UK Prime Minister, Rishi Sunak, has announced a major U-turn on the UK’s “net zero” policies.  This amounts to 3 key policy changes:

  • Electric vehicles – 3 years after announcing a ban on the sale of new petrol and diesel vehicles from 2030, the ban has been delayed to 2035;
  • New exceptions to ban on sale of new domestic gas boilers from 2035 – although the ban on the sale of new gas boilers from 2035 remains, new exceptions will be introduced to help poorer households, although the details are to follow.  The sale of oil, LPG and coal boilers for off-grid homes is to be delayed to 2035;
  • Tougher EPC requirements to be scrapped – from 2025, no residential property was to be let unless it achieved a “C” rating for energy efficiency.  This has been scrapped.  Mr Sunak said that this could have led to a requirement to invest around £8,000 per property.  No announcements were made regarding commercial properties.

The changes have met with a mixed response, with some commentators highly critical of Mr Sunak’s U-turn, warning that introducing uncertainty could severely undermine investor confidence in the UK.

Continue Reading UK rolls back “net zero” ambitions, carbon offsets face renewed attack and the spotlight falls (again) on policing carbon markets

On 12 September 2023, Brazil´s Attorney General Office, representing the Brazilian Federal Environmental Agency, filed a climate litigation lawsuit against a livestock farmer, seeking compensation for the deforestation of the Amazon Forest between 2003 and 2016.

This blog post provides a brief overview on this new lawsuit, which further strengthens a new trend for climate litigation in Brazil.

Continue Reading New lawsuit filed by Brazil’s Federal Government further strengthens climate litigation trends against private entities in Brazil

Two new bills have been passed in California as part of a “Climate Accountability Package” that require U.S.-based companies “doing business”[1] in California to make disclosures about their emissions and climate-related financial risks. These are (a) the Climate Corporate Data Accountability Act (California Senate Bill 253 (SB-253)) and (b) the Climate-Related Financial Risk Act (California Senate Bill 261 (SB-261)). The laws remain subject to approval by the California Governor (who has until October 14, 2023, to sign or veto them).

To assist companies in preparing for these new climate-related disclosure requirements, we have provided a summary of some of the key requirements below.

Continue Reading New “Climate Reporting” Laws in California – Emissions and Climate-Related Financial Risk Disclosure Required

Companies are increasingly recognising that climate risk poses “strategic and operational risk” that could severely impact business operations. On 3 August 2023, United Nations Global Compact released Just Transition in Supply Chains: A Business Brief (the “Brief”).  At the heart of the Brief is a call for businesses to embed the concept of ‘just transition’ into supply chain risk management, taking into account both the environmental and social impacts of their supply chains. There is real concern that as companies increase their climate mitigation and adaptation activities, such actions may have unintended consequences that negatively affect workers, small businesses and local communities that drive global supply chains. On the other hand, integrating climate and social risks into a business’ core business and risk management could be “mutually reinforcing” and could “deliver valuable co-benefits”.

Continue Reading UN Global Compact Publishes Business Brief on Just Transition in Supply Chains

On 24 August 2023, through Decree No. 11,666/2023, the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer was enacted in Brazil (the “Amendment“). It was at MOP 28 (Meeting of the Parties) of the Montreal Protocol, in 2016, in the city of Kigali, Rwanda, that the Parties agreed to include HFCs among the substances controlled by the international regime. Hydrofluorocarbons (“HFCs“) have been used as alternatives to chlorofluorocarbons, mainly in the refrigerant market.

Continue Reading Federal government of Brazil enacts Kigali Amendment to Montreal Protocol, extending restrictions to HFCs

The EU Corporate Sustainability Reporting Directive (“CSRD“) entered into force on 5 January 2023 and the associated European Sustainability Reporting Standards (“ESRS“) were adopted by the European Commission on 31 July 2023. Together, the CSRD and ESRS create detailed sustainability reporting requirements that will apply to a significant number of EU and non-EU companies and substantially increase the scope of their sustainability reporting.

Application of the rules is now imminent and, for some, CSRD reporting periods will begin from 1 January 2024.

In this update, we take a look at the implications of the CSRD for non-EU companies and what companies can do to prepare.

Continue Reading The EU Corporate Sustainability Reporting Directive is upon us – what non-EU companies should know and do

At the Summer 2023 National Meeting of the US National Association of Insurance Commissioners (“NAIC”), a number of sessions were focused on environmental, social and governance (“ESG”) initiatives, led by the Special (EX) Committee on Race and Insurance (the “R&I Committee”) and the Climate and Resiliency (EX) Task Force (“C&R Task Force”), both of which report to the NAIC Executive (EX) Committee. While neither the C&R Task Force nor the R&I Committee announced any major developments or exposed any substantive items for review or comment, both bodies reported on the ongoing progress of important initiatives which they have been overseeing during the past few years. In addition, the Property and Casualty Insurance (C) Committee (the “P&C Committee”) announced plans for a data call to better understand protection gaps and the availability and affordability of insurance.

Continue reading at Mayerbrown.com.

On 27 July 2023, the International Sustainability Standards Board (the “ISSB”) published the Proposed IFRS Sustainability Disclosure Taxonomy for public consultation. The IFRS Sustainability Disclosure Taxonomy, which follows the ISSB’s issuance of the IFRS sustainability disclosure standards (the “Standards”) (which we reported here), is a digital taxonomy designed to facilitate digital reporting of sustainability-related financial information and to improve accessibility and comparability of such information by investors and regulators globally. Notably, the IFRS Sustainability Disclosure Taxonomy is not a taxonomy for categorising sustainability ratings or attributes of specific activities such as the EU taxonomy for sustainable activities.

Continue Reading ISSB Publishes IFRS Sustainability Disclosure Taxonomy for Consultation

On 31 July 2023, the European Commission adopted the European Sustainability Reporting Standards (“ESRS“). EU and non-EU entities subject to the new EU Corporate Sustainability Reporting Directive (“CSRD“) will be required to report against the ESRS, making the development of interest to entities preparing for reporting under the CSRD regime.

Continue Reading European Commission adopts the European Sustainability Reporting Standards

On 30 June 2023, the Working Group on Impact Investment (“Working Group”), which was established under the Expert Panel on Sustainable Finance of the Financial Services Agency of Japan (“FSA”), published a report (“Report”) (in English and Japanese) setting out domestic and international trends in impact investment and draft basic guidelines consisting of four key principles as discussed below (“Guidelines”).  The Report seeks to fill a gap in the lack of standards regulating “impact investment”, one of several sustainable finance investment methods, and noted “impact investment” market practices are still developing. In contrast, other ESG investment methods such as “integration” and “positive or negative screening” appear to be more commonly used in the market.

The Guidelines seek to encourage dialogue and align understanding on basic concepts and processes for “impact investment” between investors, financial institutions and companies in Japan and globally, and develop knowledge and experience in this area. The Guidelines further aim to create an environment in which investors and financial institutions can invest more confidently without concerns of greenwashing, and to help companies in obtaining financing and support. 

Continue Reading Japan FSA Publishes Draft Guidelines on Impact Investment and Calls for Public Opinion