Although Environmental, Social and Governance-related (“ESG”) initiatives continue to face some political headwinds, and the ESG-linked debt market suffered a downturn in 2023, a nascent product type is piquing the interest of certain players in the sustainable debt space. Several debtors have entered the so-called blue financing space in an effort to
Products
BUSINESS AND HUMAN RIGHTS: EU POLITICAL AGREEMENT ON FORCED LABOR PRODUCT BAN
On March 5, 2024, the European Parliament and the Council of the European Union reached a “political agreement” on a Regulation prohibiting products made with forced labor on the European Union (“EU“) market.1 While binding legislation was initially proposed by the European Commission (“Commission“) in September 2022 (see Legal Update…
NYDFS Finalizes Climate Risk Management Guidance
On December 21, 2023, the New York Department of Financial Services (“NYDFS”) finalized guidance on how the banks and mortgage institutions it regulates (“New York Institutions”) should manage climate-related financial and operational risks (the “Guidance”). The Guidance establishes extensive obligations for New York Institutions, which—even if tailored by the state to be proportionate to size…
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
UK Sustainability Disclosure Framework – FCA publishes final rules on Sustainability Disclosure Requirements and investment labels
On 28 November 2023, the UK’s Financial Conduct Authority (“FCA“) published its “Sustainability Disclosure Requirements (“SDR“) and investment labels” policy statement (PS23/16) (the “Policy Statement“). The Policy Statement introduces a set of new rules aimed at tackling greenwashing, including investment product sustainability labels and restrictions on how terms…
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…
Hong Kong Promotes Product Eco-Responsibility: New Regulations on Disposable Plastic Products
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.Continue Reading Hong Kong Promotes Product Eco-Responsibility: New Regulations on Disposable Plastic Products
Sustainability-Linked Loans: Recent Changes to Best Practice Guide to Sustainability-Linked Leveraged Loans
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…
Federal government of Brazil enacts Kigali Amendment to Montreal Protocol, extending restrictions to HFCs
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
Greenwashing: Navigating the Risk
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…