Key news in this edition:
- UK Prime Minister Rishi Sunak announces changes to the UK's net zero policies.
- Hong Kong government announces new retail green bond.
- Malaysian, Indonesian and Thai Stock Exchanges sign a Memorandum of Understanding towards establishing an inter-regional ESG linked ecosystem.
Global
UN Environment Programme publishes first draft of plastic pollutions treaty
On 4 September, the UN Environment Programme published the zero draft text of the international legally binding instrument on plastic pollution, included in the maritime environment (‘Draft Plastics Treaty’). The preparation for the Draft Plastics Treaty has been ongoing since 2 March 2022, the date at which a resolution adopted by the United Nations Environment Assembly instructed the Executive Director of the UN Environment Programme to convene an intergovernmental negotiating committee to develop the treaty. The treaty is expected to address the full lifecycle of plastic, and to adhere to the principles of the Rio Declaration on Environment and Development, a non-binding declaration of intent that focuses on the environment. The Draft Plastics Treaty will be deliberated on the third session of the intergovernmental negotiating committee, set to be held in Nairobi between 13 and 19 November 2023.
Asia
Kazakh president maintains calls for green energy transition during State of Nation Address
On 1 September, Kazakh president Kassym-Jomart Tokayev (‘Tokayev’) delivered his annual state of the nation address. In his address, Tokayev pledged to continue Kazakhstan’s decarbonisation programme by bringing the country’s energy efficiency standards in line with those of the OECD. He also pledged to increase the share of renewable and low-carbon energy sources in the country’s energy mix, with a particular focus on developing new hydroelectric power plants. Tokayev ordered the creation of a new Ministry of Water Resources and Irrigation, dedicated to managing the country’s water resources, a critical issue in light of major droughts that have gripped the region in recent years. He also called upon the Astana International Financial Centre – the country’s flagship business and investment hub – to develop into the country’s main platform for attracting green financing in line with ESG standards.
Hong Kong government announces new retail green bond
On 5 September, the Hong Kong government announced the launch of a new retail green bond with a target size of HKD 15 billion (USD 1.9 billion). The bond has a tenor of three years and offers a minimum interest rate of 4.75 percent, payable every six months. Proceeds from this bond will be used to fund green projects that provide environmental benefits and support the sustainable development of Hong Kong. The subscription period ended on 28 September. It was widely reported in local media in September, that the subscription amount totalled at HKD 30.2 billion (USD 3.85 billion) with 323,000 applications received – based on preliminary estimates from placing institutions. The green bond will start trading on the Hong Kong Stock Exchange from 11 October 2023.
United States
State of California passes new laws on climate-related disclosure
On 14 and 15 September, the state of California passed two new laws concerning climate-related financial risk and corporate disclosure. The first law, SB-253 Climate Corporate Data Accountability Act, will require companies with a total annual revenue of USD 1 billion and above to publicly disclose their greenhouse gas emissions. These companies will also be requested to obtain an assurance engagement of their public disclosure, prepared by an independent third party assurance provider, to prove the degree of confidence in their disclosures. This bill will also create a Climate Accountability and Emissions Disclosure Fund (‘the Fund’), which will be used for the purposes of the bill. The second law, SB-261 Greenhouse gases: climate-related financial risk, will require companies to report their climate-related financial risks and the measures that they have taken to mitigate these risks, by 1 January 2026. Companies will be required to publish this report on their website. These bills still require approval by the Governor of California to be signed into law.
The White House announces new measures to combat climate change
On 21 September, the Biden-Harris administration issued a directive announcing new measures to reduce greenhouse gas emissions. While it is not legally binding, the directive indicates that the federal government should account for the social cost of greenhouse gasses (‘SC-GHG’) in procurement, budgeting and other federal agency decisions. SC-GHG is a metric that measures the estimate cost of damages that greenhouse gas emissions cause society at a specific point in time. Federal agencies can account for SC-GHG in their budgeting processes in a variety of ways, including by assessing discretionary infrastructure grants given to companies, and by using it to calculate the impacts, both positive and negative, of federal programmes – particularly those that already monitor greenhouse gas emissions.
Europe
The EU Council and the EU Parliament reach a provisional agreement to ban generic and offsetting-based green product claims
On 19 September, the European Council and the European Parliament reached a provisional agreement (‘the Provisional Agreement’) on the proposed directive to “empower consumers for the green transition through better protection against unfair practices and better information”, which had been submitted by the European Commission to the European Council on 1 April 2022. The Provisional Agreement aims to counteract unfair commercial practices which prevent consumers from making uninformed decisions on green and circular products. Such misleading practices include greenwashing or false claims regarding the durability of products. Notably, the Provisional Agreement would seek to ban unfair claims based on greenhouse gas emissions offsetting. Therefore, traders will not be able to claim that a product has a neutral or improved environmental impact based on unverified offsetting programmes. The Provisional Agreement would also introduce harmonised labelling regarding the durability of products. The Provisional Agreement now needs to be endorsed and formally adopted by both the EU Council and the EU Parliament, and has a transposition period of 24 months to allow member states to adapt to the changing legislation.
Prime Minister Rishi Sunak announces changes to the UK's net zero policies
In a televised speech on 20 September, UK Prime Minister Rishi Sunak (‘PM Sunak’) announced new proposals to change the UK Government’s policy on achieving its net zero goals for 2050. Among the changes that PM Sunak claimed will be implemented are: delaying the ban of sales for petrol and diesel vehicles in the UK from 2030 until 2035; delaying the ban of fossil fuel heating for homes outside of the gas grid for nine-years until 2035; and, removing the requirements for landlords to ensure their rental properties have a grade above C on their Energy Performance Certificate from 2025 onwards. In his speech, PM Sunak also said that the UK government will not ban new oil and gas exploration and drilling projects in the North Sea. The changes announced by PM Sunak have not yet been codified into new regulations. According to the UK government’s press release, the Energy Security Secretary and the Chancellor of the Exchequer will bring forward new reforms at an undisclosed future date.
