Other Notable Developments

Paris Climate Targets: The University of Oxford’s 2024 State of Carbon Dioxide Removal study found that around 7-9 billion metric tons of carbon dioxide will need to be removed from the atmosphere every year in order to meet the climate targets in the Paris Agreement and that emissions reductions efforts must be supplemented by carbon dioxide removal.

Climate Progress Reports: A report by Oil Change International shows that G-7 countries are failing to deliver on climate change goals by continuing to fund the development of oil and gas. Another report by Climate Analytics found that none of the G-7 members are on track to meet emission reduction targets for 2030.

EU: European Supervisory Authorities Publish Final Reports on Greenwashing

The European Supervisory Authorities (the “ESAs”)—the European Securities and Markets Authority (“ESMA”), the European Banking Authority (“EBA”) and the European Insurance and Occupational Pensions Authority (“EIOPA”)—have each released reports on greenwashing in the financial sector. The reports are the result of a request by the European Commission for advice on greenwashing risks and sustainability-related supervision. The ESAs define greenwashing as a practice where statements, declarations, actions or communications do not clearly reflect the underlying sustainability profile of an entity, a financial product or financial services. The reports emphasize inter alia that financial supervisors must develop consistent standards for sustainability disclosures and further explain how supervision may be improved in the coming years. 

Specifically, ESMA invites national competent authorities (“NCAs”) to increase human resources and expertise for sustainability-related supervision and to invest in data and supervisory tools, such as SupTech tools. ESMA’s report also contains a list of high-level recommendations for market participants, including increasing know-how and resources and relying on external verification. EIOPA similarly encourages NCAs to cooperate with securities and banking supervisory authorities to leverage their resources to tackle greenwashing. EBA asserts that the most effective way forward from a regulatory and legislative perspective is to finalize and implement existing initiatives. 

The ESAs will continue to monitor greenwashing risks and track supervisory progress.

Links:
ESMA Report
EBA Report
EIOPA Report

On June 4, 2024, CDP (formerly the Carbon Disclosure Project), an independent environmental disclosure organization, announced the launch of its 2024 reporting platform. CDP’s announcement comes as climate reporting is mandated by many countries globally, several of which require the use of standards released by the International Sustainability Standards Board (namely, IFRS S1 and IFRS S2). The CDP platform aims to streamline environmental reporting and disclosures through its alignment with IFRS S2 and is open to 75,000 companies, cities, states and regions. 

This development follows CDP’s announcement of a new disclosure portal, which will incorporate critical aspects of other standards such as the Taskforce on Nature-related Financial Disclosures and the European Union’s ESRS. A preview of the portal can be accessed here.

CDP’s new platform includes two questionnaires that will serve as baselines for companies engaging in climate disclosure: (1) a full corporate questionnaire, based on IFRS S2, which addresses water, forests, climate, biodiversity, plastics, etc. in order to provide a more streamlined reporting experience; and (2) a dedicated questionnaire for small and medium enterprises. Companies will be able to use such questionnaires to disclose their climate data, which will then be accessible by those requesting it through the portal. According to CDP’s CEO Sherry Madera, “CDP is proud of [its] partnerships with the ISSB, TNFD, EFRAG and other global frameworks to fulfil [its] role in the ecosystem, answering market demand for efficiency and enabling faster environmental action through the power of data. [CDP’s] new platform […] ensures that data disclosed once can be used by many investors, lenders, and procurement teams across the globe.”

Link: 
CDP Announcement

China, currently the world’s largest emitter of carbon dioxide, has announced plans to establish a carbon footprint management system by 2027. The system aims to reduce carbon emissions by tracking them across industries in order to inform policy. The initiative is expected to release carbon footprint calculation standards for approximately 100 major products by 2027, including coal, natural gas, steel and electric vehicles. It will also include a comprehensive database and analytical tools intended to facilitate assessment of carbon emissions. The Chinese Ministry of Ecology and Environment hopes to expand the guidance to 200 products by 2030 in order to advance low-carbon consumption and to reach its goal of carbon neutrality by 2060. 

A spokesperson for the Ministry stated that the “system will be a cornerstone in our efforts to monitor and reduce carbon emissions[…]by 2027, we aim to have a robust framework that supports our sustainability goals.” The Ministry hopes that the system will incentivize large companies to reduce their emissions, with local governments encouraged to develop pilot schemes to encourage the use of lower-emission products. Experts have said that the system could also be part of China’s efforts to reduce emissions associated with product manufacturing, helping to avoid high import tariffs under the European Union’s new Carbon Border Adjustment Mechanism, which is set to impose tariffs starting in 2026. 

Links:
Implementation Plan (Mandarin Only)
Notice (Mandarin Only)

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