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November 17, 2022

Regulatory Round-up: EU supervisors on greenwashing, ISO’s net zero guidance, US govt’s supply chain disclosures

By Victor Smart

A formal call for examples of greenwashing has been made by the EU’s three major financial supervisory authorities, the European Banking Authority, the European Insurance and Occupational Pensions Authority and the European Securities and Markets Authority. The aim is to gather input from stakeholders on how to understand the key features, drivers and risks associated with greenwashing and to collect examples of potential greenwashing practices. The three institutions say they want to better understand which areas may become more prone to greenwashing risks. 

“Obtaining a more granular understanding of greenwashing will help inform policymaking and supervision, and will help foster the reliability of sustainability-related claims,” the three authorities said in a statement. All stakeholders are welcome to contribute by the January 10 deadline. 

Initiative Climat International (iCI), a private-sector initiative supported by the UN-backed Principles of Responsible Investment, has produced guidance for private equity firms wanting to pursue net zero goals. There is widespread support for net zero in the financial services sector but few private equity firms have made public commitments, says iCI, though it adds: “This does not reflect a lack of ambition from private equity but rather confusion over application to private equity and what public commitments may require.”

The International Organization for Standardization, a federation of national standards bodies, has launched guidelines for organisations’ net zero emissions strategies, to clarify key concepts and terminology around net zero. The tool, launched with the UN at COP27, offers “a global basis for harmonizing, understanding, and planning for net zero for actors at the state, regional, city and organisational level”. Nigel Topping, the UK’s UN climate change high level champion at COP26, said: “These Net Zero Guidelines […] can be used as a core reference text on net-zero to bring global actors into alignment, ratchet up ambition and address greenwashing,” as reported by Reuters.

The US federal government would require all but the smallest businesses in its supply chain to publicly report greenhouse emissions data, as well as climate risks, under proposals made by President Joe Biden’s administration. Contractors that have more than $50mn in annual business with the government would have to disclose Scope 1, 2 and 3 emissions. Less stringent rules would apply for smaller firms, with a complete exemption for those with less than $7.5mn in business.

The International Energy Agency is calling for immediate policy action to mobilise financing for clean energy alternatives to coal and to ensure secure, affordable and fair transitions, especially in emerging and developing economies. A new report, ‘Coal in Net Zero Transitions: Strategies for Rapid, Secure and People-Centred Change’, sets out what would be necessary to bring down global coal emissions rapidly enough to meet international climate goals.

“Coal is both the single biggest source of CO₂ emissions from energy and the single biggest source of electricity generation worldwide, which highlights the harm it is doing to our climate and the huge challenge of replacing it rapidly while ensuring energy security,” said IEA executive director Fatih Birol



A service from the Financial Times