ESG Policies and Regulations Update May 2023

Here we explore various framework updates in May 2023, as well as highlighting some key updates and releases in the coming months.

Frameworks can help stakeholders understand how an organisation manages risks and opportunities around sustainability issues, and can help demonstrate the sincerity of a company’s actions as well as ensuring good governance to stakeholders, investors and colleagues.

May 2023 Update

The general observed trends within frameworks include a growing focus on disclosure, regarding both data and strategy, as well as an increased engagement of supply chains. Climate impacts are also seeing greater levels of inclusion into regulations and policies.  

Carbon Removal

Launched at the Major Economies Forum on Energy and Climate Change (MEF) in April, Secretary of State for the Department for Energy Security & Net Zero, Grant Shapps MP, confirmed plans for the UK to join President Biden’s global challenge to develop and scale carbon removal technologies.¹  

New Net Zero Council

The government and private sector established the first Net Zero Council and the first meeting took place on 9^th May². The aim is to accelerate collaboration between government, industries and financial institutions on the net zero transition, supporting further carbon reduction amongst businesses across all sectors of the economy.  

Global Warming

In other environmental news, May saw the inevitable – that the world will exceed 1.5 degrees warming by 2027. This is according to a new update issued by the World Meteorological Organization (WMO)³. The level of which was meant to be the target, and not something due to happen in the next few years.  

G7

Outcomes from the G7 summit, which took place 19-21 May, included the seven nations pledging to take concrete steps to drive the transition to clean energy economics of the future through cooperation within and beyond the G7⁴. They announced determination to accelerate achievement of the Sustainable Development Goals, recognising that reducing poverty and tackling the climate and nature crisis go hand in hand. Determination of preserving the planet was also announced by accelerating the decarbonisation of the energy sector and the deployment of renewables, end plastic pollution and protect the oceans.  

The Retained EU Law Bill

The government has announced that all EU laws that were copied over to UK law will expire on 31^st December.⁵

The majority of the regulations have either been superseded, or have UK specific regulations. The EU Emissions Trading Scheme features heavily within this list. However, there are two alterations to F-gas legislation which related to forward requirements and thus shows a potential stepping back of environmental controls in the UK.

Upcoming changes

In June we are expecting to see the ESRS standards defining the rules of the CSRD requirements, as well as the ISSB with new IFRS Sustainability Disclosure Standards, SDR policy as well as the first set of Principal Adverse Impacts (PAI) disclosures from the SFDR.

The SEC’s issuance of a finalised Climate Disclosure rule has been delayed until ‘fall’. 

And into the Autumn, we look forward to new GRI Biodiversity Standards, the GHG Protocol “Land Sector and Guidance” document, and the final version of the TNFD’s framework. The CDP are also looking at releasing new questions on biodiversity, requesting Board level oversight, public commitments, the impact of the value chain, actions to progress the topic, indicators and related publications 

CSRD

Various progressions from the CSRD over the next 18 months are also expected such as the EFRAG proposing a second draft of ESRS to the Commission that will include standards for sectors, non-EU companies, and listed SMEs; voluntary guidance for non-listed SMEs; amendment to the first draft to implement a cap on value chain emissions.

In June next year, we anticipate adoption of the second draft of ESRS and at some point in 2024 the CSDR is due to supersede NFRD. Large companies already subject to NFRD must begin reporting on the fiscal year 2024.

Find out more about Sustainability Reporting and Regulations

Sources

1. UK to join Joe Biden’s Cabron Emissions Removal Scheme – edie
2. https://www.gov.uk/government/news/government-holds-first-net-zero-council
3. World Meteorological Organization
4. G7 Hiroshima Leaders’ Communiqué
5. Brexit: Ministers clash with MPs over plan to scrap EU laws – BBC News

Abbreviations