There are so many ESG-related publications and developments that it is hard to keep abreast of them all. For this reason, every two weeks, our firm has been publishing a tracker of ESG-related publications and developments, with a primary focus on developments that may be of most interest to or impact our clients, be they corporates, asset managers or asset owners.

Key updates covered in this edition include:

  • the European Securities and Markets Authority (“ESMA”) has published its 2022 Annual Work Programme (“AWP”), setting out its priority work areas for the next 12 months to deliver on its mission to enhance investor protection and promote stable and orderly financial markets;
  • International Air Transport Association’s resolution for the global air transport industry to achieve net-zero carbon emissions by 2050; and
  • the Spanish National Securities Market Commission (CNMV) requires listed companies to explain how the "ESG objectives" section of the bonus is achieved.

If you have any ESG-related questions, please get in touch with your usual contact at HSF who will be able to direct you as appropriate. 

Key items

This issue covers the period from 28 September to 11 October 2021.

28 September 2021

The European Securities and Markets Authority (“ESMA”) has published its 2022 Annual Work Programme (“AWP”), setting out its priority work areas for the next 12 months to deliver on its mission to enhance investor protection and promote stable and orderly financial markets. One of the key workstreams identified in the AWP is ‘sustainable finance’. Under the ‘sustainable finance’ workstream, ESMA will focus on developing rules on environmental, social and governance disclosures and risk identification methodology for ESG factors, contribute to the work on non-financial reporting, and work with national authorities to prevent the risk of greenwashing.

30 September 2021

Malta Financial Services Authority (“MFSA”) issued a circular on the Implementation of the Sustainable Finance Disclosure Regulation (“SFDR”). The circular serves as a notification to the industry on the process to be adopted with respect to the submission of updates to the pre-contractual document by Professional Investor Funds (PIFs) and Alternative Investment Fund Manager (AIFMs).

Following the clarification provided by the European Commission confirming applicability of the SFDR to registered/sub-threshold AIFMs, the MFSA issued the circular to notify the industry that PIFs and de minimis AIFMs are required to submit the updates to their pre-contractual documents (prospectuses) in line with SFDR.

1 October 2021

The International Association of Insurance Supervisors (“IAIS”) has published a global insurance market report, which provides the first quantitative global study on the impact of climate change on the insurance sector.

The IAIS concludes that the report underlines the importance for supervisors of assessing how climate change may affect the insurance sector and individual insurers and of developing an appropriate supervisory response, and reiterates the recommendations in its May 2021 application paper.

4 October 2021

The International Monetary Fund (“IMF”) in its semi-annual Global Financial Stability Report has said that to help the sustainable investment industry grow, governments should do more to protect investors from being misled by greenwashing. The IMF said growth in sustainable funds could be accelerated if policymakers harmonised climate disclosure-related standards and developed new green frameworks to help direct investment flows towards projects such as renewable energy infrastructure. It noted that climate-orientated funds accounted for just $130bn of the assets in sustainable investment strategies that employed a range of environmental, social and governance metrics.

4 October 2021

The International Air Transport Association’s (“IATA”) 77th Annual General Meeting approved a resolution for the global air transport industry to achieve net-zero carbon emissions by 2050. This commitment will align with the Paris Agreement goal for global warming not to exceed 1.5°C compared to pre-industrial levels. The industry’s road map relies on 65% of emission reductions resulting from sustainable aviation fuel, which is significantly less polluting than traditional jet kerosene, but currently in very short supply.

“The world’s airlines have taken a momentous decision to ensure that flying is sustainable,” said Willie Walsh, IATA’s Director General. “The post-COVID-19 re-connect will be on a clear path towards net zero. That will ensure the freedom of future generations to sustainably explore, learn, trade, build markets, appreciate cultures and connect with people the world over. With the collective efforts of the entire value chain and supportive government policies, aviation will achieve net zero emissions by 2050”.

4 October 2021

The UK Government has announced that it will support Angola’s transitioning to Green Economy. The announcement was made after the Prime Minister’s Trade Envoy to Angola, Laurence Robertson MP, visited Luanda and met Ministers and Senior Members of the Angolan Government including Economic Coordination, Finance, Natural Resources, Oil and Gas, Energy and Water, Transport, and the Angolan National Bank.

The meetings covered a vast range of issues focussing on the work around greening the economy, climate change, financial inclusion and infrastructure to support Angola’s low-carbon development. Coming ahead of COP26, the global conference on climate change to be held in the UK in November, there was a strong emphasis on the transition to a green economy through the adaption of green finance instruments, sustainable solutions in transport, industry and agriculture, and work towards net zero emissions.

5 October 2021

The Spanish National Securities Market Commission (CNMV) requires listed companies to explain how the "ESG objectives" section of the bonus is achieved. The CNMV considers it is not always easy to adequately understand what the directors' real achievement is.

5 October 2021

The Global Reporting Initiative (“GRI”) issued revised Universal Standards, as well as its first ever GRI Sector Standards. The Universal Standards are intended to assist organisations to understand and report on their impacts on the economy, environment and people in a comparable and credible way.

As part of the changes, GRI considers that the revised Universal standards will provide the first and only reporting standards to fully reflect due diligence expectations for organisations to manage their sustainability impacts, including on human rights, as set out in the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises.

5 October 2021

The European Insurance and Occupational Pensions Authority (“EIOPA”) has outlined its strategic priorities for the coming years. Amongst EIOPA’s strategic areas is the integration of sustainable finance across all areas of work, including promotion of sustainability disclosures and a sustainable conduct of business framework and addressing protection gaps.

5 October 2021

Egypt will invest USD 45 billion into its sustainable rural communities program called “Hayah Karima”, the country’s minister of planning and economic development has confirmed. The minister also confirmed that green projects represent 30 percent of the country’s total development projects in the current fiscal year.

These comments were made during meetings with UN officials to discuss joint sustainable development goals and financing strategy in the country.

6 October 2021

It has been reported that the White House is to propose changes to the National Environmental Policy Act so to restore climate change protections to the nation’s bedrock environmental law which former President Donald J. Trump had weakened in an effort to speed the approval of projects like mines, pipelines, dams and highways.

Amongst the proposed changes are (i) the requirement for the federal government to evaluate the climate change impacts of major new projects as part of the permitting process, and (ii) the grant of authority to federal agencies to work closely with communities to develop alternative approaches to projects.

8 October 2021

It has been reported that the Dutch financial market regulator (Netherlands Authority for the Financial Markets - “AFM”) is urging pension funds to speed up the implementation of the “SFDR”. The AFM recognises that while many practical questions around the implementation of the regulation, it is time for the pension funds sector to start working on implementing the SFDR.

8 October 2021

Japan will introduce environmental, social and governance considerations for foreign reserves held by the finance ministry. The decision to include ESG as a factor for foreign asset holdings is a first for a Group of Seven nation, Finance Minister Shunichi Suzuki said on 8 October, 2021. Instead of shifting the existing portfolio, ESG will become a new factor to be considered for all new foreign asset investments, the Finance Ministry said in a statement. It said investment into ESG bonds will likely increase as the ESG bond market expands.

13 October 2021

Spain announced the "H2VLC-València Valle de Hidrogeno Verde" Plan. This is supported by Valencia's council and several other institutions, companies and research centres. The initiative seeks to promote the use of green hydrogen within the transport and logistics sector