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
Plastic pollution is a global environmental problem. To combat this issue, the United Nations Environment Assembly passed a resolution in March 2022 to develop a draft global agreement on plastic pollution by the end of 2024 (reported here). The third session of the Intergovernmental Negotiating Committee recently concluded in Nairobi, Kenya with the next session scheduled in April 2024 in Ottawa, Canada. Further, in April 2023, the international non-profit organisation, CDP, added plastic-related impacts to its global disclosure platform for companies and governments (reported here).
In Hong Kong, waste plastics continue to make up around 20% of municipal household solid waste disposal. To address growing concerns over the harmful effects of plastic waste on the environment and public health, the Hong Kong government recently passed the Product Eco-responsibility (Amendment) Bill 2023 (the “Bill“) to introduce regulations on disposable plastic tableware and other common plastic products, some of which will be banned from sale or free distribution in the coming year. Consequently, businesses in the food and beverage and hospitality industries will have to adapt their business operations. Hong Kong residents and visitors must also modify their consumption habits accordingly.
In line with the global trend of increasing importance of sustainability-linked loans, the Loan Market Association (LMA) and the European Leveraged Finance Association jointly published on 5 October 2023 the updated Best Practice Guide to Sustainability-Linked Leveraged Loans (the “Updated Guide”), which contains updates to the original Best Practice Guide to Sustainability-Linked Leveraged Loans published
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.
The risk of an accusation of “greenwashing” is now an important concern for many companies. Greenwashing is an ill-defined concept but, nevertheless, is increasingly a source of litigation and regulatory scrutiny – with more of both expected. It carries with it reputational, regulatory and litigation risks for which companies should be prepared. Whilst the risks are always context specific – varying by jurisdiction, industry
On June 22, 2023, the International Capital Markets Association (ICMA) issued its first update of its Climate Transition Finance Handbook (CTFH) since its original publication in December 20201 and an updated version of its Sustainability-Linked Bond Principles (SLBPs).
In its related press release, ICMA states that the updated CTFH:
[I]ntegrates the progress made
On 31 May 2023, the European Parliament and the Council of the European Union adopted Regulation (EU) 2023/1115 regarding the marketing and export of certain commodities and products associated with deforestation and forest degradation from the European Union. In this Legal Update, we delve into the regulation and highlight what operators and traders should know
On 7 June 2023, the UK Advertising Standards Authority (“ASA“) – the UK’s independent advertising regulator – banned a series of advertisements from a number of large oil and gas companies for including misleading information about their socio-environmental credentials. These landmark rulings, which mark the latest step in the ASA’s fight against greenwashing, are expected to set a precedent for how companies advertise their socio-environmental credentials in the future. More broadly, the increased regulatory scrutiny will likely feed into the expected rise in ESG-related litigation.
This move from the ASA mirrors similar moves by regulators and law-makers both in the UK and in other jurisdictions. The UK Competition and Markets Authority (“CMA”) has, for example, commenced investigations into the accuracy of environmental claims made by businesses in the fast-moving consumer goods sector (for further information on the CMA’s investigation, read our earlier blog post here). The US Federal Trade Commission and the European Commission have also taken steps to tighten regulation addressing greenwashing in marketing materials (for further information on these initiatives, read our earlier blog posts here and here).
Continue Reading Greenwashing: UK advertising watchdog bans greenwashing advertisements
On 24 May 2023, Walk Free, an international human rights group focused on the eradication of modern slavery, published the fifth edition of its Global Slavery Index (the “Index”), which provides a national level analysis of modern slavery across 160 countries.
Modern slavery is a growing global problem against a backdrop of compounding risks. According to the Index, some 50 million people around the world are living in modern slavery, with a reported 28 million in forced labour, 22 million in forced marriage and 12 million in child labour. Moreover, the Index estimates that around US$ 468 billion of goods imported by the G20 are at risk of being tainted by modern slavery. This includes products related to: cattle, coal, cocoa, coffee, electronics, fish, garments, gold, palm oil, rice, solar panels, sugar cane, textiles and timber.
The Index includes a heatmap that illustrates where modern slavery risks are more acute. In practice, this may prove to be a helpful tool for companies seeking to identify and assess human rights (and, in particular, modern slavery risks) in global supply chains in order to respond to: emerging mandatory human rights due diligence (“HRDD“) laws; obligations under established international norms (such as the UN Guiding Principles); and increasing stakeholder expectations.
The European Union has agreed on the final version of its Carbon Border Adjustment Mechanism (“CBAM”). The CBAM will apply to a limited set of products (cement, aluminium, fertilisers, electric energy production, hydrogen, iron and steel, as well as some “precursors” such as cathode active materials and a limited number of downstream products)