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United Kingdom - London

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.

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

Brazil - Fortaleza

Following a long-waited ratification (on March 4, 2021), Brazil became a party to the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (“Nagoya Protocol” or “Protocol”) on  June 2, 2021. This is an opportunity to dig into some practical consequences of the ratification. One of these consequences relates to offering a possible remedy to clarify one of the pending issues related to the material scope of Law 13123 of May 20, 2015 (the “Brazilian Biodiversity Law” or “Law”).
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Continue Reading Biodiversity – Brazil: Does the Nagoya Protocol Set Limits to the Scope of Domestic Legislation?

United States - Washington DC

Earlier this year, the US Federal Housing Finance Agency (“FHFA”) issued a Request for Input (“RFI”) on the risks of climate change and natural disasters to the national housing finance markets.1 As we discussed in our prior Legal Update, the RFI posed 25 questions on how FHFA can best identify, assess and respond to those risks for the entities FHFA regulates (Fannie Mae, Freddie Mac and the Federal Home Loan Banks) and the housing finance markets in general. Comments were due on April 19, 2021. The RFI is one of a series of recent actions by the federal government to address the financial risks posed by climate change.2 Most recently, on May 20, 2021, President Biden issued an executive order requiring the federal government to take several actions to identify and address the financial risks posed by climate change.3

Continue reading for our discussion on the comments in response to the RFI.

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Continue Reading Update on FHFA’s Request for Input on Climate Change and Natural Disaster Risks

India - New Delhi

On May 10, 2021, the Securities and Exchange Board of India (SEBI) issued a circular implementing new sustainability-related reporting requirements for the top 1,000 listed companies by market capitalization. New disclosure will be made in the format of the Business Responsibility and Sustainability Report (BRSR), which is a notable departure from SEBI’s existing Business Responsibility Report and a significant step toward bringing sustainability reporting up to existing financial reporting standards.

Continue reading for more details on the disclosure requirements in the new BRSR format.

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Continue Reading India Imposes New ESG Reporting Requirements on Top 1,000 Listed Companies

European Union - Germany - Berlin

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

United Kingdom - London

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.

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Continue Reading Investment Stewardship in the UK: The Regulatory Perspective

Environmental

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.

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

MOSS and glass globes

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.

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

United States - Washington DC

On Thursday, May 20, 2021, US President Biden signed an Executive Order, entitled “Climate-Related Financial Risk” (Climate Risk EO), that sets the stage for the US federal government, including its financial regulatory agencies, to begin to incorporate climate-risk and other ESG issues into financial regulation. The Climate Risk EO further demonstrates the…

Singapore

On May 19th, 2021, Singapore’s Green Finance Industry Task Force (GFIT), an industry-led initiative convened by the Monetary Authority of Singapore (MAS), issued a detailed implementation guide for climate-related disclosures by financial institutions (FIs) and a whitepaper on scaling green finance in the real estate, infrastructure, fund management and transition sectors. In addition, the GFIT has established a framework to help banks assess eligible green trade finance transactions and will launch a series of ESG-related capacity building workshops and e-learning modules from May 2021 to April 2022 for FIs and corporates.

In an announcement, Ms. Gillian Tan, Assistant Managing Director (Development and International) at the MAS, said:

“GFIT’s initiatives to enhance climate-related disclosures and strengthen green capabilities will enable financial institutions to effectively develop green solutions and align their portfolios towards facilitating Asia’s transition to a low carbon economy. These initiatives will also contribute to global efforts to achieve greater consistency and comparability in climate-related disclosures, as well as provide investors and market participants with the necessary information for climate risk analysis and investment decision-making.”

Continue reading for more details on each of these significant new developments.

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Continue Reading Singapore Financial Regulator Announces Initiatives on Climate Disclosures, ESG Capacity Building and More