Welcome to our ESG monthly newsletter, covering the period 15 November to 15 December 2024
There's a lot happening in the environmental, social and governance (ESG) space, and we don't want you to get lost in the quagmire. In our newsletter, we share our latest ESG insights and identify must-know developments from the UK, EMEA, and around the world.
In this edition, we shine a spotlight on key ESG developments from the past month, including:
- a special update on our thought-leadership relating to Biodiversity COP16 and Climate Change COP29;
- the EU's announcement of a proposed Omnibus Regulation to streamline complexity surrounding CSRD, CS3D and the EU Taxonomy;
- updates to compulsory HR due diligence in the UK;
- the publication of the draft standards for sustainability reporting under CSRD for non-EU entities;
- the EU Council's adoption of a ban on products made with forced labour; and
- detailed analysis of the highly anticipated judgment from the Hague Court of Appeal in the climate litigation against Shell.
Overview of latest ESG developments
COP HUB 2024
Biodiversity COP16
Climate Change
- Building net zero: The construction sector's role in hitting COP's climate goals
- COP29: The state of net zero and sustainability efforts in Azerbaijan and Central Asia
- COP29 in Baku: Expectations and key issues on the global climate stage
- COP29: Emerging technology and the energy transition – Risk and opportunities
- Inside COP29: Key themes from week one
- COP29 Recap - What was achieved in Baku?
- Latin America's Climate Strategies at COP29
CHRISTMAS SPECIAL – YULETIDE FIRESIDE CHAT SERIES
- Talks by the fireside – a chat with Jo Holbrook, Of Counsel in the HSF Environment Team
- Sea-sons Greetings! Key Developments in the UK's CCUS and Offshore Wind Sectors
- Sustainable Finance Products: Deep Freeze or Thaw?
UK
Climate Change and Energy Transition
- UK Government commits to cut emissions more than 80% by 2035
- UK Budget: Billions pledged for green energy schemes
- Government Launches Call for Evidence on the RTFO
Business and Human Rights
- UK House of Lords Select Committee calls for the introduction of mandatory human rights due diligence
- MPs vote to approve the Terminally Ill Adults (End of Life) Bill, 2024
- EAT confirms whistleblowing protection applies to disclosures made pre-employment
Green Finance and Carbon Markets
Corporate Governance
- HM Treasury introduces draft legislation for the regulation of ESG ratings
- FCA publishes Sustainability Disclosure Requirements pre-contractual disclosure examples
- FRC consultation on the Stewardship Code
Corporate Crime
EU
Climate Change and Energy Transition
Business and Human Rights
Green Finance and Carbon Markets
- EU Commission publishes draft technical FAQs on the EU Taxonomy
- European Supervisory Authorities publish final report on the European Single Access Point
- ESMA Guidelines on ESG or sustainability-related fund names - Guide on comply or explain statements of national regulators
Corporate Governance
- The EU's Sustainability 'Omnibus': major reform of the EU's sustainable finance system or tinkering at the margins?
- CSRD Update: Are the ESRS for non-EU entities a simplification?
- CSRD Update: ESRS E1 – How does EFRAG propose to streamline climate reporting for non-EU entities?
ESG Disputes and Complaints
- Dutch Court of Appeal upholds appeal on landmark climate litigation case against Shell
- German court rules in favour of NGO, Environmental Action Germany, in an environmental advertising claim against fuel trader ZG Raiffeisen Energie
Environment and Planning
- EU Deforestation Regulation: Parliament and Council agree one-year delay
- European Commission refers Bulgaria and Romania to EU Court of Justice for failure to adequately collect and treat urban waste water
International
Climate Change and Energy Transition
Business and Human Rights
Green Finance and Carbon Markets
ESG Disputes and Complaints
- USA: SCOTUS rejects petition by youth group to reconsider Ninth Circuit dismissal of ground-breaking 'Juliana' climate change case
- USA: Plastic pollution lawsuit against PepsiCo dismissed
Environment and Planning
- Fifth and final round of UN Plastics Treaty negotiations concludes without outcome in Busan, South Korea
- TNFD: Discussion Paper on Nature Transition Plans
COP Hub 2024: Biodiversity and Climate change
Biodiversity COP16
COP16: Why is COP16 relevant for business?
In 2022, the 15th Conference of the Parties (COP15) saw the adoption of the Kunming-Montreal Global Biodiversity Framework, which set out the key targets for global action on biodiversity over the next decade. COP16 presents the first opportunity since the Global Biodiversity Framework was adopted for governments to review progress to date and consider future opportunities for the implementation of the Global Biodiversity Framework.
COP16 Round-up: What have we learned?
The 16th Biodiversity COP took place in Cali, Colombia, between October 21 and 1 November, 2024. Although Biodiversity COPs often garner less media coverage compared to their Climate Change counterparts, they play a crucial role in facilitating international consensus on a ‘nature positive’ future.
Climate Chabge COP29
Building net zero: The construction sector's role in hitting COP's climate goals
With the United Nations Climate Change COP coming into its 29th year, many member states are starting to take decisive action in line with their net-zero commitments. The construction, engineering and infrastructure sectors are at the heart of this transformation, both in terms of large-scale green energy generation and reducing the carbon footprint of the world's existing (and future) building stock.
COP29: The state of net zero and sustainability efforts in Azerbaijan and Central Asia
As the host country of COP29, Azerbaijan’s commitment to the green energy transition is under scrutiny. Indeed, both Azerbaijan and the neighbouring Central Asia region are at a critical juncture in their journey towards sustainability and net-zero emissions. While fossil fuels, particularly oil and gas, are significant contributors to their economies and are likely to remain so for many years to come, governments in the region are also trying to take steps to embrace a greener, more sustainable future. This presents significant investment opportunities in the region, but has also led to questions about whether the actions being taken are sufficient.
COP29 in Baku: Expectations and key issues on the global climate stage
As parties gathered in Baku, Azerbaijan, for COP 29, we reflected on the key issues on the agenda for the annual gathering of UN member states aimed at negotiating and implementing global climate agreements under the United Nations Framework Convention on Climate Change (UNFCCC).
Hopes were tempered in the leadup to COP29, especially as venue limitations risked a smaller attendance than previous years. While nations acknowledged the urgency of ambitious climate action, geopolitical tensions, financing disagreements, and varying levels of commitment lowered hopes for a breakthrough in Baku.
COP29: Emerging technology and the energy transition – risks and opportunities
The role of technology development and transfer in implementing the energy transition was a major focus of COP28 last year, with commitments from State parties to triple the use of renewable energy sources and overhaul financial support for green technologies in pursuit of this technological revolution. How did this commitment play out during COP29?
Inside COP29: Key themes from week one
We reflect on the main developments from Week 1 of the “finance COP”. The week saw slow progress, with the first day largely spent discussing and debating agenda items and the rest of the week featuring disagreement between nations over the New Collective Quantified Goal (NCGQ) which means there will be increased pressure to finalise this over week two. The week did however see some key announcements aimed at driving forward global investment in carbon markets and sustainable development.
COP29 Recap - What was achieved in Baku?
The key goals of the COP29 conference in Baku this year were to: (a) set a New Collective Quantified Goal (NCQG); (b) develop an agreement over carbon market regulation under Article 6 of the Paris Agreement; and (c) build on the outcomes of COP28's “Global Stocktake" in the UAE last year.
While agreement was reached on carbon market regulation, the NCQG agreement has been widely criticised, with many commentators arguing that the goal has not gone far enough to supply the funding that developing countries require to achieve their Nationally Determined Contributions (NDCs) and adaptation plans. Other negotiations have also been slow, and some commentators argue that a step backwards has been taken since last year in transitioning away from fossil fuels.
Latin America's Climate Strategies at COP29
At COP29, delegations from several Latin American countries, including Argentina, Brazil, Chile, Colombia, and Mexico presented themselves as potential beneficiaries of climate adaptation and mitigation funding from the developed countries. These countries, four of which have left-leaning governments that have advocated for more to be done in order to fight climate change, have each adopted unique positions reflecting their regional perspectives and needs.
UK
Climate Change and Energy Transition
UK Government commits to cut emissions more than 80% by 2035
At the COP29 climate conference in Baku, Azerbaijan, Prime Minister Keir announced a new climate target of cutting UK greenhouse gas emissions by 81% by 2035 (compared to levels in 1990). The new target represents a more ambitious climate target for the UK, compared to the 78% target set by Prime Minister Boris Johnson in 2021. The new goal will form the UK’s new Nationally Determined Contribution under the Paris Agreement.
UK Budget: Billions pledged for green energy schemes
The UK Government has announced £27.8 billion in new funding for green energy projects as part of the Autumn Budget. The funding announcement includes:
- £21.7bn investment over 25 years in carbon capture projects in Teesside and Merseyside;
- £3.9bn for carbon capture, usage, and storage projects in 2025/26; and
- Funding for 11 green hydrogen projects.
Government Launches Call for Evidence on the RTFO
The Renewable Transport Fuel Obligation (RTFO) is the government's key scheme for incentivising the use of low carbon fuels (such as biofuels, hydrogen and synthetic alternatives to petrol or diesel) in road vehicles, non-road mobile machinery (including trains, mobile generators and certain types of vessels) and other surface transport modes. Since its introduction in 2008, over 27 billion litres (equivalent) of sustainable low carbon fuel have been supplied under the RTFO and resulted in greenhouse gas (GHG) savings of almost 54MtCO2e.
Business and Human Rights
On 16 October 2024, the UK House of Lords Select Committee on the Modern Slavery Act 2015 (MSA) published a report setting out the conclusions of its parliamentary inquiry into the MSA's impact and effectiveness. The report recommends that the UK Government implement significant changes to the UK's modern slavery regime, including by introducing legislation obliging in-scope companies to conduct modern slavery due diligence, and considering import bans applicable to certain producers.
MPs vote to approve the Terminally Ill Adults (End of Life) Bill, 2024
MPs have voted in favour of advancing a proposed assisted dying law to the next stage in the UK Parliament. The Terminally Ill Adults (End of Life) Bill, proposed by Labour backbencher Kim Leadbeater as a private member's bill, was supported by MPs with a vote of 330 to 275 after more than four hours of debate. The bill allows terminally ill adults in England & Wales, who are eligible, to lawfully request and be provided with, assistance by healthcare professionals to end their own life. The bill will now move to the committee stage, the next step in the legislative process.
EAT confirms whistleblowing protection applies to disclosures made pre-employment
The EAT in MacLennan v The British Psychological Society has ruled that protection against detriment for whistleblowing covers disclosures made prior to the employment commencing.
Green Finance and Carbon Markets
UK Government consults on the implementation of the UK Green Taxonomy
On 14 November 2024, HM Treasury (HMT) published a consultation on a UK Green Taxonomy, which was previously announced in the March 2023 update to the UK's Green Finance Strategy.
Corporate Governance
HM Treasury introduces draft legislation for the regulation of ESG ratings
On 14 November 2024, HM Treasury (HMT) published a response to its consultation on proposed regulation of ESG ratings providers, which ran from March - June 2023. The initial consultation set out HMT's intention to introduce secondary legislation requiring providers of ESG ratings to be authorised by the Financial Conduct Authority (FCA).
FCA publishes Sustainability Disclosure Requirements pre-contractual disclosure examples
The FCA's Sustainability Disclosure Requirements (SDR) and investment labels regime ( which you can read more about in our previous detailed briefing here) will enter into force on 2 December 2024.
In preparation for this, the FCA has published a list of examples of good practice in pre-contractual disclosures. While the examples are not exhaustive, they provide appreciated guidance on length, level of detail and vocabulary which firms may use to comply with the expectations of each label category.
FRC consultation on the Stewardship Code
The Financial Reporting Council (FRC) has published a consultation paper on the Stewardship Code, which proposes significant changes to, and a restructuring of, the Code.
The Stewardship Code, which was last updated in 2020, seeks to enhance the quality and quantity of engagement between investors and companies (for more details on the 2020 Code, see our blog post here).
The publication of the consultation paper is the next step in the fundamental review of the Code which the FRC launched earlier this year and follows the interim reporting changes which the FRC announced in July 2024 (see our blog post here).
Corporate Crime
Economic Crime and Corporate Transparency Act passed in UK Parliament
After years of debate and calls from the Serious Fraud Office (SFO) to change the law, and months of discussion in Parliament, the Economic Crime and Corporate Transparency Act 2023 received Royal Assent last Thursday, 26 October 2023, introducing (among other reforms) a new failure to prevent fraud offence and an expansion of the basis on which companies can be held criminally to account. According to the UK Government's press release, these reforms provide prosecutors with "game changing powers to hold companies criminally liable for malpractice".
Europe
Climate Change and Energy Transition
European Commission publishes guidance on importer requirements under the Methane Regulation
On 19 November 2024, the European Commission published a Q&A document setting out further guidance on obligations imposed on importers under Regulation (EU) 2024/1787 (the Methane Regulation). The guidance set out by the Commission is not legally binding but is likely to be viewed as persuasive by national regulatory authorities, and is subject to change from time to time.
Business and Human Rights
EU Council adopts ban on products made with forced labour
On 19 November 2024, the EU Commission adopted regulations prohibiting products in the EU market that are made using forced labour. This was published in the Official Journal of the European Union on 14 December 2024.
Green Finance and Carbon Markets
EU Commission publishes draft technical FAQs on the EU Taxonomy
The EU Commission has published draft technical FAQs on the EU Taxonomy on 29 November 2024, available here.
The FAQ aims to answer specific technical questions on technical screening criteria for a variety of economic activities contributing to the six Taxonomy objectives, as well as questions on the generic criteria for "doing no significant harm" (including the climate risk and vulnerability assessment and the environmental impact assessment). The FAQ also answers some further general questions on the application of the Taxonomy by users, including on the use of third-party verification to verify compliance with Taxonomy requirements, confirmation than a Taxonomy analysis must be refreshed annually, and clarifications on timeframes for companies reporting on EU Taxonomy.
European Supervisory Authorities publish final report on the European Single Access Point
At the end of October, the three European Supervisory Authorities (the European Banking Authority, the European Insurance and Occupational Pensions Authority, and the European Securities and Markets Authority) (the "ESAs") published a final report on the European Single Access Point ("ESAP").
By 21 October, all EU national regulators had to declare to the European securities regulator ESMA if they intended to comply with ESMA's new "Guidelines on funds' names using ESG or sustainability-related terms". These were originally published on 14 May 2024 and translated into all EU languages on 21 August 2024. The ESMA Guidelines will apply from 21 November 2024 for new funds and from 21 May 2025 for existing funds.
Corporate governance
In November 2024, Ursula von der Leyen announced her intention to create an 'omnibus' legislative instrument to simplify the administrative procedures and sustainability reporting requirements that are set out in the CS3D, CSRD and the Taxonomy Regulation.
CSRD Update: Are the ESRS for non-EU entities a simplification?
Working drafts of the long-awaited standards for sustainability reporting by non-EU ultimate parent companies have just been released (NESRS). The current drafts largely follow the standards applicable to EU-incorporated companies, with a few important limitations in scope including a focus on impact materiality only (to the exclusion of financial materiality) and an option to limit the reporting perimeter to EU operations only. The NESRS promised to be lighter than the ESRS applicable to EU-incorporated companies, but do these go far enough?
CSRD Update: ESRS E1 – How does EFRAG propose to streamline climate reporting for non-EU entities?
As we explained in our introductory blog on the new draft NESRS, while NESRS introduces the option for companies to exclude information about the impacts of sales of goods or provision of services to natural and legal persons outside the EU, this does not apply to NESRS E1 – the Climate Change topical standard which much be reported against for the entire global group.
As all in-scope non-EU parent companies will have to consider their global impacts under E1, how has EFRAG proposed to streamline climate reporting under this standard?
ESG Disputes and Complaints
Dutch Court of Appeal upholds appeal on landmark climate litigation case against Shell
On 12 November 2024, The Hague Court of Appeal handed down its highly anticipated judgment in the appeal of the Milieudefensie et al. vs. Royal Dutch Shell case. The CoA was considering Shell’s appeal against one of the most significant climate litigation rulings in recent years, namely the 2021 ruling of the District Court of The Hague in which Shell was ordered to reduce its greenhouse gas emissions across its global operations by 45% by the end of 2030 as compared with 2019 levels.
It is reported that German NPO, Environmental Action Germany (Deutsche Umwelthilfe), has won an environmental advertising lawsuit brought in Germany against ZG Raiffeisen Energie GmbH. The judgment reportedly prohibits ZG Raiffeisen from advertising that its oil heating operations are "climate-neutral" by reason of its compensation measures.
Environment and planning
EU Deforestation Regulation: Parliament and Council agree one-year delay
On 3 December 2024, the Council and the European Parliament reached a provisional agreement to amend the EU Deforestation Regulation (which you can read more about in our previous briefing here) postponing its enforcement by 12 months.
The European Commission has decided to take Romania and Bulgaria to the Court of Justice of the European Union for failing to meet the collection and treatment standards set by the Urban Waste Water Treatment Directive. The Directive is designed to safeguard public health and the environment by mandating the collection and treatment of urban waste water before it is discharged. Cities and towns must establish the necessary infrastructure to manage their urban waste water. Failure to collect or treat this waste water can endanger human health and contaminate lakes, rivers, soil, as well as coastal and groundwater. Both Romania and Bulgaria received exemptions to meet this directive under their Accession Treaty.
International
Climate Change and Energy Transition
Australia: NSW Renewable Energy Planning Framework commences with immediate effect
Following months of consultation, the NSW Government has released final planning guidelines that come into immediate effect in the assessment of proposed State significant renewable energy projects. The new framework seeks to deliver faster and more consistent planning and assessment decisions as the State works to support the energy transition and meet legislated net zero targets. The framework is expect to bring in sweeping changes for wind energy projects.
Busines and Human Rights
Indonesia: Inside the Constitutional Court Ruling on the Job Creation Law
On 1 December 2023, a coalition of labour organisations in Indonesia filed for a judicial review seeking amendments to Law No. 6 of 2023 on Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 on Job Creation. Changes were requested to at least 70 articles of this law, which focuses on various aspects of employment.
Green Finance and Carbon Markets
NGFS publishes latest long-term climate macro-financial scenarios for climate risks assessment
The Network for Greening the Financial System (NGFS) has released the fifth edition of its long-term climate macro-financial scenarios, designed for assessing forward-looking climate risks. These scenarios examine both the transition and physical impacts of climate change over an extended period and under various assumptions. The latest update includes new economic and climate data, policy commitments, and model versions.
ESG Disputes and Complaints
The Supreme Court of the United States (SCOTUS) has rejected a petition from youth plaintiffs seeking to overturn a decision by the U.S. Court of Appeals. The climate change lawsuit, which claimed that federal policies exacerbated climate change and thus endangered the futures of young people in the USA, was dismissed early in 2024. SCOTUS ruled that the plaintiffs did not have the standing required under Article III of the U.S. Constitution to pursue their claims.
USA: Plastic pollution lawsuit against PepsiCo dismissed
The New York Supreme Court has dismissed a lawsuit filed last year by the New York Attorney General, Letitia James, which claimed that PepsiCo was responsible for plastic pollution in the Buffalo River. The Court ruled that holding manufacturers civilly liable for the actions of third parties contradicts established legal principles. The Court noted that adopting such a theory could lead to excessive measures by prosecuting agencies to penalise manufacturers for the actions of consumers who improperly dispose of their products.
Environment and planning
On 25 November 2024, delegates from 175 countries gathered in Busan, South Korea, for the fifth of talks aimed at securing an international treaty to solve the problem of plastic waste. What was meant to be the fifth and final round of negotiations on a legally binding and universal plastic treaty, held last week in Busan, South Korea, concluded without an agreement.
TNFD: Discussion Paper on Nature Transition Plans
The Taskforce on Nature-related Financial Disclosures (TNFD) has released a discussion paper providing draft guidance on nature transition planning for corporations and financial institutions. This guidance addresses all aspects of nature, excluding climate change, greenhouse gas emissions as drivers of nature loss, and natural carbon stocks, which are covered by other like GFANZ. The TFND has invited the public to submit feedback on the paper by February 1, 2025.
Our Latest Thought Leadership
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- 'Regulating for growth': Chancellor delivers first Mansion House speech | Herbert Smith Freehills | Global law firm
- Climate change: succeed in a net-zero future | Herbert Smith Freehills | Global law firm
- Pensions Disputes Quarterly - October 2024
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- UK Autumn Budget 2024 – Key tax and legal points for business | Herbert Smith Freehills | Global law firm
- The nuclear option – Can atomic power arrive in time (and on budget)?
- Going for green on real estate transactions – Episode 1 How to champion ESG priorities during construction
- Going for green on real estate transactions – Episode 2 How to champion ESG priorities in Agreements for Lease
- Going for green on real estate transactions - Episode 3 How to champion ESG priorities in Leases
- Going for green on real estate transactions - Episode 4 How to champion ESG priorities in the Investment Market
Look out for:
- Webinar: "Webinar Alert – Join our webinar on COP29 outcomes and 2025 ESG trends " to be held on 15 January 2025 from 9:00 to 10:00 UK time. Please find the invitation and sign-up link here.
In case you missed it
- ESG newsletter UK and EU: October 2024
- Keeping Up with ESG in Australia: October 2024
- Global Corporate Crime and Investigations update – November 2024
- General Counsel Update – November 2024
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Disclaimer
The articles published on this website, current at the dates of publication set out above, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action.