UK Developments
UK climate agenda takes shape – a leading global role for the UK on climate
The UK foreign secretary, David Lammy, spoke at Kew Gardens on 17 September 2024, laying out the UK’s mission to put the UK at the centre of global efforts to build a low carbon, nature positive future. The FT reports that Mr. Lammy said tackling the climate and nature crises would be “central to all the foreign office does”. He announced that a climate envoy will be reappointed and a new nature envoy will be appointed to coordinate with governments around the world.
Ed Miliband, the Secretary of State for Energy Security and Net Zero (DESNZ), also spoke on the same day about ensuring Britain’s energy security through a stronger renewable energy sector and electricity network: vowing to ‘take on the nimbys’.
CMA: new supplement for fashion on green claims guidance
On 18 September 2024, the Competition and Markets Authority (CMA) published its practical guidance for fashion brands on following the Green Claims Code when making green claims.
The guidance covers clothing, footwear, fashion accessories and related services. The guidance addresses the use of imagery and icons in a misleading way, the use of unclear terms, the description of products and other major areas that could lead to greenwashing. The CMA also provides nine examples to assist fashion brands with their green claims.
UK SRS: Department for Business and Trade publishes future steps
On 19 September 2024, the UK Department for Business and Trade (DBT) published guidance on the process to assess IFRS S1 and IFRS S2 (also referred to as the ISSB Standards) for endorsement in the UK and, if affirmed, the creation of the first two new UK Sustainability Reporting Standards (UKSRS). The UK aims to endorse its own standards by Q1 2025.
If the UKSRS are introduced and endorsed, the FCA will consult on whether to introduce further requirements for UK-listed companies to report sustainability-related information in accordance with the UKSRS.
An independent Technical Advisory Committee (TAC) and a Policy and Implementation Committee (PIC) have been tasked to assist with the assessment and endorsement of the ISSB Standards and the implementation of any resulting UK SRS.
SDR: FCA confirms portfolio management policy statement expected in Q2 2025
On 27 September 2024, the FCA published an update on its website page in relation to extending the SDR regime to Portfolio Management confirming that its Policy Statement will be published in Q2 2025.
Voluntary carbon and nature markets: UK Government consultation
On 25 September 2024, during New York Climate Week, Kerry McCarthy (the Under-Secretary of State at DESNZ) confirmed that the UK government will be consulting on voluntary carbon markets (VCM) and nature markets. She stressed that carbon and nature markets have an essential role to play which it come to achieving climate targets as well as raising climate finance.
No further details of the consultation, or its proposed timing, have been confirmed.
Scottish Taskforce for Green and Sustainable Financial Services
On 25 September 2024, the Scottish Taskforce for Green and Sustainable Financial Services published their final report. The report sets out a total of 31 recommendations that collectively could help catalyse Scotland’s efforts to become a global centre for green finance. The recommendations are summarised under four strategic priorities – policy, promotion, investment, and skills.
EU and International Developments
European Commission proposes to extend transition period for the EU Deforestation Regulation by twelve months
On 2 October 2024, the European Commission proposed a twelve-month extension to the transition period for enforcing the EU Deforestation Regulation (EUDR). If approved by the European Parliament and the Council then the EUDR would apply from 30 December 2025 for large companies, and from 30 June 2025 for micro and small enterprises.
For further information on the application and implications of the EUDR, please see previous HL Engage articles here and here.
CSRD: European Commission calls on 17 Member States to fully transpose Corporate Sustainability Reporting Directive
On 26 September 2024, the European Commission announced it had opened infringement procedures against 17 Member States that have failed to fully transpose the Corporate Sustainability Reporting Directive (CSRD) by the 6 July 2024 deadline. Formal letters are now being sent to these Member States and they have two months to respond and complete the transposition. See our article here for more information.
Taskforce on Inequality and Social-related Financial Disclosures (TISFD)
On 23 September 2024, the Taskforce on Inequality and Social-related Financial Disclosures (TISFD) was launched. The TISFD will develop a global framework for companies to include more effective disclosures about impacts, dependencies, risks and opportunities related to inequality and social issues.
TISFD previously consulted on the scope, mandate and governance model of TISFD. One of the overwhelming messages of the responses to the consultation was that TISFD should be interoperable with existing disclosure standards and frameworks, including ISSB and the European Sustainability Reporting Standards. EFRAG and TISFD Secretariat announced their cooperation agreement on 27 September 2024 which aims to align their thoughts on development of a global framework for inequality and social-related financial disclosures.
Frank Elderson speech: financial sector needs to prepare for climate and environment-related litigation
On 6 September 2024, Frank Elderson, Vice-Chair of the Supervisory Board of the European Central Bank (ECB), and a Member of the Executive Board, delivered a keynote speech at the European System of Central Banks (ESCB) Legal Conference.
Mr Elderson emphasised that banks are becoming increasingly at risk of climate litigation: “financial companies, including banks, are becoming the direct targets of such litigation.
He stressed that banks still have a lot of work to do, stating that “Banks must manage all their material risks, including their climate and environmental related litigation risks. Come hell or high water.” He suggested that banks prepare by: a) evaluating litigation risks, defining tasks and responsibilities relating to climate risk and conducting climate-related due diligence; and b) putting in place a Paris-aligned transition plan.
IFRS Foundation publishes guide to help apply ISSB Standards
On 25 September 2024, the IFRS Foundation published its guidance, Voluntarily applying ISSB Standards – A guide for preparers. Investors have requested for companies to voluntarily apply the ISSB Standards in order to provide investors with information useful for investment decisions. In response to this request, the ISSB published the guide to help meet this demand.
The guidance aims to support companies to apply the ISSB Standards and assisting companies with communicating their progress to investors.
