Catagory:ESG

1
Europe: UK FCA’s Anti-Greenwashing Rule and Guidance Come Into Force on 31 May 2024
2
Europe: ESMA publishes Guidelines on fund names using ESG or sustainability-related terms
3
Europe: New Funds May Apply for UK Overseas Fund Regime Recognition from September 2024
4
Australia: Federal Court Rules on Greenwashing Civil Penalty Action
5
Australia: Labelling Responsible Investment Products
6
Europe: Agreement on EU ESG Ratings Regulation
7
Australia: Climate-related Financial Disclosure: Exposure Draft Legislation
8
EUROPE: UK’s Overseas Funds Regime Moves a Step Closer with Confirmation that Most EEA UCITS Will Be Deemed Equivalent
9
ICMA’s Code of Conduct for ESG Ratings and Data Products Providers – A Step Towards Consistent Global Standards
10
CFTC Proposes Highly Anticipated Guidance on Voluntary Carbon Credit Derivatives

Europe: UK FCA’s Anti-Greenwashing Rule and Guidance Come Into Force on 31 May 2024

By: Philip Morgan, Andrew Massey, and Omega Modi

An anti-greenwashing rule comes into force in the UK on 31 May 2024. This is the first part of the FCA’s Sustainability Disclosure Requirements.

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Europe: ESMA publishes Guidelines on fund names using ESG or sustainability-related terms

By: Áine Ní Riain, Dr Philipp Riedl, and Ruth Hennessy.

The European Securities and Markets Authority (ESMA) has published its much anticipated Final Report: Guidelines on funds’ names using ESG or sustainability-related terms (Guidelines).

This follows a consultation on the subject between November 2022 and February 2023 and an update provided by ESMA last December.

Acknowledging the significant impact of fund names on investor decision-making, ESMA has determined that a fund with ESG- or sustainability-related terms in its name must apply at least 80% of its investments to meet environmental or social characteristics or sustainable investment objectives.

The Guidelines also apply exclusion criteria for certain terms in fund names:

  • “Environmental”, “impact” and “sustainability”- related terms will require compliance with the exclusions applicable to Paris-aligned Benchmarks; and
  • “Transition, “social” and “governance”- related terms will necessitate compliance with the exclusions applicable to Climate Transition Benchmarks.

Use of “sustainability”-related terms in fund names will require a commitment to “invest meaningfully” in sustainable investments. Similar use of “transition” or “impact” – related terms will require that the relevant fund’s investments used to meet the 80% threshold are on a clear and measurable path to transition or are made with the objective to generate a positive, measurable impact alongside a financial return.

The Guidelines will apply to all EU UCITS and EU AIFs, and it currently seems likely that they will also apply to non-EU funds marketed into the EU (this is a point on which we will be watching developments closely).

The Guidelines are expected to come into force in Q3 or Q4 2024, subject to completion of administrative formalities including a decision by national competent authorities on whether to apply them locally (which is generally expected). Existing funds will have an additional 3-month transition period before compliance becomes mandatory.

Europe: New Funds May Apply for UK Overseas Fund Regime Recognition from September 2024

By: Áine Ní Riain, Aoife Maguire, Gayle Bowen, and Philip Morgan

The Financial Conduct Authority (FCA) has released updated information and, together with HM Treasury, a “roadmap,” on the UK’s Overseas Funds Regime (OFR). It intends to accept applications from new funds (i.e. those not in the Temporary Marketing Permissions Regime (TMPR)) from September 2024. This is a welcome development for managers of new EEA UCITS that are not currently able to access the UK retail market.

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Australia: Federal Court Rules on Greenwashing Civil Penalty Action

By: Lisa Lautier and Dhivya Kalyanakumar

On 28 March 2024, the Federal Court handed down its verdict on the greenwashing civil penalty action brought by the Australian Securities and Investments Commission (ASIC).

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Europe: Agreement on EU ESG Ratings Regulation

By: Hilger von Livonius and Philipp Riedl

On 5 February 2024, the EU Council and the EU Parliament agreed on a provisional text for the ESG Ratings Regulation (the Regulation).

Under the Regulation, in-scope EU providers of ESG ratings will require a licence from, and be supervised by, European Securities and Markets Authority (ESMA).

In-scope ESG ratings will provide an opinion on a company’s or a financial instrument’s sustainability profile, by assessing its exposure to sustainability risk and its impact on society and the environment.

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Australia: Climate-related Financial Disclosure: Exposure Draft Legislation

By: Lisa Lautier and Rebecca Mangos

The Australian Government has released Treasury Laws Amendment Bill 2024: Climate-related financial disclosure, which is draft legislation confirming mandatory reporting of climate-related financial disclosure requirements.

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EUROPE: UK’s Overseas Funds Regime Moves a Step Closer with Confirmation that Most EEA UCITS Will Be Deemed Equivalent

By: Shane Geraghty, Aoife Maguire, Andrew Massey, Philip Morgan, and Courtney Hunter

The UK’s overseas funds regime has been in development for several years and is finally close to becoming a reality. It will create a more streamlined method by which non-UK funds given “equivalence” status may be marketed to UK retail investors.

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ICMA’s Code of Conduct for ESG Ratings and Data Products Providers – A Step Towards Consistent Global Standards

By: Carolyn Sng and Sook Young Yeu

The International Capital Market Association (ICMA) has released a voluntary code of conduct for ESG ratings and data products providers (the Code), reflecting recommendations by the International Organization of Securities Commissions (IOSCO). The Code is intended to be internationally interoperable and may be used by jurisdictions where no local code or regulation is in place.

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CFTC Proposes Highly Anticipated Guidance on Voluntary Carbon Credit Derivatives

By: Cheryl Isaac and Wiley Cole

On 4 December 2023, the Commodity Futures Trading Commission (CFTC) proposed guidance on the listing of voluntary carbon credit (VCC) derivative contracts. The proposal outlines how designated contract markets (DCMs), which are CFTC-registered derivatives exchanges, may list VCC derivative contracts while complying with statutory “Core Principles” set forth in the Commodity Exchange Act (CEA) and applicable CFTC rules and regulations.

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