The First Civil Senate of the German Federal Court of Justice, which is in charge of competition law, has ruled that advertising with an ambiguous environmental term (here: “climate neutral”) is generally only lawful if the specific meaning of the relevant term is explained in the advertising itself.
Judgment of June 27, 2024 – I ZR 98/23
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After the results of the European elections, where the presidential political party lost a significant number of seats at the European Parliament, the president of the French Republic Emmanuel Macron decided to dissolve the National Assembly. This dissolution was effected by the presidential “Decree of June 9, 2024 dissolving the National Assembly“, which was published in the Official Journal of the French Republic on June 10, 2024.
At the time of the dissolution, several projects and proposals of laws were pending adoption within the French Parliament and the question of the status of these texts was scrutinized by the media shortly after the dissolution. Particular concern was raised by certain media articles about the consequences of the dissolution on pending environmental legislation, including the proposed legislation to protect the population from risks linked to Perfluoroalkyl and Polyfluoroalkyl Substances (“PFAS“) (the “Proposed PFAS Law”).
The Proposed PFAS Law had drawn quite substantial public attention as, if enacted, France would become the first EU Member State to heavily prohibit PFAS in products. The Proposed PFAS Law was also developed in parallel to the development of a PFAS restriction at the EU level, which drew criticism from industry bodies and some French parliament representatives.
Continue Reading Dissolution of the French National Assembly: what does it mean for the Proposed PFAS Law?
Multinational companies are facing increased pressure to ensure that they have adequate ESG-related policies in place and (more importantly) that they are implementing those policies in practice within both their business and associated supply chains via appropriate systems and controls. Companies that are found not to have implemented or adhered to those policies face increased legal and reputational risk which has the potential to have a materially negative impact on their business.
Although there are various formal legal routes through which a company that is found to have failed to implement or adhere to ESG-related policies can be held to account, National Contact Points (“NCPs“) are increasingly being used as a means of holding companies’ “feet to the fire” regarding their ESG non-compliance.
Companies that are subject to an adverse NCP finding, or publicly known complaint, may expose themselves to additional risks, including reputational damage and follow-on civil litigation. This article will explain what NCPs are, why they are becoming increasingly relevant and what businesses should be doing to minimise their exposure to an NCP complaint.
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Japan is considering whether to require all of its primary listed companies to publish an annual sustainability report which substantively conforms with the standards issued by the IFRS’ International Sustainability Standards Board (“ISSB”). The new mandatory disclosure rule would be applied in phases based on the size of market capitalization, with the biggest companies planned to be entering into the scheme from the financial year ending March 2027. The regulator in charge, the Financial Services Agency (“FSA”), established an ad hoc advisory board, the Working Group on Sustainability Disclosure (Reporting) and Assurance (“Sustainability Disclosure WG”) under its Financial System Council in February 2024. A public consultation in respect of the local adaptation of some of the ISSB standards will end on 31 July 2024.
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On 3 June 2024, the Asia Pacific Loan Market Association (“APLMA”) published its set of “Model Provisions for Green Loans” (“Model Provisions”), following the publication of the “Draft Provisions for Sustainability-Linked Loans” by the London-based Loan Market Association (“LMA”) a year earlier in May 2023. The markets expect that the Model Provisions will bring some clarity into the classification of green loans going forward.
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On May 28 2024, the Biden administration released the “Voluntary Carbon Markets Joint Policy Statement and Principles”.
The Joint Statement makes a number of important and supportive points in favor of the VCM, noting that:
The principles set out in the Joint Statement (the “Principles”) will guide how the US Government engages with VCMs. Through the Joint Statement, the US government encourages the US private sector and other stakeholders in the carbon credit value chain to responsibly participate in the VCM market, consistent with the Principles (see further below). While the focus of the Joint Statement is on VCMs, much of the content speaks to the development and operation of carbon credit markets more generally.
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On April 24, 2024, the Loan Market Association (LMA) published its Sustainability Coordinator Letter. The publication of the LMA’s letter follows the LSTA’s February 2023 publication of its own Sustainability Structuring Agent Engagement Agreement Inserts. This Legal Update contains a comparative analysis of the LMA and LSTA’s documents, notes key similarities and differences between the two, and provides some key takeaways for ESG loan market participants.
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The European Securities and Markets Authority (ESMA), published a combined report on its 2023 Common Supervisory Action (CSA) and the accompanying Mystery Shopping Exercise (MSE) on marketing disclosure rules under MiFID II. ESMA, together with the National Competent Authorities (NCAs), states that marketing communications and advertisements generally comply with MiFID II requirements. Investment firms generally have procedures in place that ensures compliance with the rules for marketing materials. However, there are increasing concerns about marketing material which includes sustainability claims. ESMA identified several areas of improvements and announces that further supervisory actions in this area shall be undertaken.
Continue Reading ESMA’s Final Report on the 2023 Common Supervisory Action and Mystery Shopping Exercise on marketing
On 16 May 2024, the UK Government published an implementation update on its development of economy-wide sustainability disclosure requirements (the “Implementation Update“). The Implementation Update, which the UK Government committed to publishing in its 2023 Green Finance Strategy (which you can read more about here), discusses:
On 14 May 2024, the European Securities and Markets Authority (“ESMA“) published its final report on “Guidelines on funds’ names using ESG or sustainability-related terms” (the “Guidelines“). The Guidelines aim to provide fund managers with clear and measurable criteria to assess their ability to use ESG and/or sustainability-related terms in fund names, thereby ensuring that investors are protected against associated greenwashing risk.
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