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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.

The report lays down policies aimed at fostering carbon neutrality in the UK by 2050 and supporting Paris Agreement pledges.

By Paul A. Davies and Michael D. Green

On 9 December 2020, the UK Climate Change Committee (the Committee) published its 6th Carbon Budget (the Budget), as required under the Climate Change Act. The Budget provides ministers with advice on the volume of greenhouse gases the UK can emit during the period 2033-2037 and also contains policies designed to place the UK on track to achieving carbon neutrality by 2050.

The Budget comes in the context of the UK bolstering its climate ambitions ahead of hosting the COP26 in Glasgow next year, as the Prime Minister has recently committed to cutting emissions by at least 68% from 1990 levels by 2030. The Government also published a ten-point plan aimed at boosting the green economy.

A new report shows headway in reducing greenhouse gases and details the latest climate change policy developments.

By Paul A. Davies and Michael D. Green

On 30 November 2020, the European Commission (EC) adopted the EU Climate Action Progress Report Kick-starting the journey towards a climate-neutral Europe by 2050 (the Report). The Report, which is produced annually, details recent developments in EU climate policy and progress made by the EU and its Member States. The EC’s Directorate-General for Climate Action compiles the Report based on data provided by Member States under the Climate Monitoring Mechanism Regulation.

The Chinese Communist Party’s policy plans include an increased focus on climate change and a more open trade environment.

By Paul Davies, Ethan Prall and Andrew Westgate

The Central Committee, the top-level authority of the Chinese Communist Party (CCP), recently concluded its Fifth Plenary Session and created China’s 14th Five Year Plan (the Plan). The Five Year Plan is the primary policy document for the CCP, covering a variety of social, economic, and foreign policy topics, and effectively serving as the CCP’s political platform. The Fifth Plenary was attended by 198 members of the Central Committee, including President Xi Jinping in his role as General Secretary of the Central Committee (his most important title). The full text of the new Plan is not yet public, but a communique summarizing the discussions at the Plenary has been released (Chinese version only). The communique indicates that the CCP will continue its focus on developing environmental governance policies through 2025, and the party will also prioritize aggressive climate policies aimed at reaching the 2060 carbon neutrality target recently announced by President Xi.

As Chairman Clayton reaches the end of his tenure, Commissioners Lee and Crenshaw continue to push for SEC action on climate change.

By Paul A. Davies, Paul M. Dudek, Ryan J. Maierson, and Kristina S. Wyatt

Background

In recent years, the market has witnessed a sharp divide both within the US Securities and Exchange Commission (SEC or Commission) itself and between the investor community and the SEC over the regulation of environmental, social, and governance (ESG) disclosures, as discussed in this blog post. The Commission, under the direction of Chairman Jay Clayton, has declined to entertain the regulation of ESG disclosures outside of human capital issues, even upon the adoption of amendments in August 2020 to the provisions of Regulation S-K governing the companies’ business description, risk factors, and legal proceedings. Last week, the Commission adopted amendments to the provisions of Regulation S-K governing Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) and, in line with its previous actions, declined to include any provisions related to ESG disclosures.

The annual report shows a considerable uptake in the adoption of climate-centred financial disclosures.

By Paul A. Davies and Michael D. Green

The Task Force on Climate-related Financial Disclosures (TCFD) published its Annual Report on TCFD-aligned disclosures by firms (Annual Report), on 29 October 2020. The TCFD was established by the Financial Stability Board (FSB) in 2015 as a mechanism to develop an approach for companies to disclose climate change matters. The TCFD offers companies guidelines and disclosure recommendations for providing information to investors, so that companies can provide more consistent, comparable data. The TCFD also promotes climate-related scenario analysis and the integration of climate-related risks into risk-management processes.