The Securities and Exchange Commission (the “SEC”) has adopted new rules that require public companies to disclose substantial information about the material impacts of climate-related risks on their business, financial condition, and governance (the “Final Rules”). The SEC says that “climate-related risks, their impacts, and a public company’s response to those risks can significantly affect
Disclosures
Council of the EU agrees on proposal to regulate ESG ratings providers
On 20 December 2023, the Council of the EU reached an agreement on its negotiating mandate on a proposal for a regulation on ESG ratings (the “Proposed EU Regulation“). This builds on the European Commission’s proposal, which was published on 13 June 2023.
The EU’s desire to regulate ESG rating agencies is a response to increasing concerns from a variety of stakeholders about the reliability, comparability and transparency of ESG ratings and the data behind these ratings.Continue Reading Council of the EU agrees on proposal to regulate ESG ratings providers
ESMA publishes explanatory notes on the definition of “sustainable investments”, “do no significant harm” and the use of estimates in European sustainable finance regulation
The European Securities and Markets Authority (“ESMA“) has today published three useful explanatory notes covering key topics of the European sustainable finance framework, namely: a) the definition of “sustainable investments”; b) the application of do no significant harm (“DNSH“) principle; and c) the use of estimates.
The explanatory notes set out…
Brazil Sets Global Precedent: First Nation to Embrace ISSB Sustainability Financial Reports
The Brazilian Securities Commission (“CVM“) made a significant announcement on October 20, 2023, by introducing CVM’s Rule No. 193. This resolution provides comprehensive guidance on the creation and dissemination of sustainability information reports, specifically the IFRS S1 and IFRS S2, as outlined by the International Sustainability Standards Board (“ISSB“), which are aligned with the recommendations of the Task Force on Climate-Related Financial Disclosures (“TCFD”) and the criteria set by the Sustainable Accounting Standards Board (“SASB”).Continue Reading Brazil Sets Global Precedent: First Nation to Embrace ISSB Sustainability Financial Reports
International businesses with operations in the EU: Are you taxonomy-ready?
What is a taxonomy anyway?
The EU’s “Taxonomy” is a classification framework that determines whether an economic activity is environmentally sustainable.
Under EU legislation, “large” EU companies will soon need to report on their taxonomy “alignment” as part of their mandatory sustainability disclosures. This means, at risk of oversimplifying, reporting on the extent to which…
Disclosure Framework on UK Transition Plans
In 2021, at COP 26, the UK Government announced its intention that the UK would become the world’s first net zero aligned financial centre. It also launched the Transition Plan Task Force (“TPT”) with a view to producing a Gold Standard Disclosure Framework for transition plans.
Last week, the TPT published its Disclosure…
ISSB Publishes IFRS Sustainability Disclosure Taxonomy for Consultation
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
European Commission adopts the European Sustainability Reporting Standards
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
Asia Regulators’ Responses to the ISSB Disclosure Standards
The inaugural International Sustainability Standards Board (“ISSB“) sustainability disclosure standards, namely IFRS S1 (General Requirements for Disclosure of Sustainability-related Financial Information) and IFRS S2 (Climate-related Disclosures) (the “ISSB Standards“), have received positive feedback from stakeholders across the globe since its issuance on 26 June 2023 (which we reported here). This includes endorsement by the International Organization of Securities Commissions (IOSCO) on 25 July 2023.
The long-awaited ISSB Standards are intended to serve as a global baseline for transparent, reliable and comparable corporate disclosure of climate and sustainability-related information, and will help to inform investment decisions. In this blog post, we summarise several Asian regulators’ responses to the ISSB Standards which have been positive. Continue Reading Asia Regulators’ Responses to the ISSB Disclosure Standards
ESMA release Public Statement on Sustainability Disclosures in Prospectuses
On 11 July 2023, the European Securities and Markets Authority (ESMA) published a public statement on sustainability disclosure in prospectuses, available here: ESMA32-1399193447-441 Statement on sustainability disclosure in prospectuses (europa.eu).
The statement is addressed to the National Competent Authorities (NCAs) to promote coordinated action regarding sustainability-related disclosure included in prospectuses under current legislation. While the statement is addressed to NCAs, ESMA have said that its contents should be taken into account by issuers and advisers when drawing up a Prospectus Regulation (PR) compliant prospectus that contains sustainability-related disclosure.
Whilst there is little in the way of deviation from best practice here, the statement reflects the enhanced focus of ESMA and NCAs on ESG disclosure and is likely to result in additional commentary from NCAs during the prospectus approval process.
A summary of some of the key takeaways is included below.Continue Reading ESMA release Public Statement on Sustainability Disclosures in Prospectuses