In Brief: Europe expands register of environmental crimes; Singapore to implement mandatory ISSB standards

The latest ESG policy and regulatory news

The Belgian presidency of the European Council has failed to negotiate an agreement between member states on the EU Corporate Sustainability Due Diligence Directive, arguably one of the most impactful corporate human rights regulations ever attempted. You can find our overview of what went wrong here.

Meanwhile, the EU Nature Restoration Law was approved in the European parliament after overcoming last-minute opposition. More on the vote can be found here.

The parliament also expanded its list of environmental crimes to include illegal timber trade and pollution caused by ships. European countries will have two years to transpose the rules into national law.

The EU parliament has likewise agreed on new rules regarding waste shipments, protections against manipulation of the EU’s energy markets, and a new trade deal with Chile. The council must give its backing before the rules come into effect.

The Strategic Technologies for Europe Platform has also been approved by the parliament, though the European Commission’s original proposal for €10bn in additional funding has been cut to €1.5bn, with all of the budget going to defence. For clean energy, the idea now is that Step mobilises resources from existing EU programmes such as Horizon Europe, the Innovation Fund and the Just Transition Fund.

The European Environment Agency has published a briefing looking at the different dimensions of “justice” that should be included in EU policy frameworks to deliver a “just transition”. The list includes distributional justice (the distribution and allocation of costs and benefits), procedural justice (right to decision-making), recognitional justice (acknowledgment of diverse perspectives), and restorative justice (compensation for past harms).

The European Insurance and Occupational Pensions Authority has published a set of updated recommendations on the low uptake of catastrophe insurance policies across Europe. The regulator says the continent faces a protection gap of approximately 75 per cent, with little awareness among consumers about the risks of being impacted by natural disasters. Eiopa recommends standardising product offerings and providing premium discounts to increase public interest.

The European Fund and Asset Management Association has criticised amendments to the EU’s Benchmark Regulation, arguing it could harm the union’s sustainable finance framework. Efama claims that by allowing gaps in the disclosure of methodologies underpinning benchmarks, which are used by investment companies to align with environmental, social and governance objectives, discrepancies could arise. The association calls on policymakers to make sure the Benchmark Regulation stays aligned with the Sustainable Finance Disclosure Regulation to avoid greenwashing accusations.

The UK government has opened consultations on a policy framework for biomethane production and on the Green Industries Growth Accelerator. Announced in the autumn Budget, the fund is targeted at increasing resilience in the country’s clean energy supply chains. The government is seeking views on how hydrogen and carbon capture, usage and storage can be supported through the fund. It has also announced extra funding for seven hydrogen projects across the country and released a new “hydrogen net zero investment roadmap”.

The UK achieved its third carbon budget, covering the period 2018-22, with emissions 15 per cent below the agreed budget. The fall means it has met its legal obligations under the Climate Change Act. Experts have warned the government against using the surplus to weaken climate commitments. Dr Simon Cran-McGreehin, head of analysis at the Energy and Climate Intelligence Unit think-tank, said: “Beating the previous carbon budget was a fluke, with the pandemic and the gas crisis reducing energy demand and masking the UK’s slow progress on insulating homes and building out onshore wind.” Beverley Cornaby, programme director of the UK Corporate Leaders Group at the Cambridge Institute for Sustainability Leadership, said: “This is an opportunity for the UK to demonstrate leadership and stick to the progress it has made on this agenda instead of soft-pedalling its climate ambitions, sending the message it is less serious on climate than it used to be.”

The Bank of England has been urged to stop accepting assets by fossil fuel companies to be used as collateral against loans made to them by the central bank. Non-profit Positive Money argues that the BoE’s collateral framework lacks the inclusion of environmental risks, resulting in polluting sectors disproportionately benefiting from better financing and liquidity conditions than more sustainable sectors.

Non-profit ShareAction has released its responsible investment manifesto with measures it would like the next UK government to implement. These measures include mandatory nature-related disclosures, ethnicity pay gap reporting legislation, and reform of fiduciary duty in the pensions sector.

Utility company Drax Group has been accused of burning wood from protected areas in Canada, despite receiving green subsidies from the UK government. A BBC investigation alleges that the wood pellets used to generate electricity by Drax in its converted UK coal plant were sourced from primary forests in Canada. Although controversial, the practice of burning wood pellets is classified as a renewable energy source. This is far from the first time that the environmental credentials of Drax’s burning of wood pellets have been questioned.

Italy’s Ministry of the Environment and Energy Security has opened a consultation regarding its proposed updates to the national energy and climate plan. The consultation, which is open until March 31, will focus on a range of topics including hydrogen, biomethane, energy security, environmentally harmful subsidies, and carbon capture and storage. The final plan is scheduled to be sent to the European Commission by June 30.

The largest meat-processing company in the world, Brazil-headquartered JBS, is being sued by the State of New York for allegedly misleading consumers about its net zero claims and sustainability practices. The lawsuit was filed against JBS’s American subsidiary and seeks restitution of profits and the removal of its contested sustainability claims. Some of the claims are related to the way the company sources its beef products and how it intends to reach net zero across its supply chains by 2040.

The Privy Council in London, which acts as the final court of appeal for some countries in the Eastern Caribbean, has ruled in favour of two Barbadians who challenged the government of Antigua and Barbuda over the environmental impact of a runway construction on the Caribbean island. The council agreed that concerned citizens have the right to challenge government decisions in court in the name of conserving the environment. Marc Willers KC, leading counsel on the case, commented that the ruling is an important precedent because it confirms that a person bringing a claim does not have to be an expert or full-time environmental defender to challenge government decisions on a habitat. The case will now return to local courts, as the runway’s environmental impact assessment has yet to be released by the government.

Japan has become the first Asian country to make a donation to the Amazon Fund, which was set up in 2008 to tackle deforestation. Japan’s ¥411mn ($2.7mn) is the latest in a set of contributions, which were resumed following Brazil’s change in government in 2023.

Draft guidelines for the shipping and clearing of plastic pellets have been agreed at the International Maritime Organization’s subcommittee meeting on pollution prevention and response. The meeting also established draft guidelines on reducing vessels’ black carbon emissions, which occur during the combustion of fossil fuel flames.

In other shipping news, the US Environmental Protection Agency has made $3bn available from the Inflation Reduction Act for its Clean Ports Program, which will finance zero-emission port equipment and should improve air quality at US ports. The deadline to apply for funding is May 28.

Meanwhile, the US Forest Service is facing a lawsuit over its management of carbon emissions linked to timber targets. The Southern Environmental Law Center filed the lawsuit on behalf of two conservation groups, which allege that the Forest Service failed to consider the environmental impact of the logging activities it implements to reach its timber targets.

ClientEarth is supporting landowners in the US state of Colorado in a lawsuit launched against oil and gas companies for allegedly abandoning wells on their properties without first guaranteeing they were plugged and no longer able to emit methane emissions. The average clean-up of a single well amounts to $100,000, says ClientEarth, accusing large oil and gas companies of “systematically” avoiding this cost by transferring their dried-up wells to smaller players, which often go bankrupt. The aim of the lawsuit is to force the original well owners to carry the cleaning costs, in cases where the current owner has been declared insolvent.

The US Securities and Exchange Commission is set to publish its long-awaited final climate disclosure rules on March 6. The expectation is that Scope 3 emissions will not be included in the final text.

Meanwhile, Singapore will start enforcing mandatory climate-related disclosures from 2025, in line with the rules set out by the International Sustainability Standards Board, which are focused on financial materiality. Listed companies will have to start reporting on their Scope 3 emissions from 2026 and provide assurance for Scope 1 and 2 emissions from 2027.

The Asian Development Bank has published research in which it claims the EU’s Carbon Border Adjustment Mechanism will have limited impact on curbing carbon emissions, unless carbon pricing is implemented in other regions as well. Central and west Asian countries are set to be more negatively affected by the CBAM due to their higher rate of carbon-intensive exports to Europe, according to the ADB’s calculations.

Financial institutions have been urged by a group of organisations, including the UN Environment Programme Finance Initiative and the Principles for Responsible Investment, to sign a sector statement supporting legally binding targets to cut plastic pollution at upcoming negotiations for a global plastics treaty.

TotalEnergies’ proposed liquefied natural gas project in Papua New Guinea is facing further delays as Crédit Agricole becomes the latest bank to state it will not finance the development of the terminal. Environmental groups have urged banks to not provide funding for the project, stating its negative environmental impact and climate-related risks.