7 Oct, 2021

Sustainable Finance Regulatory Update: September 2021


With climate change as the highest-priority agenda item at the 2021 UN General Assembly, as well as never-ending momentum behind sustainability policies around the globe, September has turned out to be an eventful month for ESG-related regulatory and reporting enthusiasts. Scroll-down for this month’s round of ESG reporting updates.  

Brazil’s Central Bank announced new rules making it mandatory for banks to incorporate climate change-related risks, such as droughts, floods and forest fires in their stress tests, starting in July 2022. Read more  

US Forum for Sustainable and Responsible Investment (US SIF) has released an updated guide for pension funds ahead of changes to the Department of Labor’s investment rules. The guide outlines five steps for retirement plan sponsors that are considering ESG criteria in the investment strategies for their defined contribution plans. Read more

 UK Competitions and Markets Authority (CMA) issues ‘green claims code’ in effort to curb greenwashing: Starting in 2022, the regulator will launch a review of misleading green claims, with sectors including fashion, transport, the beauty industry and food and drink likely to face particular scrutiny. The green claims code highlights six principles of behaviour companies should adhere to when making claims about the environmental impact of their products. Read more

ECB: Central banks must do their part in fighting global warming 

The European Central Bank (ECB) has issued another warning on climate change and monetary policy. The ECB is currently trying to quantify the consequences of climate change on companies and banks through an economy-wide stress test. The exercise, the results of which will be published soon, draws on a range of climate scenarios developed by the Network for Greening the Financial System (NGFS), a global association of central banks and supervisory authorities advocating a more sustainable financial system. These scenarios are used to assess the potential impact of climate change on roughly four million companies worldwide and nearly 2,000 banks in the euro area. Read more.  

Philippines’ Securities and Exchange Commission (SEC) is planning to make sustainability reporting mandatory for all listed companies by 2023. Read more 

Look out for: Updates coming up in Q4 2021 to the GRI and SASB Standards 

The GRI has announced it will unveil a major update to the GRI Standards on 5th October, with the launch of the updated Universal Standards and the first Sector Standard (Oil and Gas). The updated Universal Standards is intended to enable the highest level of transparency for organizational impacts on the economy, environment, and people. A refocused approach to determining material topics and greater clarity on the reporting principles, requirements and structure will ensure GRI reporting is more globally consistent and comparable. 

Along similar lines, SASB has unveiled plans to release an update to the SASB Standards in Q4 2021, namely – the SASB Codified Standards V2.0, as a successor to V1.0 that was launched in 2018.   

Other news 

  • Chinese President Xi Jinping has said that China would no longer fund the construction of new coal-fired power projects overseas, surprising the world on climate for the second straight year at the United Nations General Assembly. Read more  
  • Malaysia’s stock exchange Bursa Malaysia commits to become a carbon-neutral and a net zero emissions exchange. Read more 
  • Netherlands Authority for Financial Markets Autoriteit Financiële Markten (AFM) publishes report on the implementation of the SFDR by Dutch funds. Read more 
  • The Australian Prudential Regulation Authority (PRA) has published an information paper outlining the purpose, design and scope of the Climate Vulnerability Assessment (CVA). Read more
  • New disclosure standards for Singapore retail ESG funds due in early 2022: Monetary Authority of Singapore (MAS). Read more