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.


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

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

On April 26, 2021, the Central Bank of Brazil (BCB) launched a new public consultation (No. 86/2021, the “Consultation”) on a proposed regulation for mandatory disclosure of social, environmental, and climate risks by financial institutions.

Climate-related risks must be disclosed in accordance with the TCFD Recommendations (“Recommendations”), including both

On April 15, 2021, General Mills, a leading global food company, announced that it had closed the first-ever sustainability-linked loan (SLL) facility for a US consumer packaged goods company.

The $2.7 billion five-year multi-currency revolving credit facility (RCF) was arranged by Bank of America (which acts as administrative agent) and syndicated to a significant number of banks and other lenders.

The RCF was filed with the US Securities and Exchange Commission and includes a matrix that will adjust the applicable interest rate and fees under the RCF based on General Mills’ reductions in its greenhouse gas emissions in owned operations (i.e., only Scope 1 and 2 emissions) and its use of renewable electricity for global operations.


Continue Reading US Interest in Sustainability-Linked Loans on the Rise

Following in the footsteps of other central banks around the world, and in face of the pressing need for an inclusive and sustainable economic recovery after the COVID-19 pandemic, on April 7, 2021, the Central Bank of Brazil (BCB) launched public consultation No. 85/2021 (Consultation). The Consultation includes proposed amendments and new rules governing the management of social, environmental and climate risks by financial institutions (and other institutions with operations authorized by the BCB), as well as the requirements to be observed by these institutions in the elaboration and implementation of their respective Social, Environmental and Climate Responsibility Policy (PRSAC).

The BCB joined the Network for Greening the Financial System (NGFS) on March 25, 2020, and, on September 8, 2020, launched the “Sustainability Dimension” of its work agenda (Agenda BC#), which aims to promote sustainable finance, proper management of social, environmental and climate risks in the National Financial System (SFN), and integration of ESG variables into BCB’s decision-making process.


Continue Reading Brazil’s Central Bank Set to Incorporate Social, Environmental and Climate Factors into Financial Regulation

On April 9, 2021, the Division of Examinations of the US Securities and Exchange Commission (SEC) issued a Risk Alert that highlighted its observations from its recent examinations of investment advisers, registered investment companies and private funds offering ESG products and services. The Risk Alert also provides observations of effective practices.

ESG investing

On March 4, 2021, Brazil ratified the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization (“Nagoya Protocol” or “Protocol”). Starting on June, 2, 2021, the country becomes a party to the Protocol and will be able to actively take part in discussions and decision-making, including by participating in the next Conference of the Parties serving as the meeting of the Parties to the Nagoya Protocol (COP-MOP 4) scheduled for October 2021.

Brazil is the most biodiverse country in the world, and the ratification comes 10 years after the signing of the Protocol on February 2, 2011. In the meantime, the country passed its own regulations on biodiversity, notably Law 13,123 of May 20, 2015 (Brazilian Biodiversity Law), which provides for access to genetic resources and traditional knowledge, as well as benefit-sharing mechanisms. The Brazilian Biodiversity Law is the national legislation for implementing the Nagoya Protocol and one of the key access and benefit-sharing (ABS) legislations, which places benefit-sharing obligations on manufacturers of finished products developed from Brazilian genetic resources (regardless of who previously accessed the resources).


Continue Reading Brazil Ratifies the Nagoya Protocol: One Step Further to Unlock the Potential of Brazilian Biodiversity

On March 25, 2021, the New York Department of Financial Services (NYDFS) issued for public comment “Proposed Guidance for New York Domestic Insurers on Managing the Financial Risks of Climate Change” (Guidance). Comments must be submitted by 11:59 p.m. EDT on Wednesday, June 23, 2021, and must be made

On March 10, 2021, the US Department of Labor (DOL) released a policy statement that it will not enforce or otherwise pursue enforcement actions against a fiduciary for failing to comply with the “Financial Factors in Selecting Plan Investments” regulation published on November 13, 2020 (the “ESG Rule“), and the “Fiduciary Duties Regarding Proxy Voting and Shareholder Rights” regulation, published on December 16, 2020 (the “Proxy Voting Rule“). Both regulations were promulgated by the DOL shortly before the Biden administration took office. In the recent policy statement, the DOL stated that certain stakeholders, including asset managers, plan sponsors and consumer groups have expressed concern over whether these rules accurately reflect a fiduciary’s duties under ERISA and appropriately consider the utility of ESG factors in making investment decisions. As a result, the DOL intends to “revisit” each of these rules.

Continue Reading The US Department of Labor’s Non-Enforcement Policy on Recent ESG and Proxy Voting Rules