Regulatory Press

With regulation changes from the U.S. to Japan taking precedence over the first half of the month. The global sustainability landscape is looking more and more like learning to ski in a semi-lit tunnel.

Shifting away, we've been observing numerous corporate cases linked to greenwashing that have peppered the news this month.

Governance

New Metrics

JP Morgan, Citi, and RBC, alongside others, are coming together to disclose a new specific climate metric to 3 of their most significant clients, the New York City Employees' Retirement Scheme, Teachers' Retirement Scheme and Board of Education Retirement Scheme.

Public disclosure outlining their ratios of clean energy to fossil fuel finance.

The aim of this metric, as quoted, is to ensure that their (the bank's) financing activities align with their net-zero commitments.

Further pressure in the U.S. surrounding the financing of clean energy versus more traditional fossil fuel sources is not a new phenomenon.

Banks have a fiduciary duty to preserve and maintain the financial ecosystem alongside facilitating growth through financing to promote its continued stability. The growing scrutiny tests this norm - I would ask you this: should banks sacrifice earnings, profits, and a stable economic ecosphere to promote clean energy at the detriment of the former?

SBTI Bends

SBTi has finally recognised the effect and demand for Carbon Credit integration across the finance space to mitigate Scope 3 value chain emissions effectively. Allowing for an increased role within Net Zero target-setting

This decision by SBTi results from an ongoing standard review, which is set to continue until the beginning of next year, alongside the finalisation of the Financial Net Zero Standards.

It's taken time, but with the SBTi capitulation being the latest movement recognising Carbon Credits, Financial institutions, particularly, will pay close attention to this, as will firms seeking to release or create more Carbon Credits for the wider environment to absorb.

A development that should be noted is that SBTis' staff have sent numerous letters to the board and senior leadership group, expressing deep concern - some reports even stating they go as fast as calling for the resignation of the CEO and board members.

Japan's Proposed Sustainability Reporting Standards

The SSBJ has released a new set of draft standards for companies to report sustainability and climate-linked information, which are linked to the sustainability disclosure standards of the IFRS.

Continuing the pressure on Japanese firms, especially that of listed companies, will likely face a plethora of sustainability-related disclosure requirements.

Surprise... SEC Halts Climate Disclosure Rules

The U.S. Securities and Exchange Commission announced that it has paused the implementation of its recently released climate disclosure rules - explicitly requiring companies to report on 'climate-related' risks and greenhouse gas emissions.

This has been prompted by a court review of the new rules following legal challenges from several states and different business groups.

This is not the first time I have spoken about the SEC's climate disclosure rules, and it will not be the last. Facing fierce opposition from mainly Republican origins, some of which even resonates with individual entities separate from political intervention, the climate disclosure rule's best hope is for a judge to side with the SEC. However, any decision will likely be appealed at least once.

Given the current political cycle, do not expect to see these rules enforceable and companies adhering to them until at least mid-year 2025, perhaps even 2026.

Watered Down CSDDD Accepted

The European Parliament voted to adopt the Corporate Sustainability Due Diligence Directive, which targets the most prominent companies across the E.U. and looks to assess and address their negative impacts on the environment and human rights.

Additionally, companies affected must include adoption plans to align their businesses with the Paris Agreement goal.

The capitulations made by the regulatory bodies and lawmakers are noticeable here as the criteria denoting which companies are affected and have exposure to this new law have been significantly reduced.

A small step instead of a further E.U. shift, with companies facing down the barrel of CSRD, CSDDD will only push the boat out on what is already mandatory from the former.

Corporate

Shell Appeal

The fossil fuel producer has lodged an appeal with the Dutch court responsible for the ruling, holding the firm accountable for greenhouse gas emissions resulting from its customers' use of its products. *In case there is confusion here, this is in reference to Scope 3 Carbon Emissions

Additionally, the court ordered the company to reduce its emissions by 2030 by 45% of what they were in 2019.

With confidence coming from both sides, the rest of the world will be keenly observing here as a president for holding fossil fuel-producing firms accountable for Scope 3 emissions, which has been widely contested.

Nike Swish

The sports retail manufacturer has successfully quashed a class action lawsuit heard in Missouri. The plaintiff accused the firm of greenwashing, specifically false marketing of its products as sustainable and environmentally friendly.

Commentators state that this case reinforces the high bar set to prove greenwashing claims, with their popularity against firms set to continue increasing.

Globally, Greenwashing cases and accusations are on the rise, with a large number of firms releasing statements annually with plans to 'turn more green' however, the consumer base appears to want to hold them accountable at a minimum if actual conviction cases remain fractional.

Opinion

Don't get me wrong, delving through the constantly changing regulatory environment can be rough, even at the best times. New standards, watered-down ones, political influence over implementation, and ambiguous language from regulatory bodies all contribute to the slog.

Sustainability and best practices are constantly evolving and changing almost monthly, and interweaving business and financial opportunities around this is key for establishing a global pathway forward.

Concessions will need to be made, reviews and changes adopted, with evolving attitudes to targets and ambitions... will narrate our way forward