We’re pleased to bring you this comprehensive update on the latest developments in environmental, social, and governance (ESG) regulations worldwide. Here’s the roundup of the key changes and insights:

Global Trends:

• The Wall Street Journal recently critiqued ESG, stirring debate about its role in corporate America.
  
  • The ESG Investing Backlash Has Begun: https://www.wsj.com/business/the-latest-dirty-word-in-corporate-america-esg-9c776003
  • Why the Backlash Against ESG Is a Distraction: https://www.bloomberg.com/news/articles/2022-09-13/an-abc-on-esg-and-the-kinds-of-backlash-it-s-facing-quicktake
• Interest in Small Modular Reactors (SMRs) is surging as nations seek efficient, scalable nuclear solutions for energy needs.
  • Small Modular Reactors: What You Need to Know: https://nucleus.iaea.org/sites/smr/Shared%20Documents/Small%20Modular%20Reactors%20a%20new%20nuclear%20energy%20paradigm.pdf
  • Small Modular Reactors Offer Big Potential for Energy Transition: https://www.forbes.com/sites/kensilverstein/2023/02/15/small-modular-nuclear-reactors-may-become-the-go-to-energy-source/
• EU importers must brace for the impact of the Carbon Border Adjustment Mechanism (CBAM), affecting operations and supply chains.
  • Carbon Border Adjustment Mechanism: https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en)
• Deliberations on seabed mining rules by the International Seabed Authority (ISA) show a reluctance to finalize regulations.
  • International Seabed Authority: https://www.isa.org.jm/
• Public companies preparing for the 2024 proxy season should note recent regulatory and disclosure changes.
  • SEC: Proxy Rules and Shareholder Proposals: https://www.sec.gov/education/smallbusiness/goingpublic/annualmeetings)
• The SEC continues to scrutinize ESG-related claims with enhanced climate-related disclosures pending. The agency faces a growing backlash against ESG investing, particularly in certain US states introducing “anti-ESG” legislation.
  • SEC Division of Examinations 2023 Priorities: https://www.sec.gov/files/2023-exam-priorities.pdf
  • States Take Aim at ESG Investing: https://www.bloomberg.com/opinion/articles/2022-10-11/anti-esg-can-be-good-business
• Lawsuits related to ESG claims, particularly those alleging greenwashing, are increasing, underscoring the need for robust, data-backed ESG reporting.
  • Greenwashing Litigation on the Rise: https://corpgov.law.harvard.edu/2023/10/10/reducing-the-risk-of-greenwashing-litigation-and-defending-actions-that-are-filed/

Regional Insights:

• Japan: Climate change discussions are intensifying, affecting national policies.
  • Ministry of the Environment, Japan: https://www.env.go.jp/en/
• Australia & NZ: Organizations face challenges with the tightening of ESG legislation and standards.
  • Standards Australia: https://www.standards.org.au/
  • New Zealand Sustainable Finance Forum: https://www.theaotearoacircle.nz/news/sustainable-finance-forum-sets-out-roadmap-for-a-sustainable-financial-system-by-2030
• China & HK: ESG banking products, such as Green Deposits, align with China’s sustainability goals, while HKMA sets sales standards for sustainable investment products. 
  • China Banking and Insurance Regulatory Commission: https://www.cbirc.gov.cn/en/view/pages/index/index.html)
  • Hong Kong Monetary Authority (HKMA): https://www.hkma.gov.hk/eng/
• Malaysia: Six emerging ESG trends are likely to influence Malaysia’s landscape in 2024.
  • ESG Trends in Malaysia: https://www.eco-business.com/events/sharpening-the-esg-focus-understanding-asias-key-developments-in-2024/
• Thailand: Thai businesses must understand the implications of EU’s CBAM on their operations.
  • Thailand Board of Trade: https://www.thaichamber.org/
• Ireland: The government proposes a Climate Action Plan for 2024, aiming to meet climate targets.
  • Department of Environment, Climate and Communications, Ireland: https://www.gov.ie/en/organisation/department-of-the-environment-climate-and-communications/
• UK: The UK plans to implement a CBAM by 2027 and introduces mandatory biodiversity net gain measures.
  • Department for Environment, Food and Rural Affairs (DEFRA), UK: https://www.gov.uk/government/organisations/department-for-environment-food-rural-affairs

EU Developments:

• Draft guidance for the Corporate Sustainability Reporting Directive’s materiality assessment is out.
  • European Commission Guidance on CSRD: https://finance.ec.europa.eu/capital-markets-union-and-financial-markets/company-reporting-and-auditing/company-reporting/corporate-sustainability-reporting_en)
• The European Central Bank prioritizes governance and management of climate-related risks.
  • European Central Bank on Climate-related and environmental risks: https://www.ecb.europa.eu/ecb/climate/html/index.en.html)
• Key legislative measures like the Net-Zero Industry Act and the Critical Raw Materials Act are advancing.
  • Check the most recent updates on the European Parliament’s website (https://www.europarl.europa.eu/infographic/legislative-procedure/index_en.html)
• The European Supervisory Authorities report on the review of financial product disclosures under SFDR.
  • European Supervisory Authorities (ESA): https://finance.ec.europa.eu/regulation-and-supervision/european-system-financial-supervision_en)
• Expectations for ESG compliance and supply chain due diligence are set to tighten in the EU and Germany.

  • ELEVATE Limited: Supply Chain Due Diligence Legislation Map (https://www.elevatelimited.com/insights/publications/supply-chain-due-diligence-legislation-map/). This interactive map offers a global overview of various due diligence laws, including those in the EU and Germany.

  • Business & Human Rights Resource Centre (https://www.business-humanrights.org/en/). Search their website for analyses and articles specifically related to the German Supply Chain Due Diligence Act and the broader EU directive.

• The asset management industry should prepare for the FCA’s Sustainability Disclosure Requirements in 2024.
  • Financial Conduct Authority (FCA): https://www.fca.org.uk/

Important Resources

• International Sustainability Standards Board (ISSB): https://www.ifrs.org/groups/international-sustainability-standards-board/
• SEC: https://www.sec.gov/
• FTC: https://www.ftc.gov/
• EUR-Lex: https://eur-lex.europa.eu/homepage.html