Daily ESG Briefing: Long-awaited update to EU sustainable finance disclosure rules further delayed

The latest developments in sustainable finance

Rules setting out the details of the next phase of reporting under the EU’s Sustainable Finance Disclosure Regulation (SFDR) will not be applied until 1 January 2023, the European Commission has written in a letter to Parliament and Council. This will give investors an extra six months to comply with the rules, marking the second time the implementation of the additional disclosure measures is delayed, after an earlier decision to push the original January 2022 deadline to July 2022. The Commission letter – published by the European Supervisory Authorities (ESAs) today and written by John Berrigan, Director-General of the Commission’s Financial Stability, Financial Services and Capital Markets Union unit, which oversees the bloc’s work on sustainable finance – reiterates plans to bundle all SFDR rules into one single rulebook, but says: “Due to the length and technical detail of those 13 regulatory technical standards, the time of the submissions to the Commission, and to facilitate the smooth implementation of the delegated act by product manufacturers, financial advisers and supervisors, we would defer the date of application of the delegated act to 1 January 2023.”

The CEO of Italian energy giant Enel has questioned the viability of carbon capture as a climate solution. In an interview with CNBC last week, Enel’s boss Francesco Starace said: “The fact is, it doesn't work, it hasn't worked for us so far.” “And there is a rule of thumb here: If a technology doesn't really pick up in five years — and here we're talking about more than five, we're talking about 15, at least — you better drop it.” He added that there are other climate solutions: “Basically, stop emitting carbon.”    

Minimum requirements for sustainable investment products have been published by the Swiss asset management association AMAS and the Swiss Sustainable Finance (SSF), in a bid to prevent greenwashing. The proposed standards include an attempt to define various sustainable investment approaches “more precisely” and set minimum requirements for their implementation. The new guidance also seeks to set a baseline when it comes to transparency, including stipulating the need to inform investors about approaches taken by products and which ones are best suited to their objectives.     

A group of bipartisan US lawmakers have reportedly written to the country’s powerful securities regulator, the SEC, urging it to assess whether Unilever, the parent company of Ben & Jerry’s, should amend its regulatory filings to reflect the potential risks posed to investors by the ice-cream makers boycott of Israeli settlements in occupied territories.    

Just over a third (35%) of senior executives have “fully” considered the “ethical and legal implications relating to ESG disclosure and commitments,” according to research by legal consultant DWF.  In the survey of 480 senior executives, 47% said they will limit their disclosures to those that they believe will not create any legal issues, while almost the same number (48%) were “still thinking about how to best handle ESG disclosures from a legal perspective”. Over half of firms (59%) polled also revealed that they have lost business as a result of ESG issues.    

A new 10-year roadmap for the United Nations Guiding Principles on Business and Human Rights – also known as the ‘Ruggie Principles’ – has highlighted the need to “mainstream the understanding” that its principles should provide the “core content of the S in ESG.” Eight focus areas outlined in the document, which has been published today and includes the goal of seizing “financial sector ESG momentum and align the S in ESG with the UNGPs”.    

PwC has warned that work is needed to ensure that the “green jobs transition doesn’t exacerbate regional inequalities” in the UK, after its newly launched Green Jobs Barometer has indicated that the Northeast of England, Northern Ireland and Wales are the lowest ranking regions when it comes to green jobs. Scotland and London, by contrast, are the top performers. “Left unchecked, green employment will grow in the most fertile spots, but not necessarily where they’re needed most,” said Kevin Ellis, Chairman and Senior Partner at PwC.