On appeal of a strike out decision, the Court gives the plaintiff “his day in court” to argue that corporates owe a common law duty of care in tort to reduce greenhouse gas emissions.
By Sophie J. Lamb KC and Stephanie Forrest
On 7 February 2024, the Supreme Court of New Zealand decided to allow a novel climate change claim to proceed to trial. In Smith v. Fonterra, the Supreme Court reversed the earlier decision of its Court of Appeal
State and federal officials move forward plans and policies for water conservation, conveyance, and climate resilience.
By Michael G. Romey, Lucas I. Quass, John Detrich, Cody M. Kermanian, and Julie Miles
The winter of 2022-23 brought historic levels of precipitation to California after years of deep drought, dwindling reservoirs, and groundwater depletion. In the first quarter of 2023, most of the state received rainfall exceeding historic averages, with some areas experiencing 200%, or even 300% of average levels. According to the US Drought Monitor, the state is currently drought-free, although some regions are still considered abnormally dry. Despite heavy precipitation over the past year, California’s drought resilience remains in question, as critical infrastructure projects face staunch opposition and climate change increases the likelihood of extreme and prolonged droughts. Regulators and water managers had a busy 2023 as they grappled with persistently low groundwater levels, planned for additional water storage and conveyance, and continued to advance water conservation initiatives.
This blog post summarizes key actions taken by state and federal officials in 2023 with respect to California’s water supply and provides an outlook for 2024.
The Guidelines build on current social, environmental, and technological issues facing businesses following the last update in 2011.
By Paul A. Davies, Michael D. Green, and James Bee
The Organisation for Economic Co-operation and Development (OECD) released updated Guidelines for Responsible Business Conduct on 8 June 2023 (the OECD Guidelines).
Background to the OECD Guidelines
The OECD Guidelines, introduced in 1976, set out voluntary principles and standards to ensure multinational companies embed due diligence practices, to enhance sustainable development and address adverse social and environmental impacts. Currently, 51 countries adhere to the OECD Guidelines, including the majority of EU Member States.
The Commission is also consulting on proposed targeted amendments to the Taxonomy Climate Delegated Act and on the Taxonomy Disclosures Delegated Act.
By Paul A. Davies, Michael D. Green, and James Bee
On 5 April 2023 the European Commission opened a consultation on its proposal for four additional environmental objectives under the EU Taxonomy Regulation[1] (the Taxonomy), including: (i) sustainable use and protection of water and marine resources; (ii) transition to a circular economy; (iii) pollution prevention and control; and (iv) protection and restoration of biodiversity and ecosystems.
The Commission is seeking feedback on technical screening criteria (TSC) for economic activities that may substantially contribute to one or more of those four environmental objectives. The TSC do not only identify the technical requirements that an activity must meet to be considered to make a substantial contribution to one of these areas, they also specify the conditions by which the activities can be considered to not do any significant harm to the remaining areas.
The Commission has already adopted TSC related to the economic activities of two other environmental objectives: climate change mitigation and climate change adaptation.
The Commission is also proposing amendments to the Taxonomy Climate Delegated Act, introducing additional activities that may be considered to substantially contribute to climate change mitigation or climate change adaptation, as well as the Taxonomy Disclosures Delegated Act.
As part of the European Green Deal ambitions, the proposal encourages sustainable consumption through additional incentives to repair products to reduce waste and emissions.
By Paul A. Davies, Michael D. Green, and James Bee
On 22 March 2023, the European Commission (Commission) adopted a new proposal on common rules promoting the repair of goods (the Proposal). The Proposal seeks to deliver on the environmental targets outlined in the European Green Deal, specifically regarding sustainable consumption, by increasing consumer incentives to repair products rather than replace them, especially after a product’s legal guarantee under the EU’s Sale of Goods Directive has expired. The Proposal will therefore aim to create growth in the market for refurbished products, furthering the Green Deal ambition of promoting a circular economy.
The Guidance would increase expectations for regulated financial institutions to identify, measure, monitor, and control climate-related financial risks.
By Betty M. Huber, Arthur S. Long, Pia Naib, Austin J. Pierce, and Deric Behar
For the past few years, the New York State Department of Financial Services (DFS) Superintendent has prioritized setting the pace in climate risk management for financial institutions that it supervises. On December 21, 2022, the DFS proposed Guidance for New York State-Regulated Banking and Mortgage Institutions Relating to Management of Safety & Soundness Risks from Climate Change (the Guidance). The Guidance follows on the DFS’ October 2020 letter to CEOs of its regulated financial institutions, which announced that DFS was developing a strategy for integrating climate-related risks into its supervisory mandate. The letter also announced that DFS would engage with banking organizations (and coordinate with US and international counterparts) to develop effective supervisory practices and guidance to mitigate the financial risks from climate change.
Navigating a global patchwork of ESG regulation and enforcement while preparing for greenwashing claims and other ESG litigation will likely be among the main concerns for companies in 2023.
By Paul Davies, Sarah Fortt, and Betty M. Huber
Both anticipated and less expected changes occurred across the ESG landscape in 2022. Anticipated changes included regulatory developments across the globe, including in the US, the UK, and the EU. Less expected changes included global and regional political shifts, such as the fallout from the Russian invasion of Ukraine, the continued evolution of governmental policies following the COVID-19 pandemic (such as responses to labor market challenges and reshoring efforts), and growing political tensions throughout the world.
In 2023, investors, customers, regulators, and other key stakeholders are expected to continue to demand corporate responsiveness on ESG issues. However, how these stakeholders expect organizations to respond to ESG issues is becoming increasingly more nuanced and complex. In this complicated macroeconomic, political, and legal context, this fourth annual installment of Latham’s ESG Top 10 List highlights the ESG developments and trends that are likely to emerge in 2023.
The Guidance Note aims to support Equator Principles Financial Institutions navigating the environmental and social due diligence process.
By James R. Barrett, Joshua W. Marnitz, and Malorie R. Medellin
In July 2022, the Equator Principles Association published a Guidance Note on how to apply the latest iteration of the Equator Principles (EP), EP4, during the Environmental and Social Due Diligence (ESDD) process. In particular, the Guidance Note addresses the scope of work and terms of reference for Independent Environmental and Social Consultants (IESCs) undertaking ESDD on behalf of Equator Principles Financial Institutions (EPFIs) under EP4, including the appropriate scope for the development of an EP4-compliant Environmental and Social Impact Assessment (ESIA).
The Guidance Note is significant because it addresses the changes to the pre-financial close ESDD required to be undertaken by IESCs under EP4, including with respect to projects located in Designated Countries that are no longer “deemed in compliance” with the Equator Principles solely by virtue of satisfying host country law. For information on the transition to EP4 and our analysis of its implications for projects in Designated Countries, see this December 2019 blog post, June 2020 Client Alert, and December 2020 Client Alert.
This blog post summarizes key elements of the Guidance Note for project lenders and sponsors to consider.
The Glasgow conference was praised as a huge step forward in tackling climate change, but also drew criticism for not going far enough.
By Jean-Philippe Brisson, Paul A. Davies, Michael D. Green, and James Bee
Between 31 October and 12 November 2021, Glasgow hosted the 26th annual Conference of Parties (COP26) to the United Nations Framework Convention on Climate Change (UNFCCC), held under the presidency of the UK. Governments, corporations, academics, social groups, and other members of civil society converged with the aim of working together at the international level to tackle climate change.
A wide-ranging report encourages regulators to take a concerted approach to combat climate-related risks to the US financial system.
By Jean-Philippe Brisson, Paul A. Davies, Nicola Higgs, Malorie R. Medellin, and Deric Behar
On October 21, 2021, the Financial Stability Oversight Council (FSOC) published a lengthy report on Climate-Related Financial Risk (the Report), marking the first time that FSOC has officially identified climate change as an emerging and increasing threat to US financial stability. FSOC issued the Report pursuant to a directive in President Biden’s May 2021 Executive Order on Climate-Related Financial Risk, which tasked FSOC to assess and collaboratively address climate-related impacts on US financial system stability.
The Report is another building block in the Biden Administration’s “whole of government” approach to combating climate change and the climate-related risks that threaten the US economy. The Report comes just days after the Administration issued “A Roadmap to Build a Climate-Resilient Economy” (the Roadmap), which heralded the Report as “the first step in a robust process of US financial regulators developing the capacity and analytical tools to mitigate climate-related financial risks.” (See this Latham post for more information.)