Other Notable Developments
European Central Bank Disclosures: The European Central Bank (ECB) published a report on climate-related financial disclosures covering its €4,486 billion portfolio of financial assets held for monetary policy purposes. The report showed a steady decline in emissions and also improved reporting as the ECB included, for the first time, Scope 3 emissions for non-sovereign issuers.
Dutch Decarbonization State Aid Scheme: The European Commission approved a €750 million state aid scheme to support investments in decarbonizing industrial processes in the Netherlands. Qualifying companies will receive direct grants awarded following calls for proposals.
EU: Corporate Sustainability Due Diligence Directive Enters into Force
On July 25, 2024, the Corporate Sustainability Due Diligence Directive (CSDDD) entered into force, more than two years after the European Commission first submitted the proposal in February 2022.
The CSDDD introduces human rights and environmental due diligence obligations for:
- EU companies that have a certain number of employees and exceed a worldwide turnover threshold, and
- non-EU companies that exceed certain revenue thresholds generated from their turnover in the EU,
according to a staggered implementation timeline:
|
Effective Date
|
Number of Employees
(Only Relevant to
EU Companies)
|
Net Turnover in the
Last Financial Year
|
|
July 26, 2027
|
5,000
|
€1.5 billion
|
|
July 26, 2028
|
3,000
|
€900 million
|
|
July 26, 2029
|
1,000
|
€450 million
|
Companies must document in their annual reports the actions taken pursuant to the CSDDD. Penalties for noncompliance are primarily turnover-based financial penalties as well as civil liability to any person who has suffered harm.
EU Member States now have two years to incorporate the CSDDD into their national laws. (For more details on the CSDDD, see our recent Debevoise In Depth here.)
Link:
Press Release
U.S.: Oklahoma Judge Blocks Anti-ESG Law Targeting Financial Firms
On July 19, 2024, an Oklahoma judge blocked enforcement of the state’s Energy Discrimination Elimination Act (EDEA), a law prohibiting Oklahoma municipalities and state agencies from contracting with companies or institutions perceived to discriminate against the oil and gas industry. This follows an earlier ruling that imposed a temporary injunction in May 2024, finding that the plaintiff established a substantial likelihood of success on the merits that the EDEA was unconstitutionally vague (more on this here).
A beneficiary of the Oklahoma Public Employees Retirement System, retiree Don Keenan, brought this lawsuit in November 2023 against the Oklahoma Attorney General. The plaintiff argued that the EDEA violated the state constitution and politicized investment decisions to the detriment of beneficiaries.
The Oklahoma Attorney General’s office has announced its intention to appeal the ruling.
Links:
Energy Discrimination Elimination Act
Oklahoma Attorney General Press Release
U.S.: Republican States Ask Supreme Court to Block EPA Power Plan Rule
On July 23, 2024, led by West Virginia, 25 Republican states sought an emergency stay from the U.S. Supreme Court to prevent the Environmental Protection Agency (EPA) from implementing a new rule aimed at reducing pollution caused by power plants.
The rule, finalized in April 2024, requires coal-burning power plants to scale back their carbon dioxide emissions (more on this here). Specifically, the plants must control 90% of their greenhouse gas emissions by using available control technologies. The rule further provides that plants expected to operate past 2039 have until 2032 to reduce their emissions or face mandatory retirement.
The states’ application to stay the EPA rule previously was before the D.C. Circuit, which rejected the request. The D.C. appellate court found, among other things, that the complainants failed to demonstrate irreparable harm absent granting of the stay given that the compliance deadlines in the rule “do not commence until 2030 or 2032 – years after this case will be resolved.” The court concluded that, to the extent the complainants claimed harm due to the need for long-term planning, “a stay will not help because the risk remains that the distant deadlines in EPA’s rule will come back into force at the end of the case.”
Links:
Petition
EPA Rule
D.C. Circuit Order
This publication is for general information purposes only. It is not intended to provide, nor is it to be used as, a substitute for legal advice. In some jurisdictions it may be considered attorney advertising.