The ESPR aims to make sustainable products the norm in the EU, replacing the current Ecodesign Directive and introducing broader measures for sustainability.
By Paul A. Davies, Cesare Milani, José María Alonso, Michael D. Green, James Bee, and Telmo Iriondo
On 18 July 2024, the Ecodesign for Sustainable Products Regulation (ESPR) entered into force. The ESPR forms part of a package of measures central to achieving the objectives of the European Commission’s 2020 Circular Economy
Consortium provides prototype climate-related financial disclosure standards, following earlier pledge to collaborate.
By Paul A. Davies and Michael D. Green
A group of leading sustainability and integrated reporting organisations has published a paper addressing standards for reporting on enterprise value and presenting prototypes of climate-related financial disclosure standards (the Paper). The co-authors include the Carbon Disclosure Project (CDP), the Climate Disclosure Standard Board (CDSB), the Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), and the Sustainability Accounting Standards Board (SASB) (the Organisations). The Organisations released the paper on 18 December 2020, several months after pledging to collaborate to provide market guidance on sustainability standards.
FCA director highlights areas of concern in relation to ESG reporting and provides recommendations.
By Paul A. Davies, Nicola Higgs, Michael D. Green, and Anna Lewis-Martinez
Richard Monks, Director of Strategy at the UK Financial Conduct Authority (FCA), recently delivered a speech on the environmental, social, and governance (ESG) reporting regime and how it can be improved as part of SRI Services and Partners’ Good Money Week, held in October. The speech draws particular attention to the increasing use and relevance of ESG ratings.
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.
The Sustainability Accounting Standards Board and the International Integrated Reporting Council merger aims to streamline ESG reporting to improve data for investors.
By Paul A. Davies and Michael D. Green
On 25 November 2020, the Sustainability Accounting Standards Board (SASB) and the International Integrated Reporting Council (IIRC) announced that they are merging into a unified organisation, the Value Reporting Foundation. This move reflects an effort to provide investors and corporates “with a comprehensive corporate reporting framework across the full range of enterprise value drivers and standards” and recognises “the need for data-driven information”.
The initiative includes a competition law sustainability “sandbox” in which market participants could team up to work on sustainable business projects.
By David Little and Pierre Bichet
The Greek Competition Authority (HCC) has announced a public consultation on how competition law rules might be adapted to promote more sustainable business practices. The HCC published a Staff Discussion Paper and held a digital conference to launch the consultation.
The HCC’s exploratory proposals outline a number of novel concepts, including: (1) the creation of a competition law sustainability “sandbox” in which market participants could team up to work on sustainable business projects with some measure of protection from competition rules; and (2) the establishment of an “Advice Unit” comprising experts from different regulatory authorities who could provide informal advice on sustainability-related initiatives. The proposals also envisage the publication of general guidelines defining the contours of legitimate cooperation between rivals on sustainability projects.
The ESG performance will be measured quarterly, with the average performance of the portfolio companies judged by reference to three KPIs.
By Paul Davies, Dominic Newcomb, Farah O’Brien and Michael Green
On 11 June 2020, private equity firm EQT announced that it has entered into an environmental, social, and governance–linked fund-level subscription credit facility (SCF) with an upper limit of around €5 billion[1]. The SCF, which is currently at €2.3 billion, is believed to represent the largest ESG-linked facility seen to date on the global fund financing markets, and is further evidence of the increasing interest in ESG among private equity firms.
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.
A new regulation will detail how financial market participants and financial advisors must incorporate ESG risks and opportunities in their procedures.
By Paul A. Davies and Michael D. Green
The European Union (EU) is committed to being the global leader in fighting climate change and implementing the Paris Agreement. Since climate change is increasingly viewed as a risk factor with respect to financial stability, the EU is now focusing on the financial sector in its efforts to implement the Paris Agreement and improve the sustainability and competitiveness of the EU economy.
Background
In May 2018, the European Commission (EC) took steps toward a plan to develop a cleaner and greener economy. In particular, the EC proposed (as part of the EU Action Plan on Sustainable Finance) new measures to establish criteria to objectively determine the sustainability of financial products.
The proposals included: harmonised criteria to determine whether an economic activity is environmentally sustainable; consistent rules for the integration of environmental, social, and governance (ESG) factors into financial services; and the introduction of low carbon benchmarks operating as low carbon versions of standard indices. These proposals would allow more investment to be channelled into sustainable activities.
By Paul Davies and Andrew Westgate
On 18 October 2017, the 19th National Congress of the Chinese Communist Party will convene, after the week-long National Day holiday, marking one of the most important dates on the Chinese political calendar. Among the issues that National Congress members will surely discuss, is the importance of implementing strategies to further China’s green development. A crucial aspect of this discussion will be determining how funding can be channelled towards clean development.
China has achieved unprecedented economic growth over the last four decades, and is predicted to become the world’s largest economy before 2030, overtaking the United States. A by-product of this success however, has been severe damage to China’s ecology and environment, which the country is already taking action to address.