In Brief: Zurich exits NZIA; ISSB delays wider sustainability reporting requirements
The latest round-up of ESG policy and regulatory news.
Zurich has said it will leave the Net Zero Insurance Alliance, the second founding member to exit the group after Munich Re announced the same decision last week. While Zurich didn’t offer a specific reasoning for the move, Munich Re had cited antitrust concerns, which other financial companies had raised towards the end of last year with regards to their belonging of the Glasgow Financial Alliance for Net Zero, the network that groups NZIA, the Net Zero Asset Owners Alliance and others. Both Zurich and Munich Re are still part of NZAOA. Peter Bosshard at campaign group Insure Our Future said: “The NZIA has allowed itself to be immobilised by antitrust concerns from the start. With Munich Re and now Zurich leaving the alliance, insurers have an even bigger direct responsibility to align their businesses with a credible 1.5C pathway.”
The International Sustainability Standards Board is giving companies some leeway on its reporting requirements by focusing only on climate-related risks and opportunities in the first year of applying the ISSB standards. This “transition relief” will be combined with the one-year extension on Scope 3 emissions reporting. From the second year, companies will be required to disclose wider sustainability-related risks and opportunities, beyond climate. Earlier this month, the International Accounting Standards Board confirmed it is also looking at expanding its work to explore further climate-related risks in financial statements, complementing the work of the ISSB.
The UN has asked the International Court of Justice to advise states on their legal responsibilities towards climate change commitments, following a vote at its general assembly. The resolution was led by the Pacific island nation of Vanuatu, which is at the forefront of climate change, suffering from rising sea levels and powerful cyclones. Last week, the European Court of Human Rights held hearings on two climate change lawsuits filed against the governments of Switzerland and France.
The European Commission has launched a public consultation on its 2040 climate target, which it is required to set under the European climate law. The consultation will run until June 24 and is split alongside a general section and an expert section. The commission will propose a 2024 target after a thorough impact assessment, but it will be up to member states and the European parliament to finalise an agreement.
India is consulting on its draft carbon credit trading scheme until April 14. The country’s Ministry of Power is aiming to set up a voluntary carbon market in collaboration with the Bureau of Energy Efficiency. The scheme would issue carbon credit certificates (equalling the removal of one tonne of carbon dioxide emissions) and be governed by the Indian Carbon Market Governing Board. Last summer, India committed to reducing its gross domestic product emissions intensity by 45 per cent by 2030, compared with 2005 levels, and achieve approximately 50 per cent cumulative electric power from non-fossil, fuel-based energy resources by 2030.
Australia’s parliament and Senate have passed reforms on the country’s safeguard mechanism, resulting in enhanced emission reduction targets for the country’s 215 largest emitters. The updated scheme, which will come into effect from July 1 2023, will impose an intensity reduction target of 4.9 per cent a year on facilities that produce more than 100,000 tonnes of CO2 a year – totalling a 205mn tonnes of greenhouse gas reduction by 2030. The agreement, reached by Australia’s Labor government, needed support from the Greens party, which negotiated additional measures. These included a hard total emissions cap, a ministerial review for projects that raise total emissions, and compulsory disclosures for polluters that rely heavily on carbon offsets to meet their targets. In return, the Greens party withdrew its demand for a total ban on new fossil fuel projects. Australia has set a national climate target of reducing emissions by 43 per cent below 2005 levels by 2030 and to reach net zero by 2050.
Separately, the Australian government has introduced a “nature repair market” legislation, which would allow landowners to be paid by a third party for protecting and restoring nature under their possession. In its communication, the government noted that consultancy PwC estimates that the biodiversity market could generate A$137bn ($92bn) worth of investment to restore and protect Australia’s environment by 2050.The government is also consulting on its revision of the National Greenhouse and Energy Reporting scheme, which is a national framework for companies to report and disclose greenhouse gas emissions, as well as energy production and consumption.