On November 8, 2021, the acting head of the Office of the Comptroller of the Currency (OCC), Michael J. Hsu, issued a call to action on climate change to the boards of directors of OCC-regulated banks. Specifically, he outlined an initial series of climate change-related questions that boards should be asking bank management
Many factors are putting pressure on corporates and financial institutions to address climate change. The UK is currently rolling out mandatory economy-wide disclosure in accordance with the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations. Beyond this lies immense investor and stakeholder pressure, including by way of shareholder resolutions, and increased media, NGO
In September 2021, the Business & Human Rights Resource Centre (BHRRC) published a briefing entitled “Social Audit Liability: Hard law strategies to redress weak social assurances” (the “Briefing”).
The Briefing contends that the existing model of social auditing is inadequate and that social auditing is not a substitute for human rights due diligence (see our previous Blog Post). Among other things, the Briefing reflects on the failure of social audits to detect human rights abuse in the past and on the potential flaws in certification schemes. Ultimately, the Briefing argues that companies should not solely rely on social audits and certifications and should instead adopt a “transformative approach” to human rights due diligence which goes beyond social auditing.Continue Reading Business and Human Rights: The Case to Look Beyond Social Auditing
As interest in, and demand for, sustainable goods and services continue to increase rapidly, so too has the volume of statements, assertions and claims, often in the context of advertising, regarding the sustainability credentials of those goods and services.
In a further sign of the continued trend towards stricter regulation, and enforcement, in the context of so-called “greenwashing”, the UK’s Competition and Markets Authority (CMA) recently published its “Green Claims Code” (the “Code“), a guidance note for businesses on making environmental claims when advertising goods and services in the UK.Continue Reading The UK’s CMA Publishes Guidance on Environmental Claims Used in Advertising
“… we renew our call on all governments to develop, implement, and enforce mandatory human rights and environmental due diligence requirements for businesses headquartered or operating within their own jurisdictions or, where appropriate, to further strengthen these regulatory regimes where they already exist.” – a statement from 94 investors representing over $6.3 trillion in AUM
On 7 October 2021, 94 investors representing over $6.3 trillion in assets under management and advisement, sent a statement to European Commissioners and the European Parliament, voicing their support for mandated human rights and environmental due diligence (mHREDD) (the “Statement“). The Statement was sent in light of the upcoming European Commission legislative proposal on Sustainable Corporate Governance. The proposal would require companies to consider their human rights and environmental impacts, allowing them to better manage sustainability related matters in their value chains and overall operations.Continue Reading 94 Investors Representing Over $6 Trillion of AUM Voice Support for Mandatory Human Rights and Environmental Due Diligence
‘With the most significant change since the GRI Standards launched in 2016, the revised Universal Standards set a new global benchmark for corporate transparency. Fully addressing gaps between the available disclosure frameworks and intergovernmental expectations for responsible business, including human rights reporting, they will enable more effective and comprehensive reporting than ever before.’
– Judy Kuszewski, Chair of GRI’s Independent Global Sustainability Standard’s Board
The Global Reporting Initiative (GRI) have revised their Universal Standards to emphasize and require more transparency in reporting on human rights impacts and due diligence obligations. This is a significant update because all entities reporting in accordance with the GRI standards are required to report on the Universal Standards (now GRI 1, 2 and 3). Previously, human rights-related disclosures were addressed largely in the GRI 400 series on Social topics, on which an organization is required to report only if it determines those topics to be material. Under the revised Universal Standards, all companies reporting in accordance with the GRI Standards will need to be able to identify (and disclose) how they identify severe risks to the economy, environment and people—this now clearly includes impacts on human rights connected with their business, and what they are doing to address these risks.
This development is part of a multi-phase project to update the GRI’s human rights-related disclosures, and the emphasis on “double materiality” brings the GRI standards in line with the UN Guiding Principles on Business and Human Rights (UNGPs) and emerging mandatory human rights and environmental due diligence legislation (see our Previous Blogs here and here). For companies that already adhere to the UNGPs, these revisions may not present a significant new challenge in practice; however, for companies that have not to date sought to explicitly adhere to the UNGPs, this will present a new challenge in terms of meeting the revised GRI standards.Continue Reading Business and Human Rights: Revised GRI Standards Integrate UN Guiding Principles on Business and Human Rights and Foreshadow Emerging Mandatory Human Rights and Environmental Due Diligence Legislation
On September 15, 2021, the Central Bank of Brazil (BCB) released its first “Report on Social, Environmental and Climate-related Risks and Opportunities”. Based on the recommendations by the World Economic Forum (WEF), the Task Force on Climate-related Financial Disclosure (TCFD), and the Network for Greening the Financial System (NGFS), the publication highlights the potential impacts of social, environmental, and climate-related issues on Brazil’s economy and financial stability, and details the initiatives aimed at assessing, disclosing and managing ESG risks and opportunities within the BCB structure and in the financial system.
Continue Reading Brazil’s Central Bank and National Monetary Council Publish New Rules on Disclosure and Management of Social, Environmental and Climate-related Risks
It was recently reported, on 8 September 2021, that investors managing USD 2.3 trillion in assets called for standardised climate and environmental disclosure from more than 1,000 privately held portfolio companies. The investors, who joined a growing chorus advocating for improved disclosures around environmental issues, requested the private companies to provide such data through the non-profit disclosure platform, CDP, which provides a mechanism for climate disclosures that align with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). The TCFD recommendations were published in June 2017, and have accelerated the focus on climate disclosures by providing the leading framework for disclosures relating to the financial impacts of climate-related risks.
But what are the TCFD recommendations, and how can companies prepare for reporting in compliance with them?Continue Reading TCFD Recommendations: An Update on Climate Disclosures
Just months after we discussed a recent climate lawsuit filed in Brazil against a rural landowner due to alleged illegal deforestation in the Amazon, a new chapter in Brazilian climate litigation unfolds and reinforces the trend of climate change lawsuits against public and private entities. In this Blog Post, we take a look at this new precedent and how it further impacts climate change discussions in the context of carbon-intensive activities.
Continue Reading Climate Litigation in Brazil: New Lawsuit Seeks to Bring Climate Change Discussions to the Core of Environmental Licensing of Carbon-Intensive Activities
There is an undisputed trend of increased and strengthened human rights and environmental due diligence laws (for example, see our previous Blogs here and here). A related trend is the rise of import controls to supplement such measures. For example, the United States’ Customs and Border Protection agency have in recent times increasingly issued Withhold Release Orders to detain shipments of products suspected to be produced, in whole or in part, using forced labour (for example, see our Legal Updates here and here).
The European Commission is now assessing the adoption of action and enforcement instruments to tackle forced labour. Its consideration of such mechanisms coincides with the forthcoming legislative proposals from the European Commission on Sustainable Corporate Governance (SCG), a key element of which includes an obligation for corporations to undertake human rights and environmental due diligence (HREDD).
A coalition of NGOs, including Anti-Slavery International and the European Coalition for Corporate Justice, have released an NGO position paper raising some key considerations in the development of potential import control measures in tandem with a mandatory corporate HREDD obligation.Continue Reading Business and Human Rights: NGOs Set Out Key Considerations for EU Import Controls to Tackle Forced Labour