Voluntary Disclosures

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Regulators are increasingly mandating companies to make environmental disclosures (see here, here and here).

The CDP – a not-for-profit organisation aiming to encourage the disclosure of environmental risk – has measured and scored the effectiveness of companies’ 2022 environmental disclosures in their latest ‘A List’ Report (the “CDP Report”). The CDP Report shows that a mere 12 of the 18,700 companies that responded to the CDP’s questionnaires scored a ‘triple A’ for their environmental disclosures, whilst over 29,500 companies scored an ‘F’ after failing to provide any data to the CDP.

According to the CDP, over 680 investors with combined assets of US $130 trillion, and over 280 large purchasers with US $6.4 trillion in buying power requested over 48,000 companies to disclose environmental information through the CDP in 2022. …

Continue Reading Mandatory Disclosure: companies’ environmental disclosures analysed in the CDP’s 2022 ‘A List’ Report

Japan - Tokyo

The requirement for companies to conduct human rights diligence (“HRDD“) is increasingly being implemented by legislators across the globe.  For example, the EU is expected to adopt its draft corporate sustainability and due diligence directive in 2023. Importantly, the Directive will apply to Japanese companies and their subsidiaries if they meet certain criteria (for further information on the applicability of the directive to Japanese companies, read our earlier blog post here). Japanese companies are, therefore, being required to strengthen their HRDD processes as a result of the legislation of foreign jurisdictions (including the EU).

On 13 September 2022, the Japanese Government published its Guidelines on Respecting Human Rights in Responsible Supply Chains (the “Guidelines“), which recommend that all enterprises engaging in business activities in Japan respect human rights in their supply chains and carry out HRDD.…

Continue Reading Business and Human Rights: Japan publish Guidelines on Respect for Human Rights in Responsible Supply Chains

China - Beijing

**A Chinese version of this blog post follows the English version.**

China’s State Council-backed think tank, China Enterprise Reform and Development Society (“CERDS“), alongside a number of major Chinese companies including Ping An Insurance Company, issued “The Guidance for Enterprise ESG Disclosure” effective on 1 June 2022 (“Guidance“). The Guidance is China’s first ESG disclosure guideline, and covers all companies and industries.  It follows the environmental disclosure rules issued by China’s Ministry of Ecology and Environment (MEE) which came into effect earlier in February 2022 (which we reported here).…

Continue Reading China issues first ESG disclosure guidance: international guidelines with Chinese characteristics

Australia - Sydney

On 3 August 2022, Australia’s Financial Services Council (“FSC“) published FSC Guidance Note No 44 Climate Risk Disclosure in Investment Management (“Guidance Note”) to provide a set of common baseline expectations for the investment management industry’s approach with respect to net-zero commitments, disclosure of climate-friendly investment features and climate change risk reporting. …

Continue Reading Australia’s Financial Services Council issues new guidelines on climate risk disclosure for asset managers

Lightbulb is located on the soil, and plant are growing.Renewable energy generation is essential in the future.

Emissions reporting standards and practices in the private equity sector have been described by certain commentators as being some way behind those in the public markets; certainly the private equity asset class has, so far, received less attention in the context of Environmental, Social and Governance (ESG)-related reporting developments more generally.  That is changing, however; General Partners (“GPs“) are increasingly called upon to disclose climate-related data and establish greenhouse gas (“GHG“) emissions reduction targets across their portfolios.

There is not, at present, an agreed standard for reporting such information at a fund level, which has resulted in inconsistent approaches being adopted by different funds.  Inconsistencies, of course, potentially impair the ability of investors to make meaningful comparisons between portfolio companies, and indeed between funds.

In an attempt to address this inconsistency, the Initiative Climat International (“ICI“) — a practitioner-led group of private equity funds and investors that represents over USD $3 trillion in assets under management — in partnership with sustainability consultancy group Environmental Resources Management (“ERM“), have taken the proactive step of launching a new, non-binding standard that sets out a consistent approach to GHG disclosure across the private equity sector.  The standard, outlined in the ICI and ERM’s Greenhouse Gas Accounting and Reporting report (the “Report”), aims to better align the disclosure practices of private equity funds with the practices currently adopted by many listed companies in the public markets.…

Continue Reading New standard published for Greenhouse Gas Emissions reporting in Private Equity

Regulation

­In a previous blog post, we noted that the International Sustainability Standards Board (ISSB) will shortly publish its proposed general sustainability-related and climate disclosure requirements.

On 31 March 2022, the ISSB published highly anticipated drafts of IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information (General Requirements Exposure Draft) and IFRS S2 Climate-related Disclosures (Climate Exposure Draft) for public consultation and comments. Each of the Exposure Drafts are accompanied by a ‘Basis for Conclusions’ and ‘Illustrative Guidance’ document. A high-level summary of the proposed requirements is available here.…

Continue Reading International Sustainability Standards Board Begins Public Consultation on Draft Proposed Standards on General Sustainability-Related Financial and Climate-Related Disclosures

Energy innovation light bulb graphic interface.

The move towards consolidated, aligned, sustainability disclosure requirements, long identified as an essential element of sustainability efforts, took a major step forward last week.  On 24 March 2022, the International Financial Reporting Standards Foundation (“IFRS Foundation”) and the Global Reporting Initiative (“GRI”) announced a collaboration agreement, the purpose of which is to seek to align their capital market and multi-stakeholder focussed sustainability disclosure regimes (the “Agreement“).  The Agreement represents the latest development in the IFRS Foundation’s efforts to consolidate the plethora of – sometimes disparate – international sustainability reporting regimes into a consolidated, more cohesive, framework, for the benefit of companies, investors and society at large.
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Continue Reading International Sustainability Standards Board and Global Sustainability Standards Board to align their sustainability disclosure standards

Environmental

This Lexis practice note discusses market trends in 2021 relating to disclosures of climate change risks and mitigation by public companies, which are intertwined with ESG issues. It also provides illustrative disclosures by public companies regarding how climate change has affected or may affect their operations, both directly (e.g., through disruption of supply chains)…

Energy innovation light bulb graphic interface.

Much is heard of the plethora of – often disparate – disclosure regimes and standards around sustainability, and the attendant difficulties for stakeholders, including investors, customers, and the public more generally, of assessing and comparing performance in a meaningful way.  Significant developments in the consolidation of the sustainability disclosure landscape are, however, imminent.

The Climate Disclosure Standards Board (CDSB) – an international consortium of businesses and NGOs that offers companies a framework for reporting environmental information – has announced that it will close down its operations and consolidate with the International Sustainability Standards Board (ISSB) at the end of January 2022.  In addition, the ISSB will complete the consolidation of the Value Reporting Foundation (VRF) – an international NGO that houses the Integrated Reporting Framework and the Sustainability Accounting Standards Board (SASB) Standards – by the end of June 2022. These developments mark significant steps towards the ISSB’s ambition to become the world’s leading sustainability standards board.…

Continue Reading International Sustainability Standards Board Commences its Streamlining of the Sustainability Disclosure Landscape

Brazil - Rio de Janeiro

The Brazilian Securities Commission (CVM) issued, on December 22, 2021, CVM Resolution No. 59 (RCVM 59), which amends CVM Rule No. 480 (CVM Rule 480). This new normative arises from Public Consultation No. 09, closed in March 2021, and brings substantial innovations on the informational regime for issuers of securities. Indeed, the reform promotes a reduction in the cost of compliance for issuers and greater accessibility of information to investors by eliminating redundancies and simplifying the content required in the Reference Form, the main document of publicly-held companies in Brazil.

However, most importantly, through RCVM 59, CVM in an unprecedented way establishes criteria and requirements for the disclosure of information on environmental, social and governance aspects, which was previously a mere deliberation of issuers to attract investors engaged in ESG aspects, and it was not foreseen in any regulation of the autarchy.…

Continue Reading Brazilian Securities Commission Establishes ESG Information Disclosure Criteria for Listed Companies