Key news in this edition:
- European Council adopts regulation on European green bonds.
- US government to invest USD 7 billion in clean hydrogen.
- Saudi Arabia announces Greenhouse Gas Credits Scheme to address climate change.
Europe
European Council adopts regulation on European green bonds
On 23 October, the European Council (‘the Council’) adopted regulation on European green bonds and optional disclosures for bonds marketed as environmentally sustainable and for sustainability-linked bonds. The new regulation sets up the requirements for bond issuers that plan to designate their environmentally sustainable bonds as a European green bond. The Council indicated that the regulation aims to assist the EU’s strategy on financing sustainable growth, transition to a climate-neutral and resource-efficient economy, and prevent greenwashing. The regulation also outlines some voluntary disclosure requirements for sustainability-linked bonds and other environmentally sustainable bonds issued in the EU. All proceeds from European green bonds have to be invested in economic activities in line with the EU taxonomy for sustainable activities.
Asia Pacific
Uzbekistan places GBP 286 million in green bonds on the LSE
On 6 October, the Uzbekistan Ministry of Economy and Finance announced that it has placed ‘green’ bonds worth UZS 4.25 trillion (GBP 286 million) on the London Stock Exchange (‘LSE’), the first in its history and reportedly the first among Commonwealth of Independent States countries. The Uzbek government stated that the proceeds will be used to finance green projects, including efforts to conserve water, develop rail and metro transport systems, and plant forests to combat soil erosion and water siltation. Uzbekistan partnered with the United Nations Development Programme to select the projects eligible for funding.
Prime Ministers of Singapore and Malaysia pledge joint commitment towards renewable energy
On 30 October, the Prime Minister Lee Hsien Loong (‘PM Loong’) of Singapore and Prime Minister Dato' Seri Anwar Ibrahim (‘PM Ibrahim’) of Malaysia presented a joint statement confirming their commitment to increased bilateral cooperation between their respective countries. PM Loong and PM Ibrahim stressed the importance of renewable energy in reaching their de-carbonisation goals and in co-developing infrastructure to allow for renewable electricity trading across their borders. Both leaders expressed an interest in sharing renewable energy technologies, such as carbon capture and storage, as well as the possibility of importing renewable energy to Singapore from hydropower stations in Malaysia’s Sarawak state.
New Zealand’s regulator updates guidance on climate-related scenario analysis
On 31 October, New Zealand’s Financial Markets Authority published an information sheet outlining compliance expectations for scenario analysis disclosures within the climate-related disclosures regime. The guidance is aimed at individuals involved in environmental reporting and the update mainly provides clearer guidelines on the quantification of scenarios, such as the price of carbon tax or subsidies and estimates of economic damage from an extreme weather event.
A visual aid has also been added to the information sheet to illustrate the connections and correlations between strategy disclosures in the NZ Climate Standard 1 disclosure framework and how they interrelate or support each other. The NZ Climate Standard 1 disclosure framework has been implemented since January 2023. Under this framework, the climate reporting entities have to keep proper relevant records, prepare climate statements and lodge them with relevant government authorities.
Singapore issues guidance for finance institutions on net-zero transition planning
On 18 October, the Monetary Authority of Singapore (‘MAS’) issued a set of consultation papers to licensed entities including banks, insurers and asset managers on transition planning to a net-zero economy.
The MAS proposed guidelines that include engagement with customers and investment companies on the transition risks they faced. Instead of indiscriminate withdrawal of credit or divestment, financial institutions are urged to work closely with them to implement measures for carbon footprint reduction. Secondly, licensed entities should take a multi-year approach in assessing climate-related risk and the sustainability of their business models. The MAS also expects financial institutions to disclose meaningful data regarding their approach to addressing climate-related risk for the better understanding of shareholders. Licensed entities in Singapore have until 18 December to submit comments on the consultation papers.
Middle East
Saudi Arabia announces Greenhouse Gas Credits Scheme to address climate change
On 15 October, Saudi Arabia’s Clean Development Mechanism Designated National Authority announced the launch of its Greenhous Gas Crediting and Offsetting Mechanism (‘GCOM’), a domestic market tool which aims to reduce greenhouse gas emissions and promote sustainability.
The GCOM, which was launched at the United Nation’s MENA Climate Week, seeks to incentivise emissions reduction among national companies and entities and to mobilise finance across sectors to fund various social, environmental and economic projects.
Participation in the scheme will be voluntary and will cover a wide range of greenhouse gas and non-greenhouse gas metrics for both public and private sectors. The GCOM contributes to Saudi Arabia’s ultimate target of achieving net-zero emissions by 2060.
North America
US government to invest USD 7 billion in clean hydrogen
On 13 October 2023, the Biden-Harris US administration (‘the US Government’) announced that it will invest USD 7 billion in seven regional, clean, hydrogen hubs. With this investment, the US Government predicts that the seven hubs will attract over USD 40 million in private investment, creating thousands of jobs, and substantially bolstering decarbonisation efforts.
The US Government expects that, collectively, the seven hubs will produce over three million metric tons of clean hydrogen per year, which would comprise one third of the 2030 US clean hydrogen production goal. Additionally, the US Government estimates that seven hubs will collectively eliminate 25 million metric tons of carbon dioxide emissions from end uses each year.
South America
Brazil’s governmental efforts to combat a drought in the Amazonas state
The Brazilian federal government has allocated BRL 628 million (GBP 103 million) to combat the worst drought in the history of the Amazonas state. Funds will be used for firefighting, conservation efforts, and emergency healthcare in affected regions. There are plans to provide financial support to families through a programme named Programa Bolsa Verde, which had been suspended in 2017, offering quarterly payments of BRL 600 (GBP 98) to families living in conservation areas. Various Brazilian ministries are contributing with funds for firefighting equipment and healthcare, and BRL 100 million (GBP 16 million) from approved parliamentary amendments will be advanced for relief efforts.
Switzerland and the US donate GBP 7.3 million to the Amazon Fund
Brazil’s National Bank for Economic and Social Development approved new donations for the Amazon Fund from Switzerland and the US, totaling approximately BRL 45 million (GBP 7.3 million). The donations are the first part of an announced BRL 2.5 billion (GBP 410 million) donation. These contributions support Brazil’s efforts to combat deforestation and promote sustainable development. The Amazon Fund, reactivated in January 2023 after a four-year hiatus, has received over BRL 3.4 billion (GBP 558 million) in new donations this year, including pledges from Germany, the UK, the European Union, and Denmark. The fund aids in preventing, monitoring, and combating deforestation, as well as the conservation and sustainable use of the Amazon.
