ESG Policies and Regulations Update February 2024
The following details framework updates, and their implications, that occurred in February, as well as highlighting some key updates and releases to be aware of in the coming few years. Frameworks such as those explored in this report can help stakeholders understand how an organisation manages risks and opportunities around such sustainability issues. Often used as a communication tool, it can play an important role in demonstrating the sincerity of a company’s actions as well as ensuring good governance.
Monthly update
February did not see many regulatory or framework updates, rather some undecided news. The CSDDD had multiple delays to EU member state voting, however, Wednesday 28 February saw a failure to secure a qualified majority among member state representatives. Details on the final stance of each member state were not made public, however, the state of play will have to be considered and “will see if it’s possible to address the concerns put forward by member states, in consultation with the European Parliament.”
In other news, the US Security and Exchange Commission’s proposed climate rule is to be voted on Wednesday 6 March, when it will be decided whether to be adopted, and in what form. The outcome of this will affect what public listed US businesses need to report. Furthermore, those organisations that provide products and services to these listed US companies will also be impacted, through the proposed mandated Scope 3 emissions disclosure requiring supplier engagement for carbon data.
| Framework | Update | Date |
|---|---|---|
| ISSB | ISSB is rolling out new and updated resources to support companies in implementing IFRS S1 and IFRS S2 starting in 2024 | 21 Feb 2024 |
Implications
International Sustainability Standards Board
The ISSB is a comprehensive global baseline for high-quality Sustainability Disclosure Standards to meet investor demands for transparent, reliable, sustainability reporting and will contribute to addressing greenwashing.
The ISSB are continuing to update resources to support companies including:
- Update of the SASB Standards, making them more internationally applicable and thereby aiding companies using them to meet IFRS S1 requirements
- Educational material released by IFRA Foundation assisting companies in addressing nature and social aspects of climate related risks and opportunities under IFRS S2
- Progression on the development of a digital taxonomy, which is planned for release in April, facilitating digital consumption of information aligned with ISSB Standards
The GRI and IFRS Foundation have also published a new analysis and mapping resource: interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards. This illustrates the areas of interoperability a company should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 greenhouse gas emissions in accordance with both GRI 305: Emissions and IFRS S2 Climate-related Disclosures. The requirements in GRI 305 and IFRS S2 demonstrate a high degree of alignment. The alignment means companies that already disclose Scope 1, 2 and 3 GHG emissions using the GRI standards will be well positioned to report information about GHG emissions in accordance with IFRS S2.
Horizon Scanning
| Date expected | Framework | Description |
|---|---|---|
| April 2024 | SEC | The SEC has set April as the deadline for its climate disclosure rule, after multiple delays |
| April 2024 | ISSB | Digital Taxonomy release expected |
| May 2024 | UK SDR | Anti-greenwashing rule and guidance comes into force on 31 May |
| June 2024 | TCFD | FCA ESG Rules: TCFD disclosures relating to Financial Year 2023 to be finalised |
| June 2024 | UK SDR | First elements of the new rules (excluding anti-greenwashing rule) to come into force – at the earliest |
| July 2024 | ESRS | Anticipated adoption of the second draft of ESRS |
| July 2024 | UK SDS | Secretary of State for Business and Trade will consider the endorsement of the IFRS Sustainability Disclosure Standards, to create the UK SDS |
| July 2024 | UK SDR | Firms can begin to use labels, with accompanying disclosures from 31 July |
| July 2024 | TPT | TPT’s mandate extended until at least 31 July, in order to support the Transition Finance Market Review |
| December 2024 | UK SDR | Naming and marketing rules come into force, with accompanying disclosures, from 2 December |
| 2024 | CSRD | Due to supersede NFRD in 2024. Large companies already subject to NFRD must begin reporting on the fiscal year 2024. Drafting of sectoral-ESRS. |
| 2024 | CSDDD | Application of CSDDD to certain EU and non-EU companies expected to begin at some stage in 2024 |
| 2024 | GHG Protocol | Expected to release drafts of revised text |
| January 2025 | CSRD | Expected application of CSRD to large EU reporting. Sustainability reporting in 2026 for Financial Year 2025 |
| December 2025 | UK SDR | Ongoing product-level and entity-level disclosures for firms with AUM>£50bn, from 2 December |
| 2025 | GHG Protocol | Final standards and guidance to be released |
| 2025 | UK SDS | Suite of KPIs will need to responded on from 2025 onwards |
| January 2026 | CSRD | Expected application of EU CSRD to listed SMEs (may affect a small number of portfolio companies) |
| December 2026 | UK SDR | Entity-level disclosure rules extended to firms with AUM>£5bn, from 2 December |
| January 2028 | CSRD | Expected application of EU CSRD to non-EU companies, reporting in 2029 for Financial Year 2028 |
Funding
In its Autumn Statement 2022, the UK Government announced a new, long-term commitment to enhance energy efficiency, aiming to drive down costs for households, businesses, and the public sector with the end goal being a 15% reduction in the UK’s final energy consumption from buildings and industry by 2030 compared to 2021 levels.
This commitment took the form of new government funding worth £6 billion being made available from 2025 to 2028. These funds have recently been earmarked, in a government press statement on December 18, 2023, for various schemes aimed at delivering energy efficiency assistance to businesses and homes throughout the United Kingdom. Some of these schemes are new, while some are existing schemes that have been allocated more funding.
| Scheme | Allocation | Description | Years of funding in the next spending review period |
|---|---|---|---|
| Boiler Upgrade Scheme | £1.545bn | Replacing fossil fuel heating systems | 2025/2026 – 2027/2028 |
| Heat Pump Investment Accelerator | £15m | Bringing forward investment in the UK heat pump manufacturing supply chain | 2025/2026 |
| New £400m energy efficiency grant | £400m | For households in England to make changes such as bigger radiators or better insulation | 2025/2026 – 2027/2028 |
| New local authority retrofit scheme | £500m | Supporting low-income and cold homes with measures such as insulation | 2025/2026 – 2027/2028 |
| Social Housing Decarbonisation Fund | £1.253bn | Supporting social homes to be insulated or retrofitted | 2025/2026 – 2027/2028 |
| Green Heat Network Fund | £485m | Helping homes and buildings access low carbon, affordable heating | 2025/2026 – 2027/2028 |
| Heat Network Efficiency Scheme | £45m | Improving around 100 existing heat networks | 2025/2026 – 2027/2028 |
| Public Sector Decarbonisation Scheme | £1.17bn | Providing grants for public sector bodies to fund heat decarbonisation and energy efficiency measures | 2025/2026 – 2027/2028 |
| Industrial Energy Transformation Fund | £225m | Continuing to help businesses transition to a low-carbon future | 2025/2026 – 2027/2028 |
| Industrial Energy Efficiency and decarbonisation support | £410m | Further details to be announced in due course | 2025/2026 – 2027/2028 |
Sustainability abbreviations
CSDDD – Corporate Sustainability Due Diligence Directive
CSRD – Corporate Sustainability Reporting Directive
ESRS – European Sustainability Reporting Standards
GHG Protocol – Greenhouse Gas Protocol
GRI – Global Reporting Initiative
ISSB – International Sustainability Standards Board
TCFD – Taskforce for Climate Related Disclosure
UK SDR – Sustainability Disclosure Requirements
UK SDS – Sustainability Disclosure Standards
