Key news in this edition:
- Energy Security Secretary announces plans to strengthen Britain's energy security and independence
- EU proposes common criteria for greenwashing and misleading environmental claims
- Malaysia Stock Exchange launches centralised platform for sustainability reporting
europe and uk
EU proposes common criteria for greenwashing and misleading environmental claims
On 22 March, the EU Commission proposed the Green Claims Directive, a set of common criteria to identify greenwashing and misleading environmental claims. This directive aims to encourage consumers to actively contribute to the green transition - while complementing the EU Commission’s proposed changes to update EU consumer law to increase protections afforded to consumers. The directive sets minimum requirements on the communication and substantiation of environmental claims, before these claims can be used in commercial communications; and, requires third party verification. Microenterprises, described as companies with less than ten employees and an annual turnover below EUR 2 million, are exempt from the requirements of this directive, but remain bound by EU consumer law. The proposed criteria aim to increase transparency and the reliability of information provided to consumers about sustainability. The proposal will be referred to the European Parliament and the European Council for approval.
World Bank approves USD 100 million loan to support Armenia’s green transition
On 24 March, the World Bank approved a EUR 92.3 million (USD 100 million) loan to support Armenia’s Green, Resilient and Inclusive Development Policy Operation (‘DPO’). The DPO aims to support Armenia’s transition towards green, resilient and inclusive development, specifically through fostering climate change mitigation and adaptation, improving the regulatory framework for environmental management, enhancing equity, promoting human capital development, and strengthening the anti-corruption framework and the efficiency of the justice sector. The operation is aligned with Armenia’s 2021-26 development programme, as well as the World Bank’s 2019-23 Country Partnership Framework, which includes reforms to ensure climate screening of public investments and improved social assistance. The loan is offered as an International Bank for Reconstruction (‘IBRD’) flexible loan, one of the World Bank’s leading options for middle-income countries, which offers flexibility for borrowers to customise repayment terms. Armenia will have a five-year grace period, while total repayment is expected in 19 years.
Energy Security Secretary announces plans to strengthen Britain's energy security and independence
On 30 March, Britain’s Secretary of State for Energy Security and Net Zero, the Rt Hon Grant Shapps, announced a series of measures to promote clean and affordable energy sources in Britain, while reducing the country’s reliance on foreign fossil fuels. The measures aim to increase the UK’s energy security and independence, whilst lowering the cost of energy for consumers, and include an investment of GDP 160 million designated for port infrastructure projects, with the aim of supporting floating offshore wind projects. The government also allocated GBP 240 million for new hydrogen production projects and announced its intention to invest over GDP 380 million to boost electric vehicle infrastructure across the UK.
North america
US President Joe Biden uses his first presidential veto in support of ESG
On 20 March, President Joe Biden vetoed the joint resolution H.J.Res.30 which had earlier passed through both houses of the US Congress. H.J.Res.30 was introduced by Andy Barr, a Republican representative for Kentucky, on 7 February 2023, to nullify a US Department of Labour rule, that went into effect on 30 January 2023, allowing retirement fund fiduciaries to voluntarily take ESG factors into consideration in their investments. The joint resolution had previously been passed by the House of Representatives on 28 February 2023 by a margin of 12 votes and had passed through the US Senate on 1 March 2023, receiving 50 supporting votes to 46 in opposition.
NORTH AFRICA
EU launches EUR 624 million cooperation programme with Morocco to support green transition
On 2 March, in an official visit to Morocco, Olivér Várhelyi, the EU’s Neighbourhood and Enlargement Commissioner announced that the EU would be launching new cooperation programmes, worth EUR 624 million in total, to support Morocco’s green transition. The five programmes will address the following issues: reinforcement of social protection, including initiatives to ensure fair access to universal health coverage, unemployment insurance and pensions; supporting the green transition by investing in Morocco’s agriculture and forestry strategies and boosting “green” entrepreneurship; addressing irregular migration by strengthening Morocco’s border management, according to international human rights standards; supporting the reform of the Moroccan public administration through digitalisation, increased transparency and simplification of administrative procedures; and the enhancement of financial inclusion by increasing access to finance for micro, small and medium-sized enterprises (‘MSMEs’) and start-ups.
ASIA
National Pension Fund of Korea to include climate risk considerations when making investment decisions
On 7 March, the Korean Ministry of Health and Welfare announced a decision made by the fund management committee of the National Pension Fund of Korea (‘NPF’), to include climate risk considerations, and industrial safety, among the criteria that should be considered when making investment decisions. This decision was made during the deliberations of the revised draft guidelines for fiduciary responsibilities, as part of the first NPF fund management committee meeting of 2023. In addition, the management committee also changed the composition of the Trustee Responsibility Expert Committee, the committee responsible for deciding on key issues relating to the exercise of rights for listed stocks owned by the NPF and responsible investment. As a result of the revision, three out of the nine people who sit on the committee may be recommended by expert groups based on the expertise needed – whether that is asset management, ESG or expertise from another field. Prior to this change, only subscriber groups could recommend individuals for appointment.
Bangladesh Bank signs green fund deal with over 30 local banks
On 16 March, Bangladesh Bank, the central bank of Bangladesh, introduced a Green Transformation Fund, a refinance fund of BDT 50 billion (USD 467 million), to accelerate the adaptation of green practices and sustainable growth in export-oriented and manufacturing industries. Representatives of 32 local commercial banks, which included state-owned and private banks, attended the meeting and expressed interest in receiving a refinancing facility under this fund. Bangladesh Bank has been a key driver of green financing in the country since 2011, when the bank established policy guidelines for green banking. According to the bank, green financing from banks and other financial institutions in the country, between July and September 2022, equaled BDT 27.79 million (USD 263,852).
Malaysia Stock Exchange launches centralised platform for sustainability reporting
On 22 March, Bursa Malaysia, the stock exchange of Malaysia, announced that it had signed a memorandum of collaboration with UMW Corporation Sdn Bhd, a Malaysia-headquartered engineering company, and Malayan Banking Berhad, a Malaysian bank, to implement a centralised sustainability platform. The platform, which was co-developed by the London Stock Exchange Group and Bursa Malaysia, will serve as a repository for listed companies’ ESG disclosures. The platform aims to help listed companies reinforce their sustainability and accelerate the adoption of the carbon emissions of their supply chains, even if they contain non-listed companies. This is expected to provide greater transparency and consistency in sustainability disclosures, and increase access to green financing products in Malaysia. Education sessions in relation to the functions of the platform will commence in July 2023, to prepare companies for the submission of their mandatory disclosure requirements in March 2024.
