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November 3, 2023

In Brief: EU and UK push for oil subsidies ban; climate litigation in Hawaii

The latest news in ESG policy and regulation

The EU and the UK are planning to lobby OECD countries to end fossil fuel subsidies for foreign projects, including oil, gas and coal, according to the Financial Times. The European Council earlier indicated it supports a global phase-out of fossil fuel subsidies “which do not address energy poverty or [a] just transition” at the upcoming COP28 conference. Canada, which is reportedly set to back the UK and EU’s stance, recently created a framework to gradually phase out “inefficient” fossil fuel subsidies on its territory.

The European Financial Reporting Advisory Group is looking for new candidates for the rotation of its sustainability reporting technical expert group. Individuals from a wide range of sustainability backgrounds and European geographies are encouraged to apply until January 8. In particular, expertise in some of the standards of the EU’s Corporate Sustainability Reporting Directive is required for the role.

The Dutch financial markets watchdog has published a paper detailing its views on how to improve the EU’s Sustainable Finance Disclosure Regulation. The AFM proposes three new labels for funds – transition, sustainable and sustainable impact – and highlights the need to distinguish better between investments that are “value-aligned” and those that make “impact”.

The UK government has said it supports a moratorium on deep-sea mining, until sufficient evidence has been gathered to assess the environmental impact of these activities. The UN-backed International Seabed Authority is currently holding negotiations in Jamaica on draft exploitation regulations for deep-sea mining. An overview on the controversy surrounding this practice can be found here.

Separately, the UK has confirmed it intends to proceed with hydrogen production and industrial carbon capture regulations, as well as setting up a scheme to certify low-carbon hydrogen products.

Elsewhere in the US, the lawsuit filed by Honolulu authorities against major oil companies operating on the island is set to go to trial after the Supreme Court of Hawaii denied the oil companies’ motions to dismiss. The plaintiffs are seeking damages from big oil companies for their allegedly prior knowledge of climate change impacts.

A judge in the US state of Pennsylvania has ruled that former governor Tom Wolf unlawfully adhered Pennsylvania to the Regional Greenhouse Gas Initiative, a co-operative scheme among 11 US states to trade carbon credits. In its decision, the court ruled that without receiving prior legislative approval, membership of the RGGI amounts to an illegal tax. An appeal to the state’s Supreme Court can be filed within 30 days.

The US Department of Energy has announced $1.3bn in funding from the bipartisan infrastructure law to extend electricity transmission lines across six US states. The project will add 3.5 gigawatts of grid capacity, equalling the energy use of approximately 3mn US homes.

Australia has published its sustainable finance strategy, which is open for consultation until December 1. The strategy includes the development of a taxonomy, net zero transition planning, the issuance of sovereign green bonds and a labelling system for sustainable funds.

Hong Kong’s Securities and Futures Commission has asked the International Capital Market Association to establish a working group to develop a voluntary code of conduct for environmental, social and governance rating and data providers operating in the region. The code will be based on recommendations by the International Organization of Securities Commission and a draft version is expected in the first quarter of 2024. The ICMA is also involved in developing a similar code for the UK market.

Indonesia is set to exclude temporarily private coal power plants from the Just Energy Transition Partnership it signed with G7 nations, according to local media. The country can secure $20bn from the scheme by providing an investment and policy plan, which has, however, been delayed. Excluding private coal operations from the JETP would mean no industry-wide phase-out of the fossil fuel would be included, making it harder for Indonesia to reach its power sector emissions reduction targets as part of the scheme.

The CFA Institute, the Global Sustainable Investment Alliance and the Principles for Responsible Investment have issued a joint report in which they agreed on shared definitions for five sustainable investment approaches. These are: screening, ESG integration, thematic investing, stewardship, and impact investing. The organisations hope their initiative assists in addressing greenwashing concerns in the industry.

A service from the Financial Times