By: Abigail Hemnes, George Zornada, Franklin Na, Donela M. Qirjazi and Christine Mikhael
On 20 September 2023, the SEC adopted amendments to the Names Rule (35d-1) that will significantly expand the Names Rule’s applicability and will require all funds to consider whether changes are required to their names, 80% policies, disclosures, compliance tests, and reporting requirements.
Read MoreBy: Gayle Bowen and Áine Ní Riain
On 14 September, the European Commission launched both a public consultation and a targeted consultation on the implementation of the Sustainable Finance Disclosure Regulation (SFDR).
The Commission aims to understand how the SFDR has been implemented since its initial application in March 2021, as well as to gain an understanding of its potential deficiencies, and to explore potential improvements of the European framework for sustainable finance. These consultations form part of the Commission’s comprehensive assessment of the SFDR framework that was first announced by Commissioner Mairéad McGuinness in December 2022. While the public consultation is addressed to a wide range of individuals and organisations with a general knowledge of the SFDR, the targeted consultation is aimed at financial market participants (FMPs), investors, NGOs, public authorities, regulators, and others that are either subject to the provisions of the SFDR or otherwise have an in-depth knowledge or experience in the area of sustainable finance disclosures.
Read MoreBy: Shane Geraghty and Áine Ní Riain
On 6 July, the European Securities and Markets Authority (ESMA) announced it had launched a Common Supervisory Action (CSA) with National Competent Authorities (NCAs) on the integration of sustainability risks and on sustainability-related disclosures in the investment fund sector.
Read MoreBy Jim Bulling and Ben Kneebush
‘Greenwashing’ has been a priority for both the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) for some time now.
ASIC’s approach to ‘greenwashing’ first emerged over a year ago with the publication of Information Sheet 271 (considered previously in our post), and was expanded with the release of Report 763 (considered previously in our post).
On 14 July 2023, the ACCC released its long-awaited draft guidance titled Environmental and Sustainability Claims – Draft Guidance for Business. The aim of this was to aid businesses in avoiding ‘greenwashing’ when making environmental or sustainability claims.
Read MoreBy Jim Bulling and Kai Luck
With increased demand for “ESG friendly” investments (in an ESG investment market on track to exceed US $53 trillion globally by 2025), asset managers, funds management companies, superannuation funds and other investors are actively turning to ESG ratings agencies to guide their decisions.
As it currently stands, there is significant potential for discrepancy in the ratings being produced. This is confusing and potentially misleading for investors and may also divert capital away from its intended direction.
Read MoreBy: Jim Bulling and Kai Luck
On 27 June 2023, the Australian Treasury released a further consultation paper (consultation period open until 21 July 2023) on the introduction of a mandatory climate disclosure framework in Australia.
Under a phased-in approach, by 2027-28, all entities required to lodge financial reports will be subject to the disclosure framework. Larger entities fulfilling two of three criteria (consolidated revenue of AUD$500 million or more, consolidated gross assets of AUD$1 billion or more and 500 or more employees) will be required to lodge reports first, from 2024-25 with smaller entities which satisfy two of three criteria (consolidated revenue of AUD$50 million or more, consolidated gross assets of AUD$25 million or more, and 100 or more employees) having an extra two years to comply.
Read MoreBy Jim Bulling and Grace Hall
The Chair of the Australian Securities and Investments Commission (ASIC), Joe Longo, commented on three key ESG focus areas of the regulator in recent speeches.
In addition to governance, greenwashing and growth in sustainable financing, the Chair discussed the phenomenon of “greenhushing”, where companies decline to make any voluntary climate-related disclosures.
Read MoreBy Matthew Watts and Rebecca Mangos
The Australia Securities and Investment Commission (ASIC) has published a report on its regulatory interventions made between 1 July 2022 and 31 March 2023 in relation to greenwashing concerns (which can be accessed here). The report covers ASIC’s issuance of greenwashing infringement notices during the period and its observed increase in representations made by listed companies, managed funds and superannuation funds on environmental, social and governance credentials.
Read MoreOn 12 April 2023, the German Ministry of Justice (Bundesministerium der Justiz) published a legislative proposal which would broaden the eligible assets for German open-ended real estate funds to include certain renewable energy assets. The proposal mentions both facilities for the generation, transport and storage of electricity, gas or heat from renewable energy sources, and charging stations for electric vehicles and bikes. The proposed rules would, for the first time, allow investment in facilities which are on open land and not directly connected with a building held by the fund. The new rules may also have an impact on non-German real estate funds available to certain German investors. For example, German pension schemes may require that non-German real estate funds share certain features with similar German funds.
By Philip Morgan and Zainab Kuku
Responding to encouragement from both the FCA and IOSCO, HM Treasury has proposed regulating ESG ratings providers in a consultation paper dated 30 March 2023. It primarily aims to improve the transparency of the methodologies and governance objectives adopted by ESG ratings providers, as well as to mitigate risks arising from conflicts of interest where the rating provider also provides other services to the rated entity.
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