ESG Regulations: Global Update December 2023
As ESG regulations rapidly develop, FTI Consulting is providing a quick summary of need to know updates across the globe.
Climate Change Disclosures
Greenwashing
Product Labelling
As ESG regulations rapidly develop, FTI Consulting is providing a quick summary of need-to-know updates from around the globe. This month we cover updates to climate disclosure regulations in the U.S. and the UAE, as well as covering sustainability disclosures in the UK. Read more on our ESG regulations page.
1. The United States Securities and Exchange Commission (SEC) Climate Change Disclosure Rule likely delayed
What do I need to know?
The U.S. SEC had previously indicated that it would release its Climate Change Disclosure rule in the autumn of 2023, but this is now expected in April of 2024. Recently, the rule was emphasized by SEC Chair Gary Gensler as a means of “bringing some consistency and comparability” across existing disclosure frameworks.
What’s next:
- The SEC released its Fall 2023 agenda, which includes an update on the Climate Change Disclosure rule which is currently in the final stage of rulemaking. Based on the most recent update, we expect a final rule or an update in April, if not before.
2. UK Sustainability Disclosure Policy Statement
What do I need to know?
The UK’s Financial Conduct Authority (FCA) published a set of rules outlining labelling systems to avoid greenwashing and set limitations for the use of words such as “sustainable” and “green” in labels for funds and financial products. The Policy Statement outlines four Product Labels categories and criteria to give clarity to consumers and investors.
What’s next?
- The anti-greenwashing rule will go into effect in 31 May 2024 for all firms.
- Firms using product labels will be required to update their labels from 31 July 2024.
- Firms using sustainability terms without product labels will be required to update their language by 2 December 2024.
3. UAE Sustainable Finance Working Group: Principles for the effective management of climate-related financial risks
What do I need to know?
Four financial regulators in the UAE have adopted a set of principles for climate risk management and disclosures which will set minimum standards on the subject for all financial institutions operating in the country. The regulators are the Central Bank of the UAE, the Securities and Commodities Authority, the Dubai Financial Services Authority and the ADGM Financial Services Regulatory Authority. The principles were developed by the UAE Sustainable Finance Working Group, of which all four regulators are members, and are largely in line with the TCFD framework.
What’s next?
- Each individual regulator will decide how it will apply the principles to regulated companies and send out guidance.
4. The Monetary Authority of Singapore (MAS) launches Singapore-Asia Taxonomy for Sustainable Finance
What do I need to know?
Singapore’s central bank and financial regulatory body announced a sustainable finance taxonomy that classifies and defines sustainable economic activities to mitigate greenwashing. The taxonomy is the first to include a ‘transition’ category, where activities that are not currently on the 1.5 °C pathway but have clear dates towards a green transition, are marked as Amber in a traffic light system. Green activities are broadly aligned with EU taxonomy criteria with a few regional adaptations, and Red activities are ineligible.
What’s next?
MAS is now mapping the Singapore-Asia Taxonomy to the International Platform for Sustainable Finance (IPSF)’s Common Ground Taxonomy (CGT) to improve operations across global taxonomies, including the EU Taxonomy and People Bank of China’s (PBOC) Green Bond Endorsed Project Catalogue.
Contact us: For further information on how your business can better navigate emerging ESG regulations, please contact Ben Herskowitz, Senior Managing Director, U.S. at [email protected]
The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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