In Brief: lawyers call on corporates to use COP28 to highlight human rights abuses; India announces green credit programme

The latest news in ESG policy and regulation.

UK human rights lawyers acting on behalf of an anonymous client have written to a host of companies, including those that were partners and supporters of COP26 in Glasgow and COP27 in Egypt, calling on them not to get involved with COP28, to be held in the United Arab Emirates in December, and to use their corporate power to condemn human rights abuses. The letters, seen by Sustainable Views, said: “Climate change is a global issue that requires global action, but the decision to allow a country with a poor human rights record and high carbon footprint to host the COP28 conference represents a retrograde step.” The companies contacted include Google, Hitachi, Microsoft and Bloomberg.

Dozens of leading companies including PepsiCo, Heineken and Nike, are calling on the EU to set more ambitious emissions standards for trucks. In a letter to EU environment ministers seen by the Financial Times, 41 businesses argued that if the bloc were to achieve its 2030 emissions reduction goal, it was “essential for us that a rapidly growing number of zero emission trucks become available”.

The European Commission has issued a communication aimed at better connecting climate change, environmental degradation and security in its external policymaking. The actions proposed by the EU executive include the creation of a data and analysis hub on climate and environment security, and the deployment of environmental advisers in EU security and defence missions and operations.

44-44. Not the result of some manic football match, but the outcome of the second part of the vote in the European parliament’s environment committee on the proposed EU Nature Restoration Law. The tie means the centre-right European People’s party group in the parliament has, for now at least, failed to win its tireless campaign against the bill, which it claims will harm EU food security, climate targets, farmers and fishermen. The final decision from the parliament on the law will come in the plenary session on July 12.

The environment committee did, however, reach agreement on revisions to the Water Framework Directive, the Groundwater Directive and the Environmental Quality Standards Directive, which aim to increase protection for groundwater and surface waters. Under the proposed rules, companies selling products carrying polluting substances would be obliged to contribute to monitoring costs. The committee also voted to adopt stricter rules on air pollution, including more sampling points across the EU, a harmonised framework of air quality indices, and national air quality roadmaps with short and long-term target setting.

The European Financial Reporting Advisory Group has welcomed “the high level of interoperability” on climate metrics between the European sustainability reporting standards and the first two sets of the International Sustainability Standards Board specifications, released in their final format earlier this week. The interoperability between the two regimes will avoid “undue complexity” for ESRS reporting entities and advance the progress of a global baseline, Efrag said.

The Australian government is holding a second consultation on its intention to establish climate-related financial disclosures. It wants to know if its proposals are clear, feasible and proportionate. The consultation is open until July 21.

The Monetary Authority of Singapore is consulting until July 28 on technical screening criteria for the early retirement of coal-fired power plants under the Singapore-Asia taxonomy. Coal accounts for nearly 60 per cent of energy generation and for a third of greenhouse gas emissions in the Asia-Pacific region.

The US Environmental Protection Agency has finalised standards to gradually increase the amount of low-carbon fuels US oil producers must combine with fossil fuels over the next three years. In its calculations, the EPA has considered costs, air quality, climate change, energy security, infrastructure issues, commodity prices, water quality and supply. The standards will reduce US oil imports by approximately 130,000 to 140,000 barrels of oil a day, the EPA estimates, generating financial savings between $173m and $192m a year. The agency has also launched a $7bn solar grant competition to finance residential solar programmes in low-income and disadvantaged communities.

In similar news, the US Department of Agriculture has announced $450m in new grants to stimulate the domestic use of biofuels. The funding is part of the Higher Blends Infrastructure Incentive Program under the country’s Inflation Reduction Act, aimed at increasing the production of low-carbon fuels from agricultural products by partly financing the costs involved in creating the necessary infrastructure.

India is planning to introduce a green credit programme to incentivise companies and individuals to implement environmentally sustainable practices. Under the draft rules, green credits would be tradeable and be gained through selected activities in certain sectors, including tree plantation, water conservation, natural and regenerative agricultural practices, land restoration, waste management and air pollution reduction.

The Voluntary Carbon Market Integrity Initiative has published a code of practice on the use of carbon credits by private companies. The code is defined as a “rulebook” on the implementation of high-quality carbon credits and a guide to credible climate claims. It includes requirements related to the transparency and the integrity of carbon credits used by companies to avoid greenwashing and stimulate real climate action.

The Court of Justice of the European Union has dismissed legal action from a member of the European parliament, René Repasi, who had challenged the addition of nuclear and gas to the EU taxonomy. The court ruled the plaintiff did not have standing to bring the legal complaint as his rights are limited to the parliament’s internal procedures and cannot be expanded to the direct adoption of delegated acts. Legal action taken by Austria against the European Commission’s decision to include gas and nuclear as sustainable activities under the taxonomy is still going through the court.

Multnomah county, in the US state of Oregon, has filed a lawsuit against several fossil fuel producers, trade associations and consultancy McKinsey for their contribution to climate change. The county is specifically seeking damages related to the 2021 “heat dome” event, which reportedly killed 69 people. Without the impacts of climate change, exacerbated by the actions of the defendants, such events would not have occurred, the plaintiffs argue.

The International Capital Market Association has published updated guidance on its climate transition finance handbook, which combines sector progress on climate transition guidance and disclosure. The association has also released revised sustainability-linked bond principles, with changes to sovereign issuers and metrics, and various additional documents such as a Q&A on the securitisation of green, social and sustainability bonds, guidance on impact reporting for social bonds, and a revised mapping of the sustainable development goals.

Meanwhile, the UK’s Financial Conduct Authority has made public several concerns related to the sustainability-linked loans market. The regulator has flagged potential conflicts of interests, unrealised potential, a lack of prescriptive frameworks, and time and cost implications as issues holding back the growth and widespread adoption of this type of financial instrument to manage climate change.

The UK’s Climate Change Committee has said its confidence has decreased in the UK being able to meet its medium-term targets on emissions reductions. In its 2023 progress report, the advisory body said policy developments remain too slow and the country would have to “regain” its international climate leadership position.

The Science Based Targets initiative has released guidance to help companies engage with suppliers on emissions reductions. Supply chain emissions are 11 times larger than a company’s direct emissions, estimates CDP,  a non-profit organisation. The SBTi has also launched a public consultation on beyond value chain mitigation guidance aimed at helping companies establish climate finance and mitigation strategies, such as restoring peatlands and rainforests, to compensate for emissions outside their value chain. The consultation is open until July 30.

Nature Action 100, the investor initiative aimed at tackling biodiversity loss, has published a set of investor expectations for companies. The proposed actions will help companies protect and restore ecosystems while mitigating financial risk, the organisation said. To start with, the group is targeting eight sectors: biotechnology and pharmaceuticals; chemicals; household and personal goods; consumer goods retail; food; beverage; forestry and paper; and metals and mining.