Monthly Update on Environmental, Social, and Governance Factors | November 2023
The United Nations Climate Change Conference 2023 (COP28) is currently underway in Dubai, with a focus on addressing critical climate issues and setting new goals for the future. Here are some key developments in sustainable policies and regulations from around the world:
COP28 Agenda
One of the main items on COP28's agenda is agreeing on how to put the loss and damage fund into effect, which aims to support countries that are most affected by climate change. Another focus area is food systems and agriculture, as their impact on the environment becomes increasingly apparent. Additionally, a framework on the global goal on adaptation will be adopted at COP28.
Right to Repair Directive (EU 2024/1799)
In the European Union, the Right to Repair Directive has been adopted and entered into force in July 2024. This directive grants consumers a statutory right to request repair services for electronics like smartphones and tablets, even after the legal guarantee has expired. Manufacturers are required to provide repair services, ensure availability of spare parts, and supply clear repair information. The directive also establishes national repair information platforms and repair voucher schemes to improve repair accessibility and affordability. Enforcement at the national level will begin after Member States complete national implementation by July 2026.
UK Regulatory Developments
In the UK, the Financial Reporting Council (FRC) will not be taking forward a number of ESG-related amendments to the UK Corporate Governance Code. These include those relating to the role of audit committees on ESG and modifications to existing Code provisions around diversity. The FRC intends to publish an updated Corporate Governance Code in January 2024. The Financial Conduct Authority (FCA) has also published its Sustainability Disclosure Requirements, bringing trust and transparency to the UK market for sustainable investment products. The rules will come into force on various dates from May 2024 to December 2024.
Global Sustainable Initiatives
The EU has agreed on a new Right to Repair Directive that prioritizes repairing products over replacing them. This directive is part of a broader EU strategy under the Circular Economy Action Plan and ties into ongoing regulations such as the Ecodesign for Sustainable Products Regulation (ESPR) aiming to improve reparability and sustainability across product groups. The EU has also extended its EU Taxonomy, a classification system for environmentally sustainable economic activities, to include non-climate environmental objectives and additional activities to meet climate environmental objectives.
In other news, B Lab, the certifier behind B corporations, has announced changes to strengthen the standards B corps have to meet. The Transition Plan Taskforce has published a consultation on seven sector-specific deep dives, covering asset managers, asset owners, banks, electric utilities and power generators, food and beverage, metals and mining, and oil and gas. A large global study by BlackRock reports that companies with the most gender-balanced workforces outperform their worst peers by 1.6% every year.
The Impact Disclosure Taskforce has launched with the purpose of drafting voluntary guidance to facilitate impact reporting in line with the UN Sustainable Development Goals. The CFA Institute, Global Sustainable Investment Alliance, and Principles for Responsible Investment jointly published a set of definitions for key responsible investment terms. The International Bar Association has published a report on the role of arbitration in the resolution of ESG disputes. The FCA has published a review highlighting existing good and poor practice amongst UK fund managers.
Finally, it's worth noting that the implementation of the UK's extended producer responsibility (EPR) regime for packaging waste has been pushed back from its original intended start date in 2023. The recycling targets for packaging producers in England and Wales for 2024 are a stop-gap measure before the implementation of the EPR regime, which is currently due to apply from October 2025.
- The COP28 agenda includes a framework on the global goal on adaptation, which emphasizes on environmental-science and technology, aiming to improve resilience and mitigation strategies for climate change.
- In the realm of lifestyle and education-and-self-development, the European Union has adopted the Right to Repair Directive (EU 2024/1799), fostering sustainable practices by encouraging repair over replacement of electronics, ensuring product longevity and resource conservation.
- The Financial Conduct Authority (FCA) in the UK has published the Sustainability Disclosure Requirements, which focus on finance, bringing transparency and promoting trust in the market for sustainable investment products related to various sectors, such as food and beverage, metals and mining, and oil and gas.
