ESG Regulations: Global Update July 2023
As ESG regulations rapidly develop, FTI Consulting is providing a quick summary of need to know updates across the globe.
Packaging
Greenwashing Reduction
Alignment with Paris Agreement
ESG Disclosures
Value Chain
This month, we cover the EU ‘s proposal to regulate ESG ratings providers for sustainable investment funds. This month, we cover the UK’s delay to Extended Producer Responsibility legislation, Australia’s guidance for businesses to avoid greenwashing, Hong Kong’s proposed ESG taxonomy, and India’s updated ESG reporting requirements for its top listed companies.
1. Delay to Extended Producer Responsibility
What do I need to know?
The UK Department for Food Environment and Rural Affairs (Defra) has announced that the introduction of new rules requiring producers of packaging to pay for the recycling of their products, due to begin in October 2024, has been delayed until by a year. Defra cited the economic pressures facing industry and consumers as the basis for its decision.
What’s next:
Government will continue to engage with industry on the design of the UK’s extended producer responsibility regime, seeking to reduce costs where possible, ahead of its new launch date of October 2025.
2. Environmental and sustainability claims – Draft guidance for business
What do I need to know?
The Australian Competition and Consumer Commission (ACCC) published draft guidance clarifying how businesses can accurately report environmental and sustainability claims and reduce greenwashing. The eight principles proposed focus on accuracy, clarity, and honesty in claims, and these claims include visual elements, such as using green packaging or environmental imagery to create an impression of sustainability.
What’s next:
The draft guidelines are open for consultation until September 15, 2023.
3. Proposal: Enhancement of Climate-related Disclosures Under the Environmental, Social and Governance Framework
What do I need to know?
The Hong Kong Monetary Authority proposed a three tier ESG framework which sets out a classification and labelling process for financial products and investments based on their environmental sustainability, creating a taxonomy of terminology for green definitions. The first layer maps activities based on industrial classification codes, the second layer identifies metrics, and the third layer proposes technical screening criteria.
What’s next?
The HKMA is now integrating comments from the period that closed on June 30, 2023.
4. Business Responsibility and Sustainability Report Core
What do I need to know?
The Securities and Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Report (BRSR) Core, which consists of key performance indicators under nine ESG attributes that are specific to India as an emerging market. The top 1000 listed companies by market capitalization will be required to make disclosures that align with this new format for FY 2023-24. Additionally, the top 250 listed companies will be expected to make ESG disclosures for their value chains; this would be done on a comply-or-explain basis beginning FY 2024-25.
What’s next?
If companies do not comply with these regulations, there is potential for high financial penalties on each failure and risk of suspension of trading on recognized stock exchanges.
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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