Goods imported into the UK from countries with a lower or no carbon price will face a levy by 2027.

By Paul A. Davies, Michael D. Green, and James Bee

On 18 December 2023, the UK government announced a proposal for a new carbon border adjustment mechanism (UK CBAM). The announcement follows extensive consultation earlier this year on possible measures to mitigate carbon leakage risks and aims to support the UK’s decarbonisation efforts.

The UK has made a number of decarbonisation commitments including reaching net zero by 2050. These commitments to decarbonise can be undermined by “carbon leakage”, in which production of goods and associated emissions move from a jurisdiction with more ambitious climate policies (which add costs to carbon-intensive processes) to another jurisdiction with less ambitious policies, resulting in an overall negative impact on the carbon intensity of the processes/goods themselves. The UK CBAM (or other form of carbon tax) seeks to address this issue by aiming to put a fair price on the carbon emitted during the production of certain carbon-intensive goods entering the UK.

The framework claims to set the “gold standard” for companies to contribute to the net zero transition while emphasising ambition, action, and accountability.

By Paul A. DaviesMichael D. Green, and James Bee

The UK Transition Plan Taskforce (TPT) launched its transition plan disclosure framework (the Framework) at the London Stock Exchange on 9 October 2023. The Framework encourages businesses to create transition plans for a low greenhouse gas (GHG) emissions economy. It also seeks to help companies and financial institutions create consistent and comparable disclosures on their climate transition plans.

While initially voluntary, the Framework is expected to become mandatory for certain entities in the UK through incorporation into regulatory frameworks.

LIDW23 member-hosted event provided insights into current and future trends in the greenwashing space.

By Sophie J. Lamb KC and Aleksandra Dulska

Latham & Watkins recently hosted a panel discussion during London International Disputes Week on the topic of greenwashing and how English law continues to evolve and adapt in order to meet the needs of international businesses and other stakeholders engaging with this issue. The event provided a platform to explore:

(1) The key drivers of greenwashing complaints

(2) The challenges organisations face when trying to define and explain their sustainability plans (including against the backdrop of rapidly evolving reporting guidelines)

(3) The associated litigation trends as observed globally

The panel included the Honourable Mrs Justice Cockerill DBE (Commercial Court Judge, High Court), Sophie J. Lamb KC (Partner, Latham & Watkins), Adam Heppinstall KC (Barrister, Henderson Chambers), and Meghan Sheehan (Director and Head of ESG and Sustainability, Kekst CNC).

This blog post summarises the key themes of discussion that took place and provides interesting insights as to what may lie ahead.

Discussion Paper opens debate on potential new rules to improve diversity in financial services.

By Rob Moulton, David Berman, Paul Davies, and Charlotte Collins

On 7 July 2021, the FCA, the PRA, and the Bank of England published a joint Discussion Paper on diversity and inclusion in the financial sector. The regulators, in particular the FCA, have been focused on diversity and inclusion as regulatory issues for some time. According to the regulators, research shows there is a positive correlation between increased diversity and inclusion and better outcomes in risk management, conduct, culture, and innovation. Therefore, improving diversity and inclusion in financial services is seen as tying in closely with the regulators’ objectives. In the Discussion Paper, the regulators consider diversity and inclusion not only in terms of how a firm is run internally, but also how the firm serves its customers.

The plan promises 250,000 jobs and emphasises a “green industrial revolution” to stimulate a post-pandemic economic recovery.

By Paul A. Davies and Michael D. Green

On 17 November 2020, UK Prime Minister Boris Johnson announced a ten-point plan as part of the government’s initiative to “build back better”. The plan aims to bolster the economy and “turn the UK into the world’s number one centre for green technology and finance, creating the foundations for decades of economic growth”. The ten-point plan will mobilise £12 billion of government investment — and potentially three times as much from the private sector — while aiming to create 250,000 jobs in the UK.

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.

The FRC prompts boards, companies, and auditors to improve responses to climate change challenges through improved governance structure and narrative reporting.

By Paul A. Davies and Michael D. Green

On 10 November 2020, the Financial Reporting Council (FRC) published its findings (the Report) on its thematic review undertaken in 2020, concerning climate-related considerations that various stakeholders take into account. The Report focuses on boards, companies, auditors, professional bodies, and investors, as these actors help drive appropriate reporting to the market and thus ‘play important roles in delivering society’s climate ambitions’.

The UK citizens’ assembly identifies overarching principles and makes specific recommendations for achieving the environmental goal.

By Paul A. Davies and Michael D. Green

Background

The Climate Assembly UK has published its report on how the UK can achieve its statutory target for net zero carbon emissions by 2050. The report, which was released on 10 September 2020, followed more than a month of weekend meetings (some of which took place remotely due to the pandemic). Participants underwent a three-stage process of learning, discussion, and decision-making.

Comprising 108 members of the public, the citizens’ assembly was commissioned in June 2019 by six Select Committees of the House of Commons, including the Environmental Audit and Business Energy and Industrial Strategy. The House of Commons sponsored the initiative, with two philanthropic organisations providing additional funding and not-for-profit organisations organising the assembly