Environment, Land & Resources

International Banks Adopt the Poseidon Principles

Posted in Air Quality and Climate Change, Green Finance

Banks to disclose climate alignment of shipping portfolios with IMO’s strategy of 50% emissions reduction by 2050.

By Paul A. Davies and Michael D. Green

On June 18, 2019, a group of 11 banks — including Citi, Societe Generale, DNB, Citigroup, ABN Amro, and ING — announced the adoption of the Poseidon Principles (PPs). The PPs are accompanied by a framework for integrating climate considerations into shipping investment decisions and for assessing how well a portfolio aligns with the International Maritime Organization’s (IMO’s) Initial Greenhouse Gas Reduction Strategy, which aims to reduce total greenhouse gas (GHG) emissions by at least 50% by 2050 based on 2008 levels. This blog post will explore the four key principles established in the PPs, covering climate alignment, accountability, enforcement, and transparency.

Poseidon Principles Association and Poseidon Principles

The PPs governing body, the Poseidon Principles Association (PPA), was formed on June 18, 2019. The PPA is responsible for the management, administration, and development of the PPs. The PPA is supported by the Rocky Mountain Institute (an independent non-profit organization aiming to accelerate the adoption of a shift to greater efficiency and more use of renewables), the University College London Energy Institute, and Lloyd’s Register. The PPA is committed to improving the role of maritime finance in addressing global environmental issues, spearheaded by the PPs. Continue Reading

New Green Bond Guidance Complements Existing Green Bond Principles

Posted in Green Finance

Three new publications provide issuers with key guidance on Green, Social, and Sustainability Bonds.

By Paul A. Davies, Michael D. Green, and Aaron E. Franklin

The Executive Committee for the Green Bond Principles recently published three documents providing key guidance complementing the Green Bond Principles (GBPs), the Social Bond Principles (SBPs), and the Sustainability Bond Guidelines (SBGs). The guidance documents include the Green Project Mapping document, the Guidance Handbook, and the Impact Reporting Handbook.

The 2018 revisions of the GBPs, SBPs, and SBGs remain unchanged and applicable. However, the new publications offer complementary guidance, consolidating existing information and incorporating new information based on market feedback and information requests from market participants. Continue Reading

European Commission Publishes New Guidelines on Corporate Climate-Related Reporting

Posted in Air Quality and Climate Change, European Environmental and Public Law, Green Finance

The guidelines, along with three new reports on green finance, demonstrate the European Commission’s intent in respect of meeting its Paris Agreement targets.

By Paul A. Davies, Michael D. Green and Clément Pradille

On June 18, 2019, the European Commission (Commission) published new guidelines on corporate climate-related information reporting, as well as three new reports by the Technical Expert Group on Sustainable Finance (TEG), as part of the Commission’s Sustainable Finance Action Plan (Action Plan). The new guidelines provide companies with information and recommendations to support their approach to reporting the impact of their activities on climate change, and also how climate change impacts the business of those companies.

Understanding the Guidelines

The Commission published its guidelines on reporting climate change-related information (2019 Guidelines) under the Non-Financial Reporting Directive 2014/95/EU (Directive). The 2019 Guidelines are part of the Action Plan, which was published in March 2018 and aims to reorient capital toward sustainable investment, manage financial risks arising from climate change, and foster transparency and a long-term view in financial and economic activities. Continue Reading

6 Things to Know about EPA’s Final ACE Rule

Posted in Air Quality and Climate Change, Energy Regulatory, Power, Oil, Gas and Minerals

In a significant and potentially precedent-setting action, EPA terminates the Clean Power Plan, narrows the scope of required controls to the regulated unit, and axes previously available compliance options.

By Stacey L. VanBelleghem and Robert A. Wyman

On June 19, 2019, the US Environmental Protection Agency (EPA) released its final Affordable Clean Energy (ACE) Rule to replace the Obama Administration’s Clean Power Plan (CPP). Both rules would regulate carbon dioxide (CO2) emissions from existing electric generating units (EGUs) pursuant to Section 111(d) of the Clean Air Act (CAA).[i] EPA made few changes from its 2018 proposal (summarized in this prior Latham post), with the notable exception of EPA’s decision to proceed with a separate rulemaking to finalize its proposed revisions to New Source Review (NSR) rules for power plants.

EPA Rulemakings

EPA’s recent notice announcing the final ACE Rule identifies three actions, which EPA characterizes as “separate and distinct rulemakings.” Continue Reading

EU Introduces Single-Use Plastics Directive to Promote a Circular Economy

Posted in Air Quality and Climate Change, Contaminated Properties & Waste, Project Siting and Approval

The Directive aims to reduce the impact of plastic products and therefore help protect the environment and human health.

By Paul A. Davies and Michael D. Green

On June 12, 2019, a new directive was published that aims to help protect land and marine environments, as well as human health. The mandate — Directive (EU) 2019/904 on the reduction of the impact of certain plastic products on the environment (Single-Use Plastics Directive, or the Directive) — introduces measures to prevent and reduce the impact of certain plastic products, and promote transition to a circular economy.

The Directive encourages the prioritization of “sustainable and non-toxic re-usable products and re-use systems”. This approach aims to reduce plastic waste, drive the promotion and development of alternative materials, and promote the design and production of plastics and plastic products that are re-usable, repairable, and recyclable.

The Directive contains a number of substantive measures that will impact Member States, which are explored in this post. Continue Reading

UK Treasury Committee Launches Inquiry Into Decarbonization And Green Finance

Posted in Air Quality and Climate Change, Green Finance, Project Siting and Approval

The seven-week inquiry will assess the potential impact of decarbonization on the UK economy, and examine opportunities for the growth of green finance.

By Paul A. Davies and Michael D. Green

On World Environment Day, June 5, 2019, the UK Treasury Committee (the Committee) launched an inquiry into the decarbonization of the UK economy and green finance. The inquiry will scrutinize the role of HM Treasury (HMT), regulators, and financial services firms in supporting the UK government’s climate change commitments, and examine the potential for decarbonizing the UK economy.

UK Treasury Committee

The Committee was established by the House of Commons (the House) to examine the expenditure, administration, and policy of HMT, HM Revenue & Customs, and associated public bodies such as the Bank of England and the Financial Conduct Authority. The Committee is free to choose its own subjects of inquiry, which may lead to a report to the House, or a single day’s oral evidence.

Committee membership reaches across the House benches, and is currently comprised of 11 members. Five members are drawn from the Conservative Party, five from the Labour Party, and one from the Scottish National Party. Recent reports have examined topics such as consumers’ access to financial services, anti-money laundering supervision, and appointment of persons to public office. Continue Reading

UK Adopts 2050 Net-Zero Greenhouse Gases Target

Posted in Air Quality and Climate Change

The UK is the first major economy and G7 country to adopt the target following the CCC’s May 2019 recommendation.

By Paul A. Davies and Michael D. Green

Adoption of 2050 Net-Zero Target

UK Prime Minister Theresa May has confirmed that the UK government will adopt the Committee on Climate Change’s (CCC’s) recommended net-zero target by 2050, and will formalize that adoption through legislation. The new target supersedes the 80% greenhouse gas (GHG) reduction by 2050 target, contained in the Climate Change Act 2008. The Climate Change Act 2008 will be amended to incorporate the new net-zero target via statutory instrument, which has already been laid before Parliament.

The UK is the first major economy, and the first of the G7 group, to adopt a net-zero target, under which GHG emissions must be balanced by initiatives such as improved use of renewable energy, tree planting, carbon capture and storage technologies, and carbon offset schemes. The CCC’s recommended target is considered to be one of the toughest climate change targets in the world. Continue Reading

ESG Moves Into Mainstream Investing

Posted in Green Finance

Recent studies show ESG implementation in mainstream finance has improved significantly, presenting opportunities for sustainable, long-term returns.

By Paul A. Davies and Michael D. Green

In recent years, Environmental, Social and Governance (ESG) implementation has transformed from a niche to mainstream activity, as asset managers, asset owners, and pension funds increasingly recognize the importance of ESG factors to investors, stakeholders, and shareholders. Issues such as climate change, remuneration, modern slavery, and equal pay have led to the integration of ESG into investment processes.

Incorporating ESG Factors and Metrics

The Principles of Responsible Investment (PRI) describe “responsible investing” as an approach to integrating ESG factors, which are not traditionally part of financial analysis, into investment and decision-making processes to better manage risk and generate sustainable, long-term returns. Continue Reading

China’s Environmental Social Credit System Encourages Self-Regulation by 2020

Posted in China, Environmental Regulation

China continues to implement an IT-based big data system of market regulation that rewards and punishes individuals and enterprises.

By Paul A. Davies and R. Andrew Westgate

China is currently implementing an innovative approach to monitoring, rating, and regulating the behaviour of market participants through a new “social credit system” (SCS) set forth in the Plan for Establishing a Social Credit System (the Plan). The Plan, first published in 2014, applies credit ratings across social, political, and environmental sectors. For example, a company breaching emissions targets will receive a lower rating (resulting in punitive measures, higher taxes, or other sanctions).

The Plan aims to implement a self-enforcing mechanism for regulation built on big data that monitors and evaluates economic and social behaviour using real-time feedback. The system is designed to incentivise companies to make decisions in line with laws, regulations, and governmental policy targets.

This blog will focus on the application of the SCS to environmental matters. Continue Reading

China Kick-Starts Investment in the Yangtze River Economic Belt

Posted in China

China’s NDRC will provide green subsidies to projects that address significant environmental problems.

By Paul A. Davies and R. Andrew Westgate

China’s National Development and Reform Commission (NDRC) has announced plans to provide subsidies of up to 60% for “green” investment projects in the Yangtze River Economic Belt (YREB) in China’s latest attempt to combat pollution while stimulating growth.

Yangtze River Economic Belt Development Plan 2016

The Chinese government announced the launch of the YREB in 2016. President Xi Jinping stated that the YREB should focus primarily on environmental protection rather than economic growth, due to rapid deterioration in the Yangtze River and the Yangtze Delta. Previously, steel mills and petrochemical factories lined the riverbanks to access cheap water transport, and in 2016, more than 45% of China’s sewerage was discharged into the Yangtze River.

The YREB Development Plan, published in March 2016 following approval by the Central Committee Political Bureau, outlined a “one axis, two wings, three poles and multiple points” pattern of improvement, focusing on ecological and green development. Continue Reading