The UK government has published a response to its January 2021 consultation on the new climate risk-related governance and reporting requirements that will apply to trustees of larger occupational pension schemes from 1 October 2021. The government has also published the finalised regulations and accompanying statutory guidance.

The requirements under the regulations are essentially unchanged from the consultation version – the changes that have been made are largely technical and are designed to clarify aspects of the requirements. Changes have also been made to the statutory guidance to provide further clarity and support for trustees.

Continue reading for our discussion on the governance and reporting requirements.


Continue Reading UK Climate change risk — new pension scheme trustee duties confirmed

On June 11, 2021, the German parliament passed the “Law on corporate due diligence in supply chains” (“Supply Chain Law”) (“Lieferkettensorgfaltspflichtengesetz”). It requires companies to take steps to prevent human rights violations in their supply chains. This builds on the growing momentum for mandatory human rights due diligence (see our previous blog posts here and here).

Continue Reading Business and Human Rights – Germany passes Mandatory Human Rights Due Diligence Law

In May 2021, the International Federation for Human Rights (FIDH) published a report setting out a series of tools investors can use to identify and address human rights risks, including modern slavery risks, in their portfolio companies.  The report includes a sectoral analysis of modern slavery rights in four sectors – Tourism, Construction, Food and Beverage, and Textile and Footwear – and adds to the growing toolkit of ESG-related resources available to investors (see, for example, our briefing Asset Managers: Mastering Non-Financial Risk – The Evolution of Human Rights Due Diligence).

Continue Reading Business and Human Rights – Analysing modern slavery risks in portfolio companies: practical considerations for investors

On 29 April 2021, the German Federal Constitutional Court published its groundbreaking ruling following several constitutional complaints against provisions of the German Federal Climate Change Act of 2019. In its order, the First Senate of the Constitutional Court held that the provisions determining national climate targets and the annual emission amounts allowed until 2030 are incompatible with fundamental rights insofar as they lack sufficient specifications for further emission reductions from 2031 onwards. The German legislator is now obliged to enact provisions by 31 December 2022 that specify in greater detail how the reduction targets for greenhouse gas emissions are to be adjusted after 2030.

Continue Reading ESG litigation: German Federal Constitutional Court rules that the German Federal Climate Change Act is partially unconstitutional

There have been two recent developments in the UK which further highlight the litigation risk for  international companies in respect of the activities of  their foreign subsidiaries. The UK is certainly not the only regime where there has been a notable increase in human rights related litigation but a distinct pattern is emerging.

PGI Group (PGI), a group of companies that operate in the agribusiness and renewable energy spaces, and its Malawian subsidiary, Lujeri Tea Estates Ltd (Lujeri), are facing a legal action in the UK High Court in connection with alleged systemic sexual abuse, including rape, sexual assault and discrimination, in Malawi.  Lujeri is a supplier to a number of known UK tea brands, including Typhoo, Yorkshire Tea and Tetley.  It is also a major supplier of macadamia nuts, which are grown in its Malawi orchards.

In the meantime, British American Tobacco (BAT) and Imperial Brands sought last month to strike out claims made against them and their subsidiaries by Malawian tobacco farmers, which were filed in the UK High Court last December.

These cases add to the growing list of companies to have faced legal claims in the UK courts in respect of the actions of their foreign subsidiaries (see our previous commentary on Camellia plc, Royal Dutch Shell plc and Vedanta Resources plc).  The cases also highlight the increasing litigation risk dynamic amid the growing trend of human rights and environmental litigation and underline the importance of UK companies taking steps to identify, prevent and mitigated human rights-related risks both in their own operations and also in the operations of their subsidiaries.
Continue Reading Business and Human Rights in the UK – Litigation Risk

On May 17-19, 2021, Risk.net hosted their ESG and Sustainable Investing conference, bringing together 350 senior directors to explore how ESG principles and sustainable investing will re-shape the global financial market. Speaking on a panel discussing stewardship, fiduciary duty and shareholder engagement – “Using investor influence for a positive, transformational change” – Mark Manning, the Financial Conduct Authority’s (FCA’s) sustainable finance technical specialist, is reported to have said that “an investor either needs to inject capital into new, purposeful and impactful projects, or use active-investor stewardship and influence to drive meaningful change in investing companies’ strategies”.

Continue reading for more details and analysis regarding stewardship and sustainable investing.


Continue Reading Investment Stewardship in the UK: The Regulatory Perspective

As our readers are well aware, climate change and stakeholder litigation is on a global uptrend as it has never been before. Whether claims are brought against governments or companies, whether these claims are accepted or dismissed, and whether they involve domestic or cross-border matters, there is already a plethora of precedents worldwide involving climate issues and stakeholder litigation, each playing their own part on the grand scheme of legal measures and instruments available for fighting global warming. However, only a handful of these precedents are as significant as the decision issued on May 26th, 2021, by the Hague District Court in Milieudefensie et. al. v. Royal Dutch Shell.

In summary, the Hague District Court has ordered Shell to reduce its CO2 emission levels by 45% by 2030, compared to 2019 levels. In this Blog Post, we provide an overview on this decision and on how it may be a game changer when it comes to climate change and stakeholder litigation.


Continue Reading Unprecedented Decision Sets a Milestone for Climate Change Litigation Cases: What’s Next?

This article is the first in a series, which we introduced in a previous Blog Post, exploring the “jargon” of the EU Commission’s Chemicals Strategy for Sustainability (CSS), an ambitious political action plan for chemicals regulation in the EU that was released in October 2020.

As part of this political initiative toward a profound reshape of the existing chemicals regulatory framework, the concept of “safe and sustainable by design” is fairly innovative and could well become one of the pillars of chemicals regulation in the EU. In a nutshell, the Commission calls in its CSS for a “transition” to chemicals that are safe and sustainable by design in order to reconcile the societal value of chemicals with human health and planetary boundaries. The Commission presents the “sustainable-by-design” concept as a holistic approach to achieve these objectives: it seeks to integrate “safety, circularity, energy efficiency and functionality of chemicals, materials, products, and processes throughout their life cycle and minimiz[e] the environmental footprint”. It is aimed at constituting an overarching concept, i.e., a guiding principle in the regulation of the chemicals sector.

This ambitious goal will have important concrete consequences for the industry. At the same time the safe and sustainable by design approach is advocated by the EU executive as an opportunity for the European industry to act as frontrunner in a stammering race for the production and use of safe and sustainable chemicals.

Continue reading for more information on the current state of play regarding “safe and sustainable by design”, the development of this important concept and next steps for related regulatory and political action.


Continue Reading “Safe and Sustainable by Design”: The Inception of a Possible Game-Changer in the Regulation of Chemicals in the EU

On 21 April 2021, the EU Commission announced its proposal to extend existing sustainability reporting in a new Corporate Sustainability Reporting Directive (CSRD).  The proposal, which revises the Non-Financial Reporting Directive (the “NFRD“), will extend the reach of sustainability reporting to more companies and will cover more sustainability topics.

This is part of a wider, concerted effort by the EU to legislate for greater E, S and G reporting and accountability standards, like the EU’s proposed mandatory human rights and environmental due diligence law.  It is also part of a larger global trend: for example, New Zealand recently introduced a new Climate Disclosure Law (see our Blog Post on this here). Companies are increasingly embracing voluntary sustainability reporting but there are increased demands for mandatory reporting – the Global Reporting Initiative (GRI) for instance called for mandatory reporting in December last year. However companies’ standards of  voluntary reporting are of variable quality and often do not address the impacts of companies’ business activities on people and the environment.

Key aspects of the proposed Sustainability Reporting Directive:

  1. More companies would be asked to report on sustainability, up from 11,000 previously to nearly 50,000.
  2. The “double materiality perspective” is further reinforced – that is companies have to report on the impact of their business activities on people and the planet across the full value chain, as well as the sustainability risks for the business itself, and to disclose the process for determining their material issues.
  3. Measurements of sustainability will be more consistent, reliable, and therefore comparable, for investors and other stakeholders.
  4. Timing is subject to change, but it is expected these measures would take effect in 2024, i.e. reporting on the financial year ending 2023.


Continue Reading EU Moves Toward Comprehensive Corporate Sustainability Reporting Directive

The EU Chemicals Strategy for Sustainability Towards a Toxic-Free Environment (CSS) announces the “new long term vision for the EU’s chemical policy’” intended to achieve a toxic-free environment through the “production and use of safe and sustainable chemicals”. In line with the objectives of the EU Green Deal, this ambitious political document is expected to deeply reshape the current EU chemicals regulatory framework for the next decade.

The Commission published the CSS in October 2020. It lays out more than 50 wide-ranging actions that will have a direct impact on the EU chemicals regulatory framework, listed for completion between 2020 and 2024. It is accompanied by a detailed Action Plan listing the key areas of action and the expected legislative initiatives and providing an indicative timing accordingly. We detailed some of the main initiatives regarding REACH and the CLP in a previous blog post, following the European Commission’s roadmap on the targeted revisions to REACH and CLP, which can be accessed here.

Continue reading for more details and analysis regarding the CSS and the future of sustainability in the EU chemicals industry.


Continue Reading Exploring the “Jargon” of the Chemicals Strategy for Sustainability: A Glance at the Future of Chemicals Regulation in the EU