7 Jan, 2022

Sustainable Finance Regulatory Update: December 2021


As we take stock of the major developments in the world of ESG that took place in 2021 and pen down New Year resolutions for the year ahead, below is a summary of the main announcements around the globe during the last month of 2021. These include the release of IPSF’s Common Ground Taxonomy, UK’s FCA push for climate-related financial disclosures, and regulatory advancements on the “Social” dimension of ESG from the US and Netherlands. 

International Platform on Sustainable Finance releases the Common Ground Taxonomy

  • The International Platform on Sustainable Finance (IPSF), which was jointly launched by economies including China and the European Union, released the Common Ground Taxonomy focusing on Climate Change Mitigation (CGT). The CGT includes a list of economic activities that are recognized both by China’s and EU’ green taxonomies and have substantial contribution to climate change mitigation. Read more

Financial Conduct Authority publishes rules for climate-related financial disclosures

  • The Financial Conduct Authority (FCA) of United Kingdom published rules requiring asset managers, insurers and FCA-regulated pension providers to make climate-related disclosures consistent with the recommendations of the Taskforce on Climate-related Financial Disclosures (TCFD). Read more

AMF/ACPR report on the monitoring and evaluation of climate-related commitments of financial institutions in France

  • French Regulators AMF and ACPR released a report on the monitoring and evaluation of climate-related commitments of financial institutions. After publishing a pre-report in October 2021 on fossil fuel sectoral policies and initial estimates of the exposure of financial actors to these sectors, the two authorities also examine in this final report shareholder engagement policies and the role of collective initiatives to which financial institutions adhere, in particular for their “net zero” commitments. The difficulties identified in the assessment of asset managers’ exposure to the oil and gas sector are also outlined. Read more

Brazilian Securities Commission Establishes ESG Information Disclosure Criteria for Listed Companies

  • The Brazilian Securities Commission (CVM) issued, on December 22, 2021, CVM Resolution No. 59, which establishes criteria and requirements for the disclosure of information on environmental, social and governance aspects, which was previously a mere deliberation of issuers to attract investors engaged in ESG aspects. Read more

EU’s proposed mandatory Human Rights and Environmental Due Diligence Law further delayed 

  • The European Commission has indefinitely postponed directive on human rights and environmental due diligence (HREDD) – more than 150 days after it was first expected to be published. While the reason for the delay is unclear, 47 civil society organizations have penned an open letter seeking “full transparency on the reasons for the delay and on the decision-making process going forwards.” Read more

EU Taxonomy Update: natural gas and nuclear energy in the spotlight

  • On 31 December, the EU Commission sent to the Platform on Sustainable Finance and to the Member States Expert Group on Sustainable Finance the long-awaited draft Complementary Delegated Act detailing the technical screening criteria for qualifying natural gas and nuclear energy as sustainable in the framework of the EU Taxonomy. Under the proposal, gas and nuclear power generation would be labelled green on the grounds that they are “transitional” activities – defined as those that are not fully sustainable, but which have emissions below industry average and do not lock in polluting assets. Read more

The FSC and the Korea Exchange launch ESG Information Platform

  • Korea’s Financial Services Commission and the Korea Exchange launched an integrated environmental, social and governance (ESG) information platform on December 20, providing a convenient one-stop information service on ESG-related information of listed companies for investors and the public. Read more

Other News

  • European Commission publishes FAQ on Article 8 Disclosures Delegated Act: The EC released Frequently Asked Questions (FAQs) document to provide implementation guidance on the content of the Disclosures Delegated Act under Article 8 of EU Taxonomy Regulation (‘Disclosures Delegated Act’). Read more
  • The EU’s pensions and insurance regulator EIOPA, announced its sustainable finance activities for the coming three years, aimed at ensuring the integration of sustainability risks into the risk management practices of insurers, re-insurers and occupational pension funds. Read more
  • The Netherlands announced plans to introduce mandatory human rights and environmental due diligence (HREDD) legislation at a national level. Read more
  • The United States House Representatives passed the ‘Uyghur Forced Labor Prevention Act’. Read more
  • The Stock Exchange of Hong Kong Limited (HKEX) published amended Corporate Governance Code (the Code) and Listing Rules. The Revised CG Code and Listing Rules came into effect on 1 January 2022. Read more
  • The Singapore Exchange introduced mandatory climate, board diversity disclosures. Read more