Singapore

On May 12, 2022, Singapore’s Green Finance Industry Taskforce (GFIT) published a second consultation paper on its proposed taxonomy for Singapore-based financial institutions (“Singapore Taxonomy”), which aims to provide a common framework for classification of economic activities upon which financial products and services can be built and combat greenwashing by setting out definitive criteria for greenness in Singapore. A key purpose of developing the Singapore Taxonomy is to encourage the flow of capital to support the low carbon transition needed to avoid catastrophic climate change, as well as the environmental objectives of Singapore and the ASEAN nations, which are serviced by Singapore-based financial institutions. The Singapore Taxonomy is drafted to be consistent and compatible with other taxonomies to ensure interoperability, particularly the EU Taxonomy and the ASEAN Taxonomy (which we discussed here). The second consultation paper builds on GFIT’s earlier public consultation on the first version of the Singapore Taxonomy released in January 2021, which we discussed here.

In this second consultation paper, after considering feedback from the consultation process, GFIT proposes activity-level criteria and thresholds for three of the eight focus sectors (Energy, Transport and Buildings) outlined in the original consultation paper and for only one of the environmental objectives (Climate Change Mitigation). These three sectors were determined to have the highest environmental impact in Singapore, which collectively account for around 90% of ASEAN greenhouse gas emissions.

Further, the second consultation paper expands on the “traffic light” approach that was put forward in the original consultation paper, and adds granularity to the application and thresholds for classification, supported by science and data. Under this “traffic light” system, which is similar to the colour coding in the ASEAN Taxonomy, an economic activity can be classified as green, amber, or red, which denotes a different level of contribution to climate change mitigation as follow:

  • Green (environmentally sustainable): activities that contribute substantially to climate change mitigation by operating at net zero, or are on a pathway to net zero by 2050.
  • Amber (transition): activities that are either transitioning towards green within a certain time frame, or facilitating significant emissions reductions in the short term.
  • Red (harmful): harmful activities that are not currently compatible with a net zero trajectory.

GFIT is expected to release the criteria and thresholds for the remaining five focus sectors and the remaining environmental objectives in late 2022, and to finalise the full Singapore Taxonomy in 2023.

The consultation on the second version of the Singapore Taxonomy closes on June 23, 2022.

China - Hong Kong

There has been much talk recently about ESG. What started as a metric for investors to make ethical investment decisions has now grown to encompass how companies should, and are expected to, behave in general. ESG is now a key issue for company boards and management, and an important consideration for shareholders and investors, individual employees and stakeholders alike. There are rapidly evolving ESG regulations and disclosure requirements with which Hong Kong companies need to comply.

Continue reading on MayerBrown.com for our recent Legal Update on the implications of ESG for HR professionals in Hong Kong and what they should do from a practical perspective.

United States - Washington DC

The US Securities and Exchange Commission (SEC) rulemaking process has received much attention under Chair Gensler’s leadership not only because of the volume and substance of proposed rules, but also because of the relatively short comment periods allotted for the public to respond pursuant to the Administrative Procedure Act process. As just one example of the reaction from market participants and others, see here an earlier Mayer Brown post summarizing a letter to the SEC from 25 trade associations seeking longer comment periods.

The SEC published a press release on May 9, 2022, announcing that it has extended the comment period for its proposed rule mandating climate-related disclosures by public companies. In addition, the SEC has reopened the comment periods for rule proposals related to private fund advisers and the inclusion of certain Treasury markets platforms within Regulation ATS.

Chair Gensler stated the following with respect to this action: “Today, the Commission acted to provide the public with additional time to comment on three proposed rulemakings that have drawn significant interest from a wide breadth of investors, issuers, market participants, and other stakeholders. The SEC benefits greatly from hearing from the public on proposed regulatory changes. Commenters with diverse views have noted that they would benefit from additional time to review these three proposals, and I’m pleased that the public will have additional time to provide thoughtful feedback.”

As a result of this action, the comment period for the proposed rules on climate-related disclosures will close on June 17, 2022 (not May 20, 2022, as originally anticipated). The comment periods for the rule proposals affecting private fund advisers and Regulation ATS will be reopened for 30 days following publication of the reopening release in the Federal Register.

For more information, please refer to our legal update and related webinar on the SEC’s proposed rules on climate-related disclosures.

Social

Investors are increasingly focussed on how companies address modern slavery and wider human rights issues when making investment decisions.  Despite this, many UK companies are failing to adequately report on, and take sufficient steps to eradicate, modern slavery within their businesses and supply chains, according to the Financial Reporting Council’s (the “FRC“) recently published Modern Slavery Reporting Practices in the UK Report (the “Report”).

The Report, which analysed the reporting practices of 100 companies listed on the London Stock Exchange’s Main Market, highlighted that the majority of companies are failing to disclose sufficient information to enable stakeholders to make informed decisions about companies’ compliance with modern slavery legislation.  Such shortcomings in the quality of companies’ modern slavery reporting presents a number of compliance, reputational and financial risks to companies.

Continue Reading Business and Human Rights: the Financial Reporting Council identifies failings in UK companies’ modern slavery reporting

MOSS and glass globes

The European Commission recently published a series of documents in the context of the Green Deal initiative. One of these is a proposal for a directive on consumer empowerment. With this proposal, the Commission seeks to deliver on its promise to ensure consumers have access to reliable, comparable and verifiable information on products to allow them to make more sustainable choices.

In this article, we look at the changes the proposal would bring. It is worth remembering that this is a complex area where different sets of rules – general and product specific – intersect. Furthermore, more initiatives are on the way, including a proposal on Green Claims –  scheduled for July 2022 – which is likely to introduce an extensive right of repair. The overall consumer-rights landscape is about to become a lot more complex as the Commission heralds its green transition.

Continue reading at Mayerbrown.com.

United States - Washington DC

In December 2021, President Biden signed the Uyghur Forced Labor Prevention Act (“UFLPA”) into law. The UFLPA creates a rebuttable presumption that goods “mined, produced, or manufactured wholly or in part” in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China, or by certain other entities in China, are made with forced labor and that such goods, wares, articles, and merchandise are not entitled to entry to the United States.[1] The presumption applies unless the Commissioner of U.S. Customs and Border Protection (“CBP”) determines that the importer of record has complied with certain due diligence and evidentiary standards. The UFLPA requires CBP  to publish guidance on the due diligence and evidentiary standard needed to rebut the presumption after a formal rulemaking process. The UFLPA also requires the Forced Labor Enforcement Task Force (“FLETF”), an interagency group dedicated to preventing the import of goods made with forced labor into the US, to “develop a strategy for supporting enforcement of Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) to prevent the importation into the United States of goods mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China.”[2]  For more information on the contents of the UFLPA, please refer to our previous Legal Alert on the subject.

The rebuttable presumption will enter into force on June 21, 2022, the same day that the FLETF must submit its initial strategy to Congress for review. The FLETF has already solicited written comments and hosted a public hearing to inform its strategy.

On April 12, 2022, CBP announced on its website that, in advance of June 21, 2022, the date of enter into force of the rebuttable presumption, CBP will be issuing letters to importers that it has identified as having previously imported merchandise that may be subject to the UFLPA to encourage them to address any forced labor issues in their supply chains in a timely manner. CBP noted that not receiving a letter is not an indication that a company’s supply chain is free of forced labor. CBP urged all importers to thoroughly review their supply chains, regardless of whether they received a letter, to ensure that their supply chains do not use any convict labor, forced labor or indentured labor, including any forced or indentured child labor.

[1] Pub. L. 117-78 § 3.

[2] Pub. L. 117-78 § 2(c).

iceberg with above and underwater view

On April 7, 2022, the federal government of Canada released its Budget 2022 (Budget), which includes significant measures by the Canadian government to build its Net-Zero Economy and to fight climate change. In the Budget, the Canadian government is committed to move towards mandatory reporting of climate-related financial risks across a broad spectrum of Canadian economy, based on the Task Force on Climate-related Financial Disclosures (TCFD) framework. The new reporting requirements will be applicable to, among others, federally regulated banks and insurers, which “play a prominent role in shaping Canada’s economy” – as noted in the Budget.

Continue Reading Canada to Impose Mandatory Climate Disclosures on Banks and Insurers

United States - Washington DC

In the latest of a series of actions by the Biden-Harris administration aimed at reducing the federal government’s carbon footprint, the US General Services Administration (GSA) has issued new national standards for the concrete and asphalt used in GSA building and paving projects.1 The standards apply to concrete and asphalt provided by GSA’s prime contractors, furthering efforts to prioritize carbon-reduction in federal contracting and to leverage the federal government’s purchasing power in support of the transition to a zero-carbon economy. GSA plans to use these standards for all GSA projects involving at least 10 cubic yards of concrete or asphalt, including GSA projects carried out under the Infrastructure Investment and Jobs Act.2

Continue Reading Clean Slate: US GSA Issues New Standards for Environmental Attributes of Concrete and Asphalt

Environmental

“Greenwashing” – that is, environmental claims that are not fully or properly substantiated, or that contain false information, omit critical information, are exaggerated or are presented in an unclear, ambiguous and/or inaccurate manner – continues to be a major focus of scrutiny across all sectors, and the advertising industry is no exception.  The volume of statements and claims regarding the sustainability credentials of businesses’ goods and services, often made in the context of advertising and marketing, is increasing rapidly.

At the same time, the interests of regulators, consumers, and other stakeholders, in combatting misleading, “greenwashed” environmental claims has grown commensurately.  According to analysis conducted by the Independent, over the past 12 months alone, the UK’s Advertising Standards Agency (“ASA“) has found 16 advertising campaigns to have exaggerated the green credentials of, or made unsubstantiated environmental claims about, the advertised brands.

As a consequence of this growing interest, the World Federation of Advertisers (“WFA“) – a global organisation that represents the common interests of advertisers and marketers – has issued landmark guidance on how brands can ensure that any environmental claims featured in their marketing communications are credible for both consumers and regulators (the “Guidance“).  The Guidance, produced with the support of the International Council for Advertising Self-Regulation, the European Advertising Standards Alliance and the UK’s ASA (amongst others), is the first guidance that has been issued at an international level with regard to making environmental claims, and represents a highly significant development in the context of growing efforts to combat greenwashing.

Continue Reading World Federation of Advertisers issues guidance on making credible environmental claims

Energy innovation light bulb graphic interface.

A centerpiece of the European Green Deal was officially unveiled last week. The Proposal for a Regulation establishing ecodesign requirements for sustainable products[1] (‘ESPR’) is an ambitious document, part of a series of European Commission proposals seeking to redefine business in line with the European Union’s vision for a more sustainable future, as part of the European Sustainability Initiative.

The ESPR extends the scope of Ecodesign Directive from energy-related products to all products – save food, feed and medicines. If adopted, this Regulation will provide a general framework imposing ecodesign requirements on products intended for the EU market, on the basis of which the Commission will adopt a series of delegated acts setting more specific requirements for different product groups.

Continue reading on MayerBrown.com.