Monthly Updates on Regulatory Developments in Environmental, Social, and Governance Issues within the Financial Services Sector

Monthly Updates on Regulatory Developments in Environmental, Social, and Governance Issues within the Financial Services Sector

The world of sustainable finance is abuzz with activity, as various regulatory bodies and organisations continue to shape the landscape. Here's a roundup of the latest developments:

1. The Financial Conduct Authority (FCA) has finalised the rules and guidance on the Sustainability Disclosure Requirements (SDR) and investment labels, aiming to enhance transparency in the UK's financial sector.
2. The FCA has also updated its webpage for Consultation Paper CP24/8, extending the SDR and investment labels regime to portfolio management.
3. Across the pond, the European Commission has adopted the European Sustainability Reporting Standards (ESRS), a significant step towards standardising sustainability reporting across the EU.
4. The European Banking Authority published a consultation paper on draft implementing technical standards amending Commission Implementing Regulation (EU) 2024/3172.
5. The European Securities and Markets Authority (ESMA) has launched a consultation on the integration of sustainability preferences in the suitability assessment and product governance arrangements.
6. The International Court of Justice (ICJ) issued a judgment affirming states' obligations to protect the climate from greenhouse gas emissions, a landmark ruling in the fight against climate change.
7. The Taskforce on Nature-related Financial Disclosures (TNFD) has published recommendations, aiming to help financial institutions better understand and disclose their exposure to nature-related risks and opportunities.
8. The Transition Plan Taskforce has published the final version of its Disclosure Framework, providing guidance for companies to disclose their transition plans towards a net-zero carbon economy.
9. The European Commission has published its sustainable finance package, which includes the ESRS and the European Green Bond Standard.
10. The Prudential Regulation Authority (PRA) published a consultation paper on enhancing banks' and insurers' approaches to managing climate-related risks.
11. In a significant move, the FCA's multi-firm review of climate reporting in the UK highlighted progress in integrating climate change risks but noted challenges with data availability and reporting complexity.
12. The FCA has proposed new guidance on the anti-greenwashing rule, a move aimed at combating misleading sustainability claims.
13. The Financial Conduct Authority and the Prudential Regulation Authority have launched consultations setting out proposals to introduce a new regulatory framework on diversity and inclusion in the financial sector.
14. The Australian Competition and Consumer Commission authorized the Australian Sustainable Finance Institute to collaborate on sustainable finance initiatives in Australia.
15. The European Securities and Markets Authority (ESMA) has published Progress Reports on greenwashing in the financial sector, providing insights into the extent and nature of greenwashing practices in the EU.
16. The International Sustainability Standards Board (ISSB) has published its inaugural standards, setting a global baseline for sustainability-related disclosures.
17. In a legal development, ClientEarth attempted to judicially review a decision of the Financial Conduct Authority to approve the prospectus of a UK oil and gas company, Ithaca Energy plc.
18. The Office of NSW Anti-Slavery released the first of three reports examining risks in the procurement of electric vehicles and EV charging infrastructure by NSW government agencies.
19. The UK government announced it will not pursue a UK Taxonomy and will focus on the delivery of its commitments on transition plans and sustainability reporting standards.
20. Despite a court ruling in the landmark case Pabai v Commonwealth of Australia that the government does not owe a duty of care to Torres Strait Islanders regarding climate change, the focus on sustainable finance and climate action continues to grow worldwide.

As these developments illustrate, sustainable finance is a rapidly evolving field, with regulatory bodies and organisations working tirelessly to shape a more sustainable future.