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:

  1. its endorsement of the IFRS Sustainability Disclosure Standards;
  2. transition plan disclosures;
  3. the Financial Conduct Authority’s (“FCA“) Sustainability Disclosure Requirements (“SDR“) and investment labels regime;
  4. the UK Green Taxonomy; and
  5. nature-related disclosures.
Continue Reading UK government publishes implementation update in relation to sustainability disclosures

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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In a survey carried out by HSBC in 2023, 97% of real estate developers and investors said net zero was important to their business and 59% of the largest real estate companies said net zero was their top priority.

A third of companies in the sector already have Transition Plans and the push for formalising Transition Plans across the sector is increasing.

In April 2024, the Transition Plan Taskforce (“TPT”) published its final set of transition plan resources to help businesses transition to net zero.

In this article, we consider the guidance available to the real estate sector in preparing Transition Plans (“TP”).

Continue Reading Transition Plans & Real Estate

The UK Competition and Markets Authority (“CMA“) has announced that three fashion retailers have signed voluntary undertakings to ensure that consumers have a clearer idea of how green their clothes really are. At the end of March 2024, ASOS, Boohoo and George at Asda committed to only make green claims about their products that are accurate, clear and not misleading. At the same time, the CMA also published an open letter to the fashion retail sector stressing that players should ensure that all the green claims they make comply with UK consumer protection law. The commitments will be a particularly useful resource to fashion retailers, and businesses more generally, that are considering how to apply the CMA’s Green Claims Code to their products, and gearing up for potentially more potent interventions by the CMA in this space. To this end, it should be noted that the CMA ominously concludes its open letter by noting that its anticipated new powers under the Digital Markets, Competition and Consumers Bill (“DMCC“), which is currently being approved by Parliament, will allow the CMA for the first time, to impose financial penalties for breaches of consumer protection law, such as misleading green claims, without having to go to court.

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On 23 April 2024, the UK’s Financial Conduct Authority (“FCA“) published its “Finalised non‑handbook guidance on the Anti‑Greenwashing Rule (FG/24/3)” (the “Guidance“). The FCA has published the Guidance to help in-scope firms understand and comply with the anti-greenwashing rule, which will come into effect on 31 May 2024.

Continue Reading UK Financial Conduct Authority publishes finalised guidance on its Anti-Greenwashing rule

In March 2023, the European Commission proposed the Green Claims Directive (the “Directive“), which aims to tackle greenwashing (read our previous update on the Directive here).  On 12 March 2024, the European Parliament voted in favour of the Directive at first reading. This move further complements the EU’s commitment to empowering consumers, ensuring fair competition and fostering a more environmentally responsible marketplace.

Continue Reading The Green Claims Directive: European Parliament approves at first reading

Replace, Reduce and Remove.

The 3Rs that constitute the three-pronged approach espoused by PUB, the national water agency of Singapore, in its hefty goal of achieving net zero emissions by 2045. The strategy by PUB focuses on replacing fossil fuels with renewable solar energy, investing in research and development to reduce the energy required in water-treatment processes, and capturing and removing carbon released into the atmosphere.

In an ambitious move to combat climate change and attain its lofty aim of achieving net zero emissions by 2045, PUB unveiled on 27 February 2024 its upcoming plans for Singapore to host the world’s largest ocean-based carbon removal plant. This ground-breaking initiative, known as “Equatic-1”, represents a collaboration between the carbon removal company, Equatic, the national water agency PUB, and the University of California, Los Angeles (UCLA). The announcement details plans to construct a US$20 million facility capable of removing 3,650 metric tons of CO2 from the ocean annually while simultaneously generating 300kg of carbon-negative hydrogen per day.

Equatic-1 leverages a novel method dubbed the “Equatic process” to enhance the ocean’s natural capacity for carbon sequestration. This technique involves the electrolysis of seawater to precipitate carbon dioxide into solid calcium and magnesium-based materials, akin to natural seashell formation. These materials are designed to safely sequester CO2 for over 10,000 years, effectively turning the ocean into a more potent carbon sink. The process also yields carbon-negative hydrogen, a promising clean energy source.

This initiative is a part of Singapore’s broader strategy to reach net zero emissions by 2045, outlined by PUB. The strategy focuses on replacing fossil fuels with renewable energy, reducing energy consumption in water treatment, and employing innovative technologies like Equatic-1 to capture and store atmospheric CO2. The project builds on the success of two pilot plants in Los Angeles and Singapore, which began operations in March 2023 and have demonstrated the feasibility of the technology at a smaller scale.

Equatic-1 is set to be commissioned in Tuas, western Singapore, and is expected to begin operations in the last quarter of 2024, starting with the capacity to remove one tonne of CO2 per day. This capacity will be scaled up to 10 tonnes per day by the second quarter of 2025. The project is co-funded by PUB, the National Research Foundation (NRF) Singapore, and UCLA’s Institute for Carbon Management (ICM), with significant contributions from a multidisciplinary team of researchers and technology experts.

The commercial implications of this technology are also significant, with the operation of Equatic-1 expected to generate carbon credits. These credits will be distributed among the project partners according to their funding contributions. Moreover, Equatic has already signed agreements with various companies, including Boeing, to purchase these carbon credits, underscoring the commercial viability and environmental potential of the technology.

In addition to mitigating climate change, the Equatic process presents opportunities for integration with Singapore’s desalination operations, enhancing water security while reducing carbon emissions. The solid carbonates produced can potentially be used in the construction industry, while the hydrogen byproduct may serve as a clean energy source for various industrial applications.

This initiative not only marks a significant step toward Singapore’s climate goals but also represents a scalable solution for global carbon reduction efforts. With its innovative approach to carbon sequestration and clean hydrogen production, Equatic-1 embodies the intersection of technology, sustainability, and industry collaboration, poised to make a significant impact on the fight against climate change.

Other Author: Maria Chang

On 19 March 2024, GRESB – an investor-led organisation that provides standardised and validated data to assess the sustainability-related performance of real estate assets and portfolios – announced the upcoming launch of “REAL Solutions“. REAL Solutions is a new suite of tools designed to provide real asset managers and investors with more granular ESG data, which they are demanding in order to take advantage of opportunities in the sustainable investment market and to comply with increasingly burdensome ESG-related regulations.

Continue Reading GRESB announces launch of its new suite of ESG-evaluation tools, REAL Solutions