added a ban on carbon offsetting-based claims and backed the validation of “carbon and climate neutral” labels with science-based targets and detailed implementation plans. Products that fail to substantiate environmental claims would face a ban in the EU market. To promote the EU’s central sustainability objective of a circular economy, the proposed rule would further prohibit product design features promoting premature obsolescence and limited product durability. Read more
EC adopts Retail Investment Package to protect long-term investments
The Retail Investment Package aims to empower retail investors, ensure fair treatment and protection and build trust in the EU’s Capital Markets Union. The objective is to make the EU a safer place for long-term investment and encourage participation in capital markets. Measures to address consumer protection include improving information disclosure to investors, increasing transparency of costs, providing clear investment performance views, addressing conflicts of interest and protecting against misleading marketing. The package revises existing rules in various directives and regulations, including MiFID, covering different financial instruments. Read more
European Supervisory Authorities submit draft RTS to enhance ESG disclosure in securitisation regulations
The three European Supervisory Authorities (EBA, EIOPA, and ESMA) have jointly submitted Draft Regulatory Technical Standards (RTS) to the European Commission regarding the disclosure of environmental, social, and governance (ESG) impacts for Simple, Transparent, and Standardised (STS) securitisations under the Securitisation Regulation (SECR). These standards aim to provide market participants with information to make informed decisions about the sustainability impact of their investments, particularly for STS securitisations involving residential loans, auto loans, and leases. The proposed technical standards align with those developed under the Sustainable Finance Disclosure Regulation (SFDR), distinguishing between mandatory indicators (such as energy efficiency) and additional indicators (such as emissions) for disclosure. The European Commission is expected to endorse these RTS within three months of their submission.Read more
Provisional agreement on easy access to corporate sustainability information
The European Union (EU) has reached a provisional agreement to establish a centralized platform – European Single Access Point (ESAP) – that will provide access to public financial and sustainability-related information about EU companies and investment products. The platform will enhance the integration of financial services and capital markets within the EU, aligning with the objectives of the Capital Markets Union. Additionally, the platform will prioritize sustainability information, aligning with the goals of the European Green Deal. ESAP will not impose additional reporting requirements on European companies. Instead, it will grant access to information already disclosed in compliance with relevant European directives and regulations. The ESAP platform is expected to be available from summer 2027, with a phased implementation to ensure robustness. The initial phase will include information related to EU regulations on short-selling, prospectus information and the transparency directive.Read more
United Kingdom
UK conducts review of non-financial reporting requirements, aiming to streamline reporting burden and align with EU framework
The Department for Business and Trade (DBT) in collaboration with the Financial Reporting Council (FRC) is conducting a review of the UK’s non-financial reporting requirements. In the UK, the non-financial reporting requirements are primarily governed by the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013. Additionally, requirements may differ based on the size and nature of the company. The purpose of the review is to ease the reporting burden for companies operating across the EU by co-opting a general framework to measure non-financial performance. The review will also consider the appropriateness of the current company size thresholds, which determine specific non-financial reporting requirements, and the preparation and filing of accounts with Companies House. Read more
North America
Canada enacts the Fighting Against Forced Labour and Child Labour in Supply Chains Act
Canada’s Modern Slavery Act (MSA) to combat forced labour and child labour in supply chains, was successfully passed on May 3, 2023. This significant legislation will be enforced starting from January 1, 2024. Following its implementation (as of May 31, 2024), government institutions, private-sector entities, and importers that meet a specified threshold are obligated to report on the measures taken to prevent and mitigate the risk of forced labour and child labour across their supply chain operations. Canada’s MSA also amends the Customs Tariff, effectively enabling the prohibition of importing goods that have been wholly or partially manufactured or produced using forced labour or child labour, as defined in the Act. Read more
Asia pacific
New Zealand government launches consultation for the reform of emissions trading system
The New Zealand Emissions Trading Scheme (NZ ETS) is a vital tool in the government’s response to climate change, as it places a price on greenhouse gas emissions to help achieve emissions reduction goals. Businesses are required to surrender carbon credits (NZUs) for their emissions, which can be obtained through government auctions or traded in the secondary market. The government regularly updates auction limits, price controls, and other settings. Based on recommendations from the Climate Change Commission, the government is considering reducing auction units, increasing reserve prices, and introducing a two-tier cost containment reserve. Public consultation is currently open to gather input on these proposed changes, and submissions from stakeholders in the NZ ETS are welcome.Read more
Japanese Ministry of Environment publishes guidelines on environmental due diligence
Building on the OECD’s Responsible Business Conduct guidelines, the Ministry of Environment unveiled a handbook titled ‘Introduction to Environmental Due Diligence in the Value Chain – Implementing Environmental Management Systems (EMS) for Practicing Environmental Due Diligence.’ As regulatory demands for sustainability reporting continue to rise, Japanese companies and investors have taken the initiative to adopt ‘Environmental Management Systems’ that promote environmental preservation throughout their business practices and administration. The recently introduced guidance aims to enhance the standardization of procedures, enabling compliance with due diligence obligations outlined by the OECD, while also supplementing ongoing processes of incorporating environmental factors in governance and risk management.Read more
Other News & Resources
Have we missed anything?
ESG Book manages the world’s largest repository of sustainability reporting provisions with over 2,300 regulations across 80 jurisdictions globally. If there is a recent ESG regulatory development we have missed, we would like to hear from you and invite you to contribute below.
Click here to access the ESG Regulatory Provisions Contributor Form
In this latest ESG Quick Takes podcast episode, ESG Book’s Isabel Verkes speaks to WWF’s Tanya Steele on the role of nature in the corporate climate transition. In the podcast, Tanya discusses the work of WWF UK, and how companies can integrate nature in their net-zero planning.
In this latest ESG Quick Takes podcast episode, ESG Book’s Isabel Verkes speaks to Georg Kell, Founding Executive Director of the United Nations Global Compact. In this episode, Georg tells the story of the creation of the Global Compact, which he established as the world’s largest voluntary corporate sustainability initiative, and discusses the evolution of ESG as well as the trends that will shape the future of the sustainability and net-zero transition.
Following a long and protracted run up to sustainability reporting deadlines, standard-setting bodies and regulators alike are introducing clarifications and phasing in implementation to ensure proportionality of compliance burden. Against this backdrop, the ISSB announced a relief measure that would place emphasis on climate-related disclosures in the first year of reporting. At the same time, the European Commission is creating supplementary criteria to the Taxonomy regulation to encourage alignment of economic activities with environmental objectives beyond climate change. Furthermore, the SFDR is undergoing revision, to expand the list of principal adverse impacts (PAIs) and set decarbonization targets for financial products. In furtherance of supply chain oversight, the legal affairs committee of the European Parliament approved the draft EU Corporate Sustainability Due Diligence Directive. In Germany, financial regulator BaFin is promoting investor-led engagement in corporate sustainability initiatives.
Climate concerns are soaring in the UK, as the government develops its Green Finance Strategy to support nature recovery. The UK Government is also soliciting feedback on a carbon border adjustment mechanism to encourage decarbonization across various industries. Recognizing the critical role of the banks in transition, the US Fed has shared analysis of climate risk in the financial sector.
In Asia Pacific, the HKEX is taking steps to improve ESG reporting, with a focus on climate-related reporting. Conscious of increased policy interventions worldwide, the Australian government is pushing for measures to combat greenwashing, including a sustainable finance taxonomy. Currently, the ASEAN Taxonomy Board is also releasing a new version of its taxonomy to standardize sustainable asset categorization and reinforce nationally determined contributions (NDCs). Meanwhile, the Reserve Bank of India is introducing a framework for green deposits to encourage investments in sustainable initiatives.
Global sustainability standards and regulations are reaching a stage of maturity, suggesting a new focus beyond enhanced disclosure quality to indicator comprehension and use. Once standards are set and accepted, there emerges the challenge of enabling organizations to utilize the appropriate tools for measuring progress in specialised contexts.
ISSB Sustainability and Climate Reporting Standards update
On 4th April, the International Sustainability Standards Board (ISSB) announced transitional relief for companies adopting the new S1 and S2 disclosure standards, expected to be released in Q2 2023. In the first year of reporting, companies will only need to prioritize climate-related disclosures, and are not expected to disclose sustainability-related risks and opportunities beyond climate or Scope 3 greenhouse gas emissions. This is aimed at allowing companies to familiarize themselves with the new standards and meet baseline reporting standards, regardless of their current disclosure practices. Next month, ISSB is expected to launch a consultation on its future priorities for standard-setting, including biodiversity, human capital, human rights, and integration in reporting. Read more
Europe
Call for feedback on EU Taxonomy draft delegated acts with criteria for four remaining environmental objectives
On 5th April, the European Commission launched a consultation on new EU taxonomy criteria for economic activities that contribute to non-climate environmental objectives such as sustainable use and protection of water and marine resources, transition to a circular economy, pollution prevention and control, and protection and restoration of biodiversity and ecosystems. The draft Delegated Act is based on the recommendations of the Platform on Sustainable Finance and prioritizes economic activities that can make a substantial contribution to the environmental objectives. The draft Act also amends the Taxonomy Disclosures Delegated Act and introduces limited technical amendments to improve the implementation of the Taxonomy Climate Delegated Act. The Taxonomy Climate Delegated Act has established technical screening criteria for climate change mitigation and adaptation, but adaptation criteria for the activities included in the Taxonomy Environmental Delegated Act will be developed in the future. The consultation is open until 3rd May 2023. Read more
European Supervisory Authorities (ESAs) seek to bring clarification on the reporting of sustainability information in SFDR consultation
On 12th April, the European Supervisory Authorities (EBA, EIOPA, and ESMA) released a Consultation Paper with proposed amendments to SFDR. The proposed changes aim to address issues that have arisen since the introduction of SFDR, including extending the list of social indicators, refining adverse impact indicators, and adding product disclosures regarding decarbonisation targets. The ESAs also suggest further technical revisions to the SFDR Delegated Regulation to improve disclosures, simplify pre-contractual and periodic disclosure templates, and make other technical adjustments. The consultation is open for comments until 4th July 2023. Read more
EU lawmakers adopt legislative reforms to accelerate climate neutrality goals under ‘Fit for 55′ package
European governments and MEPs have agreed to reform the Emissions Trading System (ETS) to require specific sectors to reduce emissions by 62% by 2030 compared to 2005 levels. The revised programme includes gradually phasing out free allowances for ETS sectors from 2026, excluding the aviation sector, which will be phased out by 2026. The scope of industry coverage will also expand to include the maritime sector, and an ETS II will be created for fuel emissions from the building and road transport sector in 2027. To prevent carbon leakage from imports of goods, EU countries will implement the Carbon Border Adjustment Mechanism (CBAM) this year, with importers of carbon-intensive goods being charged the difference between the carbon price paid in the country of production and the price of carbon allowances in the EU ETS. Lastly, the EU Parliament has passed legislation banning the sale of deforestation-linked products in the EU, requiring due diligence statements from companies that produce palm oil, cattle, soy, coffee, cocoa, timber, and rubber, as well as derived products. Read more
EU Parliamentary committee approves draft EU Corporate Sustainability Due Diligence Directive (CSDDD)
On 25 April, MEPs reached a cross-party agreement to impose sustainability reporting requirements on large companies that will cover child labour, slavery and environmental impact. The legal affairs committee of the European Parliament approved the draft EU Corporate Sustainability Due Diligence Directive, which requires large companies to identify and address human rights abuses and environmental damage caused by their suppliers. The directive will apply to EU companies with a turnover of more than €40 million and more than 250 employees, and also to non-EU companies with a net turnover of at least €40 million in the bloc. Negotiations with EU states will now begin, and the directive could be rolled out in stages from around 2030.Read more
German Financial Authority Clarifies Collaborative ESG engagement by investors
On March 30th, BaFin, Germany’s financial regulator, shared its perspective on collaborative engagement by investors, which is particularly relevant for investors who seek to support a company’s pursuit of ESG goals. This engagement could meet the requirements of “acting in concert,” which under German law may lead investors to make a mandatory takeover offer and lose their shareholding rights if they fail to comply. BaFin presented six examples to illustrate its stance, including that investors can meet with management to discuss specific ESG topics and send joint letters to address ESG concerns, as long as they do not agree on voting behaviour. BaFin’s position appears to be rather permissive, which may provide investors with a secure space to pursue ESG goals with greater legal certainty in German companies. Read more
United Kingdom
UK Policy Paper for sustainable farming and nature recovery
As part of the UK’s updated Green Finance Strategy, with the aim to achieve targets for net zero and nature recovery, the UK government published a policy paper requiring a significant increase in funding for nature. The paper advocated private sector involvement in mobilising the necessary green finance for farmers, land managers, and coastal managers to accelerate environmental action. The framework for nature markets outlines how the government will guide and support the development of these markets to increase investment levels. It also sets out the UK’s vision for establishing integrity and principles within the market framework to build trust and confidence, allowing markets to grow in pace with the country’s environmental ambition. Read more
UK consults on carbon border adjustment mechanism (CBAM)
The UK is seeking views on introducing a carbon border adjustment mechanism (CBAM) to mitigate carbon leakage and ensure its industries can decarbonize effectively. The consultation covers a range of potential policy measures, including mandatory product standards, product labelling, public procurement initiatives, and emissions reporting to encourage decarbonization. The earliest date for implementation of a potential CBAM would be 2026, and it would impact sectors such as cement, chemicals, glass, iron and steel, and power generation. The consultation is open for comments until June 22, 2023. Read more
North America
Federal Reserve Bank of New York publishes reports on climate risk
The Federal Reserve Bank of New York released two reports on climate-related risks for financial institutions on April 7, 2023. The first report analyses US banks’ exposure to transition risks from climate change, and the second report discusses the design of climate stress tests to manage macroprudential risks in the financial sector. Although the reports do not impose legal requirements, they offer insights into the positions of banking regulators on climate-related risk management requirements and current industry practices. The reports suggest the need for additional research on the nexus between financial stability and climate risks, deeper analysis of the interactions between climate change and the overall economy, and consideration of political economy considerations. The reports conclude that further research is required to identify better models and data, suggesting that climate stress testing should not yet be used to set capital requirements. Read more
Asia Pacific
HKEX proposes mandatory climate reporting from 2024
Hong Kong Exchanges and Clearing Limited (HKEX) is soliciting feedback on proposed changes to the ESG reporting framework, with a specific focus on enhancing climate-related disclosures by listed issuers. The proposed changes include mandating all issuers to make climate-related disclosures in their ESG reports, moving away from the current “comply or explain” approach. The new disclosures would be organized under four core pillars: Governance, Strategy, Risk management, and Metrics and targets, and would cover various aspects related to climate-related risks and opportunities, governance processes, financial effects, GHG emissions, and industry-based metrics. Interim provisions would allow issuers time to comply, with emissions reporting (including Scope 3) expected for financial years commencing on or after 1 January 2026. The consultation paper is released ahead of the finalization of the ISSB Standards to give issuers more time to review and prepare for the proposed climate-related disclosures. Read more
Australian Green Taxonomy and Anti-greenwashing measures
The Australian government is taking measures to combat greenwashing, develop a sustainable finance taxonomy, and introduce a sovereign green bonds programme to speed up the country’s economic transition. The government will co-fund with industry groups the initial development of the sustainable finance taxonomy, which will include a “traffic-light” system to differentiate between green, transition, and excluded economic activities. The government will also introduce a sovereign green bonds programme once a green bonds framework is developed to increase private capital allocation to public projects needed to decarbonise the economy. Additionally, the country’s existing house energy rating scheme will be expanded and upgraded to make Australian homes more energy-efficient. These measures are part of Australia’s intensified climate change policy agenda following its pledge to reduce emissions by 43% below 2005 levels by 2030. Read more
ASEAN Updates Green Taxonomy
The Association of Southeast Asian Nations (ASEAN) Taxonomy Board (ATB) released the ASEAN Taxonomy for Sustainable Finance Version 2, demonstrating Asia’s commitment to meeting the Paris Agreement commitments. Similar to the EU Taxonomy Regulation, the ASEAN Taxonomy aims to standardize the classification of sustainable activities and assets to provide a “common language” for assessing a company’s sustainability. Version 2 includes advanced assessment methodologies, technical screening criteria, and science-based thresholds to classify activities. The ASEAN Taxonomy’s third Essential Criteria now includes social aspects, alongside “Do No Significant Harm” and “Remedial Measures to Transition.” The ATB plans to conduct consultations with stakeholders on the assessment methodology and metrics for the energy sector under the Plus Standard, aiming to finalize the TSC for the energy sector by early 2024. Read more
Reserve Bank of India issues green deposit guidelines
On 11 April, the Reserve Bank of India introduced a new framework for green deposits starting June 1, 2023. The framework encourages regulated entities to offer green deposits to promote credit flow to green projects, support sustainability agendas, and address greenwashing concerns. All commercial banks must comply with the framework, and green deposits will only be issued in Indian rupees. The framework includes clear guidelines for third-party verification and allocation of proceeds and provides categories for use of proceeds in various green sectors. Read more
Other News & Resources
Have we missed anything?
ESG Book manages the world’s largest repository of sustainability reporting provisions with over 2,300 regulations across 80 jurisdictions globally. If there is a recent ESG regulatory development we have missed, we would like to hear from you and invite you to contribute below.
Click here to access the ESG Regulatory Provisions Contributor Form
As the ESG debate has been heating up in the US, Dow Jones’ Angela Pavlos gives us the perspective of a global media firm with US headquarters. Angela is a product manager and leads the development of ESG data products aiming to help CSOs and investors. Where will the ESG data market go? What role does the media have in this? Tune in to learn more.
DISCLAIMER
ESG Book, registered with Companies House under Company No. FC035689 and UK establishment no. BR020774, and with registered office at Fifth Floor, Jamestown Wharf, 32 Jamestown Road London, NW1 7BY, is the UK branch of ESG Book GmbH, a limited liability company organized under the laws of Germany, with registered number HRB 113087 in the commercial register of the court of Frankfurt am Main, and having its seat and head office at Zeppelinallee 15, 60325 Frankfurt am Main, Germany.
PROFESSIONAL ADVICE – This podcast is provided for general information purposes only and does not constitute professional advice. If professional advice is required, services of a competent professional should be sought. THIRD PARTY INFORMATION – Certain information contained in this podcast has been obtained from sources outside ESG Book. While such information is believed to be reliable for the purposes used herein, no representations are made as to the accuracy or completeness thereof and none of ESG Book or its affiliates accepts any responsibility for such information. RELIANCE – ESG Book makes no representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and accepts no liability for any loss, of whatever kind, howsoever arising, in relation thereto, and nothing contained herein should be relied upon. TRADEMARK – “ESG Book” and other words or symbols in this document that identify ESG Book products and services are product and service marks of ESG Book. Other words or symbols in this document that identify other parties’ goods or services are the trademarks or service marks of those other parties. VIEWS EXPRESSED – Any views or opinions presented are solely those of the speaker, and do not necessarily represent the views or opinions of ESG Book. ENQUIRIES – Any enquiries in respect of this podcast should be addressed to ESG Book or its affiliates.
In March, the IPCC released its sixth assessment report which illustrates a critical need to accelerate climate policy action due to a ‘rapidly closing window of opportunity to secure a livable and sustainable future for all’. Despite the current state of play, the IPCC is optimistic that strategic macroeconomic policies would help unlock climate finance and support investment in low-emission infrastructure and technologies.
In the EU, regulators are launching initiatives that build on the ‘Fit for 55’ package to cut emissions by 55% by 2030, compared to 1990 levels. The EU Council and Parliament announced a proposal to revise the Renewable Energy Directive, orchestrating a shift towards the use of clean energy and fuel across the bloc. Regulators are also tackling transition in the maritime sector by introducing carbon intensity reduction targets for large ships. In the financial services sector, the ECB released its first set of climate-related financial disclosures that show a positive trend towards portfolio decarbonization.
Across the Channel, regulators in the UK are defining a pathway to net zero through the intersection of finance, technology and innovation. Among other priority areas, the UK ‘s latest Green Finance Strategy seeks to mobilize private finance in the realm of clean energy and technologies.
In the Americas, the commitment to climate action is being driven in large part by federal governments conscious of the expenditure on carbon-intensive infrastructure. In March, the Canadian Government introduced climate disclosure requirements for major federal suppliers with the purpose of “greening its operations”.
India is also multiplying sustainability governance on many fronts, starting with the Securities and Exchange Board of India’s ESG disclosure rules for corporates and a new classification system for ESG mutual funds.
Across the world, there is a sustained increase in the number and types of policy instruments to increase transparency, accountability and efficiency in the allocation of capital. Global financial regulators are faced with widespread sustainability-related risks which may not be adequately addressed through unilateral policy measures. As stated in the latest IPCC report, the enduring and inclusive quality of global sustainability regulation rests on multi-level governance and calculated coordination across multiple policy domains.
Europe
Proposal to revise EU Renewable Energy Directive
The European Council and EU Parliament reached a provisional agreement to increase the EU’s overall renewable energy use. The revised directive mandates that the EU’s total energy consumption must consist of 42.5% renewable energy by 2030. Each member state must adhere to sector-specific targets in transport, industry, buildings and district heating and cooling. The agreement offers several options for member states to lower carbon intensity, including the adoption of binding year-on-year transition targets for each sector. The Renewable Energy Directive will enhance the implementation of the EU’s ‘Fit for 55’ package and boost the region’s energy security by speeding up the permit approval process for renewable energy projects. Member states will have to reach a consensus on the agreement before it enters into force.Read more
Provisional agreement reached on European Green Bond Standard
Key negotiators in the European Parliament have established the first ‘best-in-class’ green bond standard. Companies issuing green bonds in accordance with the standards can communicate the use of proceeds in a substantive disclosure. Disclosures would provide decision-useful information to investors, allowing them to suitably add sustainable technologies and businesses to their portfolio. In addition to enhancing transparency, companies that adopt the EUGBS will be aligned with the EU Taxonomy’s classification system for sustainable economic activities.Read more
EU reaches deal on ‘FuelEU Maritime’
A new agreement was signed by EU lawmakers to significantly reduce carbon intensity in the maritime transport sector through the use of low-carbon fuels. The maritime sector contributes to 3-4% of the EU’s CO2 emissions and the law aims to induce demand in the sustainable maritime fuels market. The law provides for 80% maritime decarbonisation by 2050, starting with a 2% ship emissions reduction by 2025. Currently, the regulation is applicable to ships above 5,000 tonnes and it includes a requirement for zero-emissions at berth. Container ships and passenger ships docking at major EU ports must also use onshore power supply by 2030. Under the new law, ships may collectively demonstrate compliance with intensity targets by opting into a voluntary pooling system.Read more
ECB’s first climate-related disclosures reflect portfolios’ path to decarbonization
The ECB has published two reports on climate-related financial disclosures that give a detailed overview of its portfolios’ carbon footprint, physical risk exposure, climate-related governance and risk management. A review of the Eurosystem’s corporate sector portfolios shows a gradual trend towards decarbonisation, in part due to emissions reduction efforts from companies in the ECB’s portfolio for every million euro of revenue earned. Additionally, the Eurosystem is reducing relative emissions by tilting its corporate bond purchasing towards issuers with better climate performance. In the second report, the ECB signals the readiness of central banks in the euro monetary zone to boost transparency by meeting standardised climate reporting requirements based on recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). These will be published by the end of April. Both the ECB’s reports are a concrete step towards deploying the commitments laid out in its climate change action plan. The ECB’s forward-looking initiative to integrate climate risk in its strategy and operations will continue with a periodic review of policy measures and a decarbonization path in line with the Paris Agreement. Read more
United Kingdom
UK releases updated Green Finance Strategy
The UK Government released the Mobilizing Green Investment: 2023 Green Finance Strategy to strengthen the UK’s transition economy and create a sufficient pathway to achieve net zero goals. It provides a blueprint to close investments gaps and reorient capital towards clean technologies and renewables projects. In addition to furthering climate neutrality objectives, the government will explore the development of high-integrity voluntary nature markets in the UK. Read more
North America
Government of Canada to require major federal suppliers to disclose emissions and set reduction targets
Under the newly adopted “Standard on the Disclosure of Greenhouse Gas Emissions and the Setting of Reduction Targets” federal contractors will be obligated to report emissions and set greenhouse gas reduction targets that are aligned with the Paris Agreement. The disclosure requirements will be in effect from April 2, 2023. Suppliers can satisfy the conditions of this rule by participating in Canada’s Net Zero Challege – a voluntary initiative that encourages businesses to create an effective transition plan for achieving net zero emissions by 2050. In addition to the disclosure rule, the new Treasury Board also announced the Standard on Embodied Carbon in Construction for major government construction projects to report and reduce embodied carbon footprint. Read more
Asia Pacific
SEBI finalizes core metrics for ESG disclosures and code of conduct for ratings providers
India’s top financial regulator launched the Business Responsibility and Sustainability Report (BRSR) Core – a set of essential ESG indicators for top listed companies. BRSR Core consists of under 50 reporting metrics derived from global standards (GRI, TCFD, SASB, SDG SASB). The Core framework will be supplemented with sector-specific guidance to ensure reliable disclosures consistent with corporate sustainability data across global jurisdictions. SEBI will also create a code of conduct for ratings providers and provide oversight in accordance with IOSCO recommendations. Regulation in this area is necessary to ensure a low degree of discrepancy between ratings methodologies. This would help appropriately reorient capital flows towards transition activities. Similarly, SEBI has proposed a rule to distinguish between different types of ESG mutual funds. SEBI is among many Indian regulators tightening disclosure rules to ensure that investors are not misled by unsubstantiated sustainability claims.Read more
Other News & Resources
Have we missed anything?
ESG Book manages the world’s largest repository of sustainability reporting provisions with over 3,400 regulations across 80 jurisdictions globally. If there is a recent ESG regulatory development we have missed, we would like to hear from you and invite you to contribute below.
Click here to access the ESG Regulatory Provisions Contributor Form
Last week, the European Commission proposed the Net-Zero Industry Act to advance the manufacturing capacity of strategic net-zero technologies in the European Union (EU). The Net Zero Act is part of the EU’s Green Deal Industrial Plan to enhance the competitiveness of Europe’s clean tech industry and support the fast transition to climate neutrality. This is positive momentum for climate change regulations after the largest federal legislation on climate change in the United States, the Inflation Reduction Act, was signed into law in August last year.
The Net-Zero Industry Act in brief
The Net-Zero Industry Act aims to ensure that, by 2030, the manufacturing capacity of strategic net-zero technologies in the European Union reaches a benchmark of at least 40% of the EU’s domestic annual deployment needs for corresponding technologies. This increased capacity is necessary to achieve the climate and energy targets, including of being a climate-neutral continent by 2050.
The Act outlined several pillars to achieve its 2030 target:
The Act also proposed setting up the Net-Zero Europe Platform to allow the Commission to coordinate the above actions jointly with Member States. The Net-Zero Europe Platform will work closely with the relevant industry alliances to support with financing, reducing bottlenecks, and developing best practices for net-zero projects.
Net-Zero technologies covered under the proposed legislation are:
The Net-Zero Industry Act covers net-zero technologies that are first of its kind and are ready for commercial demonstration and deployment, and also include the main upstream components that are a central part of the respective technologies (eg. solar cells for solar modules).
Next Steps
The Net-Zero Industry Act needs to be agreed upon by the European Parliament and the Council of the European union before its adoption and entry into force.
In this latest ESG Quick Takes podcast episode, ESG Book’s Isabel Verkes speaks to Amantia Muhedini, Executive Director of Sustainable and Impact Investing at the UBS Global Wealth Management Chief Investment Office, to discuss sustainable investing practices and the relationship between returns and sustainability.
DISCLAIMER
ESG Book, registered with Companies House under Company No. FC035689 and UK establishment no. BR020774, and with registered office at Fifth Floor, Jamestown Wharf, 32 Jamestown Road London, NW1 7BY, is the UK branch of ESG Book GmbH, a limited liability company organized under the laws of Germany, with registered number HRB 113087 in the commercial register of the court of Frankfurt am Main, and having its seat and head office at Zeppelinallee 15, 60325 Frankfurt am Main, Germany.
PROFESSIONAL ADVICE – This podcast is provided for general information purposes only and does not constitute professional advice. If professional advice is required, services of a competent professional should be sought. THIRD PARTY INFORMATION – Certain information contained in this podcast has been obtained from sources outside ESG Book. While such information is believed to be reliable for the purposes used herein, no representations are made as to the accuracy or completeness thereof and none of ESG Book or its affiliates accepts any responsibility for such information. RELIANCE – ESG Book makes no representation or warranty, express or implied, as to the accuracy or completeness of the information contained herein, and accepts no liability for any loss, of whatever kind, howsoever arising, in relation thereto, and nothing contained herein should be relied upon. TRADEMARK – “ESG Book” and other words or symbols in this document that identify ESG Book products and services are product and service marks of ESG Book. Other words or symbols in this document that identify other parties’ goods or services are the trademarks or service marks of those other parties. VIEWS EXPRESSED – Any views or opinions presented are solely those of the speaker, and do not necessarily represent the views or opinions of ESG Book. ENQUIRIES – Any enquiries in respect of this podcast should be addressed to ESG Book or its affiliates.
With one million animals and plants at risk for extinction1, the need to act to preserve biodiversity is more pressing than ever. To mitigate biodiversity loss, and ecosystem degradation, the United Nations Biodiversity Conference (COP 15) was held in Montreal, Canada in December 2022, resulting in the adoption of the Kunming-Montreal Global Biodiversity Framework (GBF), which commits to placing at least 30% of all land, marine, and coastal areas under protection, and restore at least 30% of all degraded ecosystems by the year 20302 3.
This article provides an analysis using ESG Book data to explore biodiversity in sustainability reporting, demonstrating that policymakers globally are beginning to open their horizons to biodiversity preservation.
To read the full article, click here.
