ESG+ Newsletter – 24 April 2025

UK Government encourages businesses to trade carbon credits and unlock finance 

As part of a drive to establish the UK as a global hub for green finance, the UK Government has launched plans to strengthen voluntary carbon and nature markets, helping to leverage the finance necessary to address the scale of the climate emergency, while simultaneously diversifying revenue streams for British businesses. The update comes under the UK Government’s Plan for Change, which outlines their strategy to drive growth and investment whilst tackling the climate crisis. Carbon and nature markets enable businesses to reduce their emissions by investing in environmentally friendly projects by trading carbon credits. While recognised as an effective decarbonisation tool, these markets – estimated to grow in value to $250 billion by 2050 for carbon markets and $69 billion for nature markets, respectively – are failing to meet their potential due to a lack of clarity among businesses on their utilisation and concerns over their effectiveness. The Government intends to build trust and confidence in carbon and nature credit trading, outlining a set of principles to guide and support businesses on how to use carbon credits that provide environmental benefits. By increasing confidence in these markets, the hope is that British businesses will be positioned to capitalise on potential financial rewards, with the UK positioning itself as the green finance capital of the world.  

Top environmental scores rise at CDP, with A list companies linked to higher average returns

This week, ESG Today highlighted a significant milestone for CDP, the global environmental disclosure platform, which reported a 30% year-over-year increase in companies achieving top environmental scores. Despite the improvement, these high performers still represent just 2% of all disclosing companies. In 2024, a record 22,700 companies submitted disclosures to CDP, an 8% increase from the previous year, demonstrating the enduring qualities of the platform against a backdrop of pressure on ESG and sustainability-related policy. Nearly all received climate scores, while 6,500 received ratings for water security and 1,600 for forest-related impacts. CDP awards ‘A’ scores to companies demonstrating the most comprehensive and transparent reporting, as well as readiness to reduce environmental impacts. In 2024, 515 companies made CDP’s prestigious ‘A List’, up from 396 in 2023. Notably, 462 companies earned an ‘A’ for Climate (up 33%), and 133 scored an ‘A’ for Water Security (up 32%). The number of companies achieving an A for Forests, however, declined slightly from 30 to 26. Regionally, Asia led in the number of ‘A List’ companies for climate and water, while Europe led for forests. Notably, CDP also revealed that companies on the ‘A List’ have historically outperformed their peers, delivering 6% higher average stock returns over the past decade. 

SEC approves U.S.’ first ‘green’ stock exchange

The U.S. Securities and Exchange Commission (SEC) has approved the Green Impact Exchange (GIX), the nation’s first “green” stock exchange, as reported by ESG Dive. Set to begin trading in 2026, GIX will allow companies to list on the exchange if they adopt its sustainability standards, which emphasise commitments to long-term sustainability and accountability mechanisms. GIX focuses on company leadership, stakeholders, goals, strategy, reporting, and alignment related to sustainability, aiming to serve both sustainability-minded investors and companies managing climate risks. Initially, GIX will only allow dual listings with companies already listed on other national exchanges, but it plans to become a primary listing platform in the future. 

While the SEC’s approval does not necessarily signal a broader stance on sustainability—especially as the agency has backed away from its climate risk disclosure rule—it marks a significant step for market-driven sustainability initiatives. Amidst the general political backlash and regulatory rollback of sustainability policies and programs, this move shows that investors and companies are “still pursuing sustainability because it makes financial and competitive sense.”  

EU Omnibus faces continued scrutiny amid NGO complaint 

The EU’s proposed Omnibus reforms to key sustainability laws are drawing both support and criticism, as a leaked Council draft reveals broad backing for the European Commission’s push to simplify rules under the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy Regulation. According to Responsible Investor, the draft supports reducing the scope of CSRD reporting by 80%, applying it only to large firms, while encouraging voluntary reporting from SMEs. It also proposes easing CSDDD obligations, shifting due diligence reviews from annual to every three years and limiting company liability for indirect impacts unless credible information is ignored. Penalties of up to 5% of global turnover are proposed for non-compliance. 

However, Sustainable Views reports that a coalition of seven NGOs has lodged a formal complaint with the European Ombudsman. The NGOs accuse the Commission of rushing the proposal without public consultation or proper environmental and social impact assessments, alleging it favours industry over civil society and weakens key Green Deal protections. The Commission has defended the Omnibus as a competitiveness measure aligned with its growth strategy. A European Parliament vote is expected in October 2025.   

What is next for the NZBA? 

Facing ESG backlash and difficult political and economic headwinds, the Net Zero Banking Alliance (NZBA) faces a reckoning on its changing role in climate leadership, Reuters reports. Recent withdrawals by major U.S., Canadian, Japanese, and Australian financial institutions have reduced its influence, prompting a softening of its 1.5C climate target to a broader alignment with the Paris Agreement, as we reported last week. Some financial leaders argue that rather than focusing on setting targets, the NZBA has recognised the shift to practical implementation, and the complexity of transitioning different sectors at various speeds. Critics, including activists and ethical banks, disagree with this, viewing the strategy reset as simply a dilution of climate goals. With rising energy prices and legal pressures, various banks have lobbied for less stringent regulations rather than stronger climate policies. As the financial sector’s role as a climate leader currently appears more reactive, certain proponents have argued that part of the NZBA’s future role should involve calling for regulatory intervention, rather than simply market action, which would include proactive lobbying to support bold climate policy.