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European Union - EU - Brussels

This article follows-up on our previous Blog Post exploring the “jargon” of the EU Commission’s Chemicals Strategy for Sustainability (CSS), an ambitious political action plan for chemicals regulation in the EU that was released in October 2020.

Today, we are digging into another key concept of the CSS: the concept of “one substance, one assessment” (hereafter referred to as “OSOA“), which is essential for the Commission, and more generally for the European Union, to simplify and consolidate the chemicals legal framework.

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Continue Reading Simplifying and Recasting the Assessment of Chemicals in the EU: A Challenge for the Administrative Puzzle

United States - Washington DC

On September 9, 2021, the Biden administration issued a fact sheet (Fact Sheet) describing recent actions that aim to produce 3 billion gallons of sustainable aviation fuel (SAF) annually, reduce aviation emissions by 20% by 2030, and grow good-paying, union jobs.

The Fact Sheet notes that “aviation (including all non-military flights within and departing from the United States) represents 11% of United States transportation-related emissions. Without increased action, aviation’s share of emissions is likely to increase as more people and goods fly” and that “President Biden proposed a Sustainable Aviation Fuel tax credit as part of the Build Back Better Agenda. This credit will help cut costs and rapidly scale domestic production of sustainable fuels for aviation. The proposed tax credit requires at least a 50% reduction in lifecycle greenhouse gas emissions and offers increased incentive for greater reductions.”

In this Blog Post, we highlight important aspects of the Fact Sheet, as well as related initiatives from the US Department of Energy (DOE) in support of SAF development in the United States.

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Continue Reading Biden Administration Acts to Spur Sustainable Aviation

Governance

The UN’s Intergovernmental Panel on Climate Change’s Sixth Assessment Report (“IPCC Report“), published on 9 August 2021, delivered the starkest warning to date that human activity is responsible for significant changes in the Earth’s climate.  The attention of the world’s scientific, political, and business communities, and of society at large, is increasingly focused…

China - Hong Kong

On 15 July 2021, Hong Kong’s Green and Sustainable Finance Cross-Agency Steering Group (Steering Group), representing a critical mass of Hong Kong’s financial regulatory bodies, announced next steps to advance green and sustainable finance in the Special Administrative Region (the Announcement). According to the Announcement, the regulators will prioritize:

  • climate-related disclosures;
  • carbon market opportunities; and
  • a new cross-sector platform to help the financial industry manage climate change-related risks and opportunities.

In this Blog Post, we highlight key aspects of the Announcement and points for market participants to consider as Hong Kong moves toward a more sustainable future.

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Continue Reading Mandatory Climate Disclosures, Carbon Markets Attract Regulatory Attention in Hong Kong

Environmental

The EU has presented its proposal for a Carbon Border Adjustment Mechanism (CBAM). The mechanism is closely aligned with the EU’s emissions trading scheme and the purpose of the CBAM is to be able to increase the EU’s internal carbon price without pushing production offshore. This risk of “carbon leakage” arises when energy-intensive…

United Kingdom - London

As part of national plans to cut carbon emissions, the UK Cabinet Office released a Procurement Policy Note on 5 June 2021 (“PPN 06/21“, or the “PPN“): this mandates the assessment of Carbon Reduction Plans by UK central government departments as part of the procurement of large public contracts.

Key aspects of the Public Procurement Notice

  • UK Procurement Policy Note 06/21 requires a bidder for large public contracts (exceeding £5 million per annum) to produce a Carbon Reduction Plan (CRP) setting out how it intends to achieve ‘net zero’ carbon emissions by the year 2050 (compared to 1990 levels).
  • This relates to regulated contracts for goods, services and/or works awarded by UK central government departments, their executive agencies and non-departmental public bodies.
  • This will apply to procurement processes commenced on or after 30 September 2021 – bidders should take steps now to prepare for compliance, which might require new data collection and reporting procedures.

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Continue Reading ESG and UK Public Procurement: Carbon Reduction Requirements

United States - Washington DC

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.

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

Social

In May 2021, the International Federation for Human Rights (FIDH) published a report setting out a series of tools investors can use to identify and address human rights risks, including modern slavery risks, in their portfolio companies.  The report includes a sectoral analysis of modern slavery rights in four sectors – Tourism, Construction, Food and Beverage, and Textile and Footwear – and adds to the growing toolkit of ESG-related resources available to investors (see, for example, our briefing Asset Managers: Mastering Non-Financial Risk – The Evolution of Human Rights Due Diligence).
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Continue Reading Business and Human Rights – Analysing modern slavery risks in portfolio companies: practical considerations for investors

United Kingdom - London

On May 17-19, 2021, Risk.net hosted their ESG and Sustainable Investing conference, bringing together 350 senior directors to explore how ESG principles and sustainable investing will re-shape the global financial market. Speaking on a panel discussing stewardship, fiduciary duty and shareholder engagement – “Using investor influence for a positive, transformational change” – Mark Manning, the Financial Conduct Authority’s (FCA’s) sustainable finance technical specialist, is reported to have said that “an investor either needs to inject capital into new, purposeful and impactful projects, or use active-investor stewardship and influence to drive meaningful change in investing companies’ strategies”.

Continue reading for more details and analysis regarding stewardship and sustainable investing.

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Continue Reading Investment Stewardship in the UK: The Regulatory Perspective

MOSS and glass globes

This article is the first in a series, which we introduced in a previous Blog Post, exploring the “jargon” of the EU Commission’s Chemicals Strategy for Sustainability (CSS), an ambitious political action plan for chemicals regulation in the EU that was released in October 2020.

As part of this political initiative toward a profound reshape of the existing chemicals regulatory framework, the concept of “safe and sustainable by design” is fairly innovative and could well become one of the pillars of chemicals regulation in the EU. In a nutshell, the Commission calls in its CSS for a “transition” to chemicals that are safe and sustainable by design in order to reconcile the societal value of chemicals with human health and planetary boundaries. The Commission presents the “sustainable-by-design” concept as a holistic approach to achieve these objectives: it seeks to integrate “safety, circularity, energy efficiency and functionality of chemicals, materials, products, and processes throughout their life cycle and minimiz[e] the environmental footprint”. It is aimed at constituting an overarching concept, i.e., a guiding principle in the regulation of the chemicals sector.

This ambitious goal will have important concrete consequences for the industry. At the same time the safe and sustainable by design approach is advocated by the EU executive as an opportunity for the European industry to act as frontrunner in a stammering race for the production and use of safe and sustainable chemicals.

Continue reading for more information on the current state of play regarding “safe and sustainable by design”, the development of this important concept and next steps for related regulatory and political action.

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Continue Reading “Safe and Sustainable by Design”: The Inception of a Possible Game-Changer in the Regulation of Chemicals in the EU