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.
| Framework | Update | Date |
|---|---|---|
| ISSB International Sustainability Standards Board | Seeking feedback on priorities for next two-year work plan, which is open until 1 September 2023. There are four potential projects that have been identified: biodiversity, ecosystems and ecosystem services; human capital; human rights; and integration in reporting. | 4 May 2023 |
| TNFD Taskforce for Nature-Related Financial Disclosure | Confirmed launch date for the final nature reporting recommendations as 18 September 2023. | 22 May 2023 |
| SBTi Science-Based Targets initiative | Science-based targets for nature restoration and protection launched for business | May 2023 |
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 9th 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 31st 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
How we can help
We can support you and your organisation navigate the complexities of voluntary and mandatory reporting, as well as the regulatory frameworks around sustainability. Please contact us to speak to one of our experts.
Sources
- UK to join Joe Biden’s Cabron Emissions Removal Scheme – edie
- https://www.gov.uk/government/news/government-holds-first-net-zero-council
- World Meteorological Organization
- G7 Hiroshima Leaders’ Communiqué
- Brexit: Ministers clash with MPs over plan to scrap EU laws – BBC News
Abbreviations
| CDP | (formally) Carbon Disclosure Project |
| CSRD | Corporate Sustainability Reporting Directive |
| EFRAG | European Financial Reporting Advisory Group |
| ESRS | European Sustainability Reporting Standards |
| GHG | Greenhouse Gas |
| GRI | Global Reporting Initiative |
| IFRS | International Financial Reporting Standards |
| ISSB | International Sustainability Standards Board |
| NFRD | Non-Financial Reporting Directive |
| SBTi | Science-Based Targets initiative |
| SDR | Sustainability Disclosure Requirements |
| SFDR | Sustainable Finance Disclosure Regulation |
| TNFD | Taskforce for Nature-Related Financial Disclosure |
