ESG and Cryptocurrency: Considerations for Market Participants

By Latham & Watkins LLP on April 12, 2021 Posted in Environmental, Social and Governance

For market participants pivoting toward ESG and digital assets, weighing the issues at the crossroads of these two megatrends is critical.

By Paul A. Davies, Stuart Davis, Simon Hawkins, Nicola Higgs, Yvette D. Valdez, Thomas Vogel, Stephen P. Wink, and Deric Behar

The huge rise in popularity of Bitcoin — and the growing interest by mainstream financial institutions in virtual assets as an investable and tradable asset class — has shone a light on the cryptocurrency industry’s environmental, social, and governance (ESG) performance.

The vast majority of the world’s financial institutions manage climate risk and other ESG risks in their own portfolios. As a result, many financial institutions perform related diligence on corporates they look to service, whether by traditional lending, capital markets underwriting, or direct investment. While the focus has primarily been on the ESG performance of cryptocurrency miners (given their role in the creation of cryptocurrencies and the energy requirements associated with that process), the ESG performance of the broader cryptocurrency industry will increasingly need to be considered, particularly as institutional investment in this space is accelerating. Accordingly, investors in cryptocurrency miners, in cryptoasset service providers, and even in companies that put cryptoassets on their balance sheets must now weigh the potential for increased returns against the possible negative impact on their ESG credentials.

While much has been written about the sustainability challenges related to cryptocurrency mining, ESG represents a broad range of considerations. This post explores the ESG-related challenges that cryptocurrency market participants are facing and practical steps to meet them. Continue Reading

China and EU to Collaborate on Green Investment Standards

By Latham & Watkins LLP on April 12, 2021 Posted in China, Environmental Regulation, Green Finance

The People’s Bank of China announced a collaboration with the European Union to adopt a common taxonomy for green investments.

By Paul A. Davies, Nicola Higgs, and Edward R. Kempson

On 21 March 2021, the People’s Bank of China (PBC) announced that China is working with the European Union to adopt a common green taxonomy across the two markets later this year. PBC Governor Yi Gang, speaking at the China Development Forum, said strengthening the nation’s green finance system was the central bank’s priority for the next five years.[1] He emphasised that, in order for China to meet its 30/60 goal of peaking carbon emissions by 2030 and achieving carbon neutrality by 2060, China needs to engage in collaboration with global partners.

The EU Taxonomy Regulation,[2] which entered into force in July 2020 and will take effect on a phased basis from 1 January 2022, is one of the most significant developments in sustainable finance to date. It creates a classification system for environmentally sustainable economic activities and aims to provide clarity as to what should be considered “green”. The EU Taxonomy Regulation is intended to avoid issues of greenwashing and is considered to be an important tool in implementing the Paris Agreement climate goals. For more details on the EU Taxonomy Regulation, please refer to our blog post on the topic. Continue Reading

California Water Law: Legal Challenges of Water Supply Assessments

By Latham & Watkins LLP on March 28, 2021 Posted in California, CEQA, Water Quality and Supply

Project applicants and agencies alike should think carefully about developing robust analyses that demonstrate the adequacy of water supply.

By Marc T. Campopiano, Diego Enrique Flores, and Lucas I. Quass

Mark Twain is often credited with saying, “Whiskey is for drinking; water is for fighting over.” This remains true in California, where drought conditions, climate change, and population growth throughout the state’s history have made water an increasingly valuable and regulated resource. The legal landscape involves complex questions related to water quality, water sustainability, and competing claims to water rights. One notable area of controversy involves the adequacy of water supply for new development projects.

Two decades ago, in 2001, the state legislature enacted Senate Bill (SB) 610 and SB 221 to promote sustainable long-term water planning. Collectively, SB 610 and SB 221 require public agencies to determine whether adequate water supply exists for certain large development projects as part of the environmental review process under the California Environmental Quality Act (CEQA) by, in part, requesting water supply assessments (WSAs) from water service providers. Continue Reading

TCI Program Established to Reduce Carbon Emissions From Transportation

By Latham & Watkins LLP on March 11, 2021 Posted in Air Quality and Climate Change, California, Energy Regulatory, Environmental Regulation

The program will include a multi-jurisdictional cap-and-invest program and aims to address environmental justice and equity concerns.

By Jean-Philippe Brisson, Joshua T. Bledsoe, Benjamin Einhouse, and Brian McCall

On December 21, 2020, the Governors of Massachusetts, Rhode Island, and Connecticut, as well as the Mayor of the District of Columbia, announced that their respective jurisdictions would establish the Transportation & Climate Initiative Program (TCI-P) and released a memorandum of understanding (MOU) describing the agreed-upon principles for adoption and implementation of the TCI-P. While not part of the MOU, the states of New York, New Jersey, Delaware, Maryland, Virginia, Vermont, Pennsylvania, and North Carolina released a statement signaling their desire to work with the states party to the MOU and the Transportation & Climate Initiative (TCI) in general. On March 1, 2021, the TCI released draft Model Rules for public review. Once finalized, the Model Rules are intended to be adapted for use by each TCI-P signatory jurisdiction via state-specific rulemaking processes. Continue Reading

Financial Services Trade Organizations Publish Principles for Regulatory Sustainability Transition

By Latham & Watkins LLP on March 9, 2021 Posted in Air Quality and Climate Change, Energy Regulatory, Environmental Regulation, Green Finance

The principles are intended to guide the industry’s engagement with policymakers concerning the ongoing economic transition away from carbon.

By Paul A. Davies, Jason C. Ewart, and Edward R. Kempson

The US Climate Finance Working Group, a group of leading financial services trade associations, has published “Financing a US Transition to a Sustainable Low-Carbon Economy” — a set of principles for how the financial services industry can play a role in addressing climate change.

The principles, not meant to be exhaustive, are intended to serve as a useful framework for the industry’s engagement with policymakers to find practical, market-based solutions to the challenges and opportunities related to climate risk and the ongoing economic transition away from carbon. The working group noted that while individual institutions can play a significant role in the global effort to address climate change, policy must provide a critical foundation for driving the transition. Continue Reading

US OSHA’s Recent Proposal Aligns Hazard Communication With International Standards

By Latham & Watkins LLP on February 26, 2021 Posted in Chemical Regulation, Environmental, Social and Governance

OSHA calls for comments on significant proposed amendments to align Hazard Communication Standard with the United Nations Globally Harmonized System of Classification and Labelling of Chemicals.

By Julia A. Hatcher, Stijn Van Osch, Nathaniel L. Glynn*, and Jacqueline J. Yap

The US Department of Labor’s Occupational Safety and Health Administration (OSHA or the agency) published a proposed rule to amend its Hazard Communication Standard (HCS), 29 C.F.R. § 1910.1200. The February 16, 2021 amendments would align the HCS with the United Nations’ Globally Harmonized System of Classification and Labelling of Chemicals (GHS) 2017 Seventh Revision (GHS Revision 7) in various respects, including by modifying the requirements to classify hazards and to communicate those hazards and other information in Safety Data Sheets (SDS) and labeling. The public comment period on the proposed rule runs until April 19, 2021. The OSHA webpage for the proposed rule provides a red-line strikeout comparison between the current HCS and the proposed amendments, which will be helpful for stakeholders to review as they prepare comments. Continue Reading

CEQA Case Report: 2020 Year in Review

By Latham & Watkins LLP on February 26, 2021 Posted in California, CEQA, Environmental Litigation, Environmental Regulation

Public agencies prevailed in 68% of CEQA cases analyzed.

By James L. Arnone, Daniel P. Brunton, Nikki Buffa, Marc T. Campopiano, and Winston P. Stromberg

Latham & Watkins is pleased to present its fourth annual CEQA Case Report. Throughout 2020 Latham lawyers reviewed each of the 34 California Environmental Quality Act (CEQA) appellate cases, whether published or unpublished. Below is a compilation of the information distilled from that annual review and a discussion of the patterns that emerged. Latham’s webcast discussing this publication and the key CEQA cases and trends of 2020 is available here. Continue Reading