In July 2023, the Australian Competition and Consumer Commission (ACCC) published draft guidance (Draft Guidance) to improve the integrity of environmental and sustainability claims made by businesses and protect consumers from greenwashing.
In September 2023, the Green Technical Advisory Group (GTAG), chaired by the Green Finance Institute, has released four reports offering technical advice to HM Treasury on the development of a UK Green Taxonomy:
“Developing a UK Taxonomy Adapted to the UK’s Needs” — assesses short- and medium-term priorities for establishing a usable taxonomy
“Getting KPIs Right: Implementing an Effective Reporting Regime for the UK Green Taxonomy” — outlines issues in European taxonomy reporting Key Performance Indicators (KPIs)
“Treatment of green financial products under an evolving UK Green Taxonomy” — reviews how the UK Green Taxonomy affects previously considered “green” activities
“Operational considerations for taxonomy reporting” — provides recommendations for minimising data gaps in disclosures and guidance on the use of proxies
GTAG’s latest guidance seeks to provide a roadmap for the UK Green Taxonomy. While it draws on many elements of the EU taxonomy, GTAG has stated that it has looked to adapt the UK Green Taxonomy to provide a “more effective reporting framework” for both disclosing businesses and investors within the UK context.
On 17 August 2023, the European Commission (Commission) adopted rules governing the implementation of the Carbon Border Adjustment Mechanism (CBAM) during its transitional phase, which begins on 1 October 2023 and runs until 31 December 2025. The Implementing Regulation (IR) outlines the transitional reporting obligations of importers into the EU of CBAM goods and the methodology for calculating emissions from the production of such goods.
On July 5, 2023, the US Department of Energy (DOE) released a Notice of Intent (NOI) to invest up to $1 billion in a mechanism to develop reliable demand for hydrogen at DOE-funded Regional Clean Hydrogen Hubs (H2Hubs). DOE hopes this mechanism will help a diverse range of entities leverage the full potential of clean hydrogen and facilitate the use of clean hydrogen across a variety of economic sectors.
The UK government announced on 2 August 2023 that it will develop standards for company sustainability disclosures in the UK by July 2024, leveraging the work of the internationally recognised International Sustainability Standards Board (ISSB). The UK Sustainability Disclosure Standards (SDS) will set out disclosure requirements for companies in the UK in relation to their sustainability-related risks and opportunities, including those risks and opportunities arising from climate change.
On 31 July 2023, the European Commission (Commission) adopted the European Sustainability Reporting Standards (ESRS), following a four week-long public consultation period.
Background to the CSRD and ESRS
The ESRS represent the standards which set out the specific disclosure requirements for companies that will be required to report on sustainability-related impacts, risks, and opportunities under the EU’s Corporate Sustainability Reporting Directive (CSRD).
The CSRD was announced in 2021 as part of the European Green Deal. The CSRD will amend existing reporting requirements under the Non-Financial Reporting Directive (NFRD) and the EU hopes that CSRD will enhance the comparability and consistency of reported sustainability information from companies in the EU (and beyond). The CSRD will considerably increase the scope of companies required to report, as well as the level of detail required within disclosures.
The US Environmental Protection Agency’s (EPA’s) strategic plan for 2022–26, released in March 2022, added a new foundational principle to the agency’s mission: the advancement of environmental justice and equity. Since unveiling its strategic plan, EPA has taken a number of actions to make good on its mission, aggressively furthering its environmental justice goals and objectives. As recently as April 2023, EPA awarded $177 million to open 10 Environmental Justice Thriving Communities Technical Assistance Centers to improve accessibility to federal grant funding for communities with environmental justice concerns.
Most prominently, EPA has (1) increased its scrutiny of, and investigation into, claims under Title VI of the Civil Rights Act; (2) pushed for cumulative impact analyses for permits; and (3) initiated emergency actions under Section 303 of the Clean Air Act to restrain emissions. Numerous corporations and state agencies have been implicated in these efforts, and some are pushing back.
On 10 July 2023, the International Sustainability Standards Board (ISSB) and Financial Stability Board (FSB) announced that the IFRS Foundation (the organisation that founded the ISSB) would take over the monitoring of the progress on companies’ climate-related disclosures relating to the Task Force on Climate-related Financial Disclosures (TCFD). This announcement follows the ISSB’s publication of its inaugural sustainability standards IFRS S1 and IFRS S2.
The transfer in monitoring activities marks the latest development in the ISSB’s ambition to consolidate the sustainability reporting landscape internationally, with the TCFD joining other standards (such as the SASB Standards) in the list of frameworks that were previously independently managed but are now under the consolidated auspices of the ISSB.
On June 26, 2023, the Secretariat and Launching Investor Group behind Nature Action 100 (NA100) announced a set of focus areas and priority sectors for engagement with companies on biodiversity and broader nature-related matters (hereinafter, natural capital). Natural capital has rapidly climbed the list of environmental, social, and governance (ESG) priorities for many investors and regulators, with a series of initiatives being set up to parallel influential regimes on climate.
This post provides an overview of NA100 and its priorities, along with initial guidance for companies looking to integrate natural capital considerations into their ESG programs.
The European Council has formally endorsed the proposed amendments to Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources (the Renewable Energy Directive), as provisionally agreed in principle between the European Council and European Parliament during the trilogue process.
The amendments, commonly referred to as RED III, would mandate that the share of renewable energy in the EU’s overall energy consumption must rise to a minimum of 42.5% by 2030, with a further non-binding EU-wide goal to achieve 45% by this date, in order to meet the EU’s legally binding target of a 55% reduction in greenhouse gas emissions by 2030 as compared to 1990 levels. RED III therefore proposes a more ambitious mandatory target than the 32% set under the existing text of the Renewable Energy Directive.