ESG Policies and Regulations Update March 2024

The following details framework updates, and their implications, that occurred in March, 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

After the CSDDD’s multiple delays to EU member state voting in February, progress has been announced for the framework. Additionally, March also saw some long-awaited updates from SEC, after its own delays to the release of its climate disclosure rule.

Implications

SEC’s Climate Disclosure Rule

The US Securities and Exchange commission approved the final climate disclosure rule on 6 March. It will initially apply to only large, listed entities that already post filings through the SEC, which is estimated to be around 10,000 organisations.

The rule mandates public companies to annually report their greenhouse gas emissions and climate-related risks that are likely to have material impact on their business by financial year 2025. Organisations in scope are also required to disclose how they are managing those risks and any related corporate targets.

Corporate Sustainability Due Diligence Directive (CSDDD)

The CSDDD will impose mandatory human rights and environmental due diligence and transition plan requirements on firms in scope.

EU member states have finally reached an agreement to progress the CSDDD. The version approved was a stripped-back version of the Directive; it is likely to be enshrined in law before the European elections later this year. Its scope has been narrowed to organisations with 1,000 or more employees and with an annual turnover of €450m or more.

Science Based Targets initiative (SBTi)

The SBTi is a global body enabling businesses to set ambitious emissions reductions targets in line with the latest climate science.

SBTi have unveiled minor updates to its Corporate Net Zero Standard. This provides clarify on the scope of the Standards and how businesses can certify. This Standard requires businesses to commit to reducing absolute emissions across all scopes by at least 90% by 2050 or sooner. The revisions added updated information on the target validation process, as well as clarifying which businesses can use the Standard as usual and which can use a more lenient pathway for SMEs.

Another change has been the embedding of key points on how businesses can design and implement strategies to go beyond value chain mitigation, engaging in activities that accelerate systems change for the global net-zero transition even if they do not reduce a company’s own value chain emissions.

These updates will affect those organisations considering or about to embark on their net-zero target setting journey.

Horizon Scanning

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. 

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 

SBTi – Science-Based Targets Initiative

TCFD – Taskforce for Climate Related Disclosure 

UK ETS – UK Emissions Trading Scheme

UK SDR – Sustainability Disclosure Requirements  

UK SDS – Sustainability Disclosure Standards