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New climate bill could be Spain’s ‘Article 173’ as government seeks to rebuild investor trust

Hints from new Ecological Transition Minister Ribera

Teresa Ribera, Minister for the Ecological Transition in the new Spanish government, has hinted that the climate change bill her department is drafting would follow key provisions of France’s pioneering Energy Transition Law that was adopted in August 2015.

Ribera left her position as Director of the Institute for Sustainable Development and International Relations (a Paris-based think tank founded by France’s Climate Change Ambassador and Special Representative for COP21 Laurence Tubiana) to lead the new ministry that merged energy and environment under one portfolio.

Giving evidence to a parliamentary committee, Ribera said that the future Spanish Climate Change Act should request listed companies to report on climate-related risks and how they will manage such risks.

“Those requirements were introduced by the pioneering French Energy Transition Law of 2015, which has allowed the French industrial and finance sectors to be at the forefront compared to their European and Western peers,” she said.

The law’s Article 173 specifically requires listed companies to disclose climate financial risks and measures adopted to reduce them. It also requires institutional investors to disclose how they take climate risks into account on a comply or explain basis.

Article 173 built on the Grenelle II Law of 2010, which required companies to undertake independent audits of their ESG disclosures and asset managers to report on how they integrate ESG factors.

Ribera did not specify whether the Spanish climate change bill would cover institutional investors. She said that the Integrated Energy and Climate National Plan will develop the Act once enacted.The Plan should provide certainty and clear expectations for investors as the country sets for a full decarbonisation target of the economy by 2050, in the context of a “just transition”, she said, echoing the terms of the Paris Agreement.

“We have to regain the trust of investors in our country. We need predictable and stable frameworks,” she said.

A previous government’ decision to make retroactive cuts in guaranteed subsidies caused the market to collapse and prompted litigation that is still ongoing.

“We have to regain the trust of investors in our country. We need predictable and stable frameworks”

Ribera also said that the future Act should encourage the Central Bank to produce regular research about the impact of climate change on the economy, including risks and opportunities.

Spain’s Central Bank has been a member of the new Network for Greening the Financial System (NGFS) since April, where it is represented by Deputy Governor Javier Alonso.

As for fossil fuels, Ribera highlighted that it is a priority to address which subsidies are in place and how they can be cancelled. “It is a G20 recommendation that has not been properly implemented so far. We have to serious analyse a plan to phase out such subsidies”.

Another priority for Ribera was to sign the Kigali Amendment to the Montreal Protocol, which aims at phasing out hydrofluorocarbons, greenhouse gases used in commercial refrigeration, heating and air conditioning equipment.