UK: FCA Offers Temporary Flexibility for Firms on Sustainability Disclosure Requirements “Naming and Marketing” Rules
On September 9, 2024, the Financial Conduct Authority (the “FCA”) announced “limited temporary flexibility” until April 2, 2025 for firms to comply with the “naming and marketing” rules for sustainability products under the Sustainability Disclosure Requirements (the “SDR”).
If a UK investment fund (i) has submitted a completed application for approval of amended disclosures by October 1, 2024 and (ii) is currently using one or more of the terms “sustainable”, “sustainability” or “impact” (or a variation thereof) in the name of that fund and is intending either to use a label or to change the name of that fund, then the firm has until April 2, 2025 rather than December 2, 2024 to comply with the “naming and marketing” rules.
The SDR and the investment labels regime were published in November 2023, aiming to protect investors by helping them make more informed decisions and to help maintain the UK’s position as a leading center for asset management and sustainable investment. Throughout 2024, several policies relating to sustainable investment took effect, including anti-greenwashing rules and rules permitting UK-based investment funds to use investment labels on their products. The “naming and marketing” rules were intended to come into effect on December 2, 2024. However, after receiving feedback from firms and trade associations that meeting the higher standards and disclosure obligations of the “naming and marketing” rules and SDR was taking longer than expected, the FCA has decided to offer relief to firms with the attributes described above.
The FCA encourages firms to comply with the “naming and marketing” rules as soon as possible, without waiting until April 2, 2025. Additionally, firms must comply with the anti-greenwashing and investment labels rules.
Link:
FCA Release
Australia: Parliament to Mandate Climate Reporting Starting in 2025
On September 9, 2024, the Australian House of Representatives passed the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, which requires in-scope entities to make mandatory climate-related financial disclosures in their annual reports.
In-scope entities must report on their climate governance; risk-management strategy, including scenario analysis of risks of climate change above 1.5 and 2 degrees Celsius; Scopes 1, 2 and 3 greenhouse gas emissions; the financial effects of climate-related risks, including on the entity’s cash flows, revenues and asset values; and the entity’s performance against climate-related targets. The entity’s climate-related disclosures will need to be audited in accordance with the standards passed by the Australian Auditing and Assurance Standards Board. The law will be implemented in phases based on the entities’ size and reporting structure.
The law must receive the Royal Assent to enter into force. Once received, in-scope entities will be required to make climate-related financial disclosures for the fiscal year commencing after January 1, 2025.
Link:
Australian Treasury
U.S.: EPA Proposes Updates to Sustainable Purchasing Standards for Federal Buyers
On September 9, 2024, the U.S. Environmental Protection Agency (the “EPA”) proposed updates to its Recommendations of Specifications, Standards, and Ecolabels for Federal Purchasing. The recommendations are designed to guide government buyers to properly identify environmentally sustainable products for federal purchasing. They cover 35 product and service categories, ensuring that federal purchases prioritize products that conserve energy, contain recycled content or reduce the use of harmful substances such as PFAS and single-use plastics, while also reducing the purchase of products that make false, misleading or otherwise inaccurate sustainability claims.
The proposed changes follow the introduction of the Sustainable Products and Services procurement rule, finalized in April 2024, which directs federal agencies to prioritize sustainable purchases based on the EPA’s standards. The proposed changes (i) introduce 14 new standards and ecolabels; (ii) expand the recommendations to sectors including healthcare, laboratories, and clothing and uniforms; and (iii) expand the food service ware category to include reusable, certified compostable and recyclable items. Additionally, the EPA proposes removing seven standards that no longer meet the agency’s strengthened eligibility criteria.
The proposed changes are subject to a 32-day comment period, ending on October 15, 2024. Thereafter, the EPA will propose the final rule.
Link:
Federal Register Notice
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