Key news in this edition:
- Australian Securities and Investment Commission publishes report on regulatory interventions in relation to greenwashing
- The EU proposes to ban environmental claims based solely on offsetting strategies
- Canada adopts new reporting requirements on forced labour in supply chains.
Middle east
Abu Dhabi Judicial Department hosted discussions on frameworks for future ESG policies and environmental strategies in the UAE
On 2 May 2023, the Abu Dhabi Judicial Department (‘ADJD’), the judicial branch of the emirate of Abu Dhabi, announced that it had organised a series of workshops and seminars to discuss both national and international legal frameworks for human rights in protecting the environment and combating climate change. These discussions were held in preparation for the 2023 United Nations Climate Change Conference (‘Cop28’), a multinational conference on environmental protection and combating climate change, which will be held in the UAE in November 2023. During the seminars, which were held through March and April 2023, participants discussed the roles state and judicial institutions can play to effectively combat climate change and improve civil and environmental rights. The participants also discussed the role of civil society in spreading awareness of climate change. These discussions come as all eyes are focusing on the UAE’s track record on ESG ahead of its hosting of Cop28. Interest is particularly high around climate change and social issues, in light of the emirates’ dependence on oil extraction and concerns regarding social protections.
North America
US Environmental Protection Agency proposes new Carbon Pollution Standards for fossil fuel-fired power plants
On 11 May 2023, the US Environmental Protection Agency (‘EPA’), a US federal agency responsible for the protection of the environment and human health, proposed new carbon pollution standards for coal and natural gas-fired power plants. The proposal includes establishing emission guidelines for limiting carbon pollution from existing fossil fuel-fired electric generating units and combustion turbines. The new standards, which are largely based on cost-effective control technologies, are expected to reduce carbon dioxide emissions by 617 million metric tons until 2042. The EPA indicates that a reduction in dangerous pollutants will also help the government to protect public health and wellbeing – as it may prevent premature deaths, asthma attacks, absences from education and work, as well as hospital and emergency room visits. The EPA has estimated that if the standards are implemented, in 2030 alone, it may prevent approximately 1,300 premature deaths and over 300,000 asthma attacks. The proposed guidelines were published in the Federal Register on 23 May 2023, and are open for comments from the public until 24 July 2023.
Canada adopts new reporting requirements on forced labour in supply chains
On 11 May 2023, the Senate of Canada enacted Fighting Against Forced Labour and Child Labour in Supply Chains Act (;the Act’), which was initially presented to the Canadian parliament on 22 November 2021. This new bill requires all companies and state bodies involved in manufacturing, importing, distributing or selling goods in Canada, to submit an annual report to the Minister of Public Safety and Emergency Preparedness on the risk of forced labour and child labour in their supply chains. The reports must include an explanation of the company or public institution’s supply chain, including any aspects that are exposed to child labour and forced labour, as well as the mitigation processes that it has adopted to assess and reduce the risks of exposure, such as due diligence and internal processes. The Act states that those who fail to comply, or provide misleading or false statements, will be guilty of an offence punishable on summary conviction and can be fined up to USD 250,000. The Act will come into force on 1 January 2024.
Europe
The EU proposes to ban environmental claims based solely on offsetting strategies
On 11 May 2023, the European Parliament approved draft legislation to improve the accuracy of product labelling in respect of environmental claims. The draft legislation proposes the banning, among others, of the use of general environmental claims in product labelling such as “environmentally friendly”, “natural”, “biodegradable”, “eco”, or “climate neutral”. Notably, the draft legislation also proposes to ban environmental claims that are solely based on carbon offsetting strategies. Carbon offsetting allows companies to compensate their greenhouse gas emissions by purchasing carbon credits to finance carbon removals or emission reductions. The draft legislation also seeks to encourage companies to produce products that are more durable. Negotiations between the EU and its member states regarding the final text of this draft legislation are expected to start soon.
European Union and Republic of Korea launch Green Partnership
On 22 May, the European Union and the Republic of Korea launched a Green Partnership which aims to strengthen cooperation and the sharing of best practices related to climate action, clean energy and environmental protection. The partnership has several strategic priorities, which include building on efforts to reduce carbon and methane emissions, promoting a circular economy, reversing biodiversity loss and supporting a just transition towards renewable energy. The EU and the Republic of Korea have also agreed to promote climate action through multilateral and plurilateral engagements and will act as donors and facilitators of climate action to support the implementation of climate and environment policies in developing countries and emerging economies.
Asia
Indonesia becomes the first Asian national government to issue blue bonds
On 19 May, the Republic of Indonesia issued JPY-denominated blue bonds totaling JPY 20.7 billion (c. USD 148 million) consisting of 7-year and 10-year tenors, through the Samurai Bond market. The two bonds come with a 1.2 percent and a 1.43 percent coupon respectively. The proceeds of the issuance of the bonds will fund investments in ocean conservation and climate change mitigation programs. The issuance made the Indonesian government the first Asian sovereign to issue blue bonds. The blue bond issuance is in line with Indonesia’s Integrated National Financial Framework (‘INFF’), published in August 2022, which highlights Indonesia’s intention to build a “blue finance ecosystem” to scale up private sector investment for sustainable development, including through the development of a platform that links blue economy projects to financial resources. The push would be a concerted effort made by at least seven ministries in the Indonesian government.
Oceania
Australian Securities and Investment Commission publishes report on regulatory interventions in relation to greenwashing
In May 2023, the Australia Securities and Investment Commission (‘ASIC’), the national corporate regulator, published a report on the regulatory interventions it made between July 2022 and March 2023, in relation to greenwashing. Previously in June 2022, the ASIC released guidance note ‘Information Sheet 271’, to help listed issuers and fund managers avoid greenwashing when offering sustainability-related products. The regulator has since stepped up surveillance and enforcement efforts against greenwashing: particularly focusing on the managed funds sector and investment processes of funds; ESG-related disclosures submitted by companies that receive investments from retail investors; and, by investigating allegations of misconduct and breaches.
The ASIC has issued 11 infringement notices against listed companies and managed fund issuers in the nine-month period. It has also commenced a civil penalty proceeding against a fund issuer for allegedly making misleading statements about its superannuation investment options’ sustainable nature and characteristics. This marks the ASIC’s first court proceedings in relation to greenwashing. The ASIC’s surveillance has also reportedly led 23 entities to make changes to documentation and product disclosure statements in relation to their funds, and the regulator has indicated that it will progress surveillance on the superannuation fund sector and the wholesale green bond market in the future.
