While self-serving politicians in the U.S. continue blacklisting financial institutions and suing government agencies for attempting to hold corporate polluters accountable, America’s international peers and competitors are pushing ahead on responsible investing.
China, the most polluting country in the world, has been busy in 2024 establishing climate reporting regulations and legislation to create a more supportive environment for investments in green technologies. Canada introduced climate disclosure requirements years ago and is moving on to more graduated policies that support the infrastructure around sustainable investments. The European Commission just this month welcomed new climate reporting guidance to better align with international metrics. Meanwhile, the U.S. Securities and Exchange Commision (SEC) has issued a stay on its own climate risk disclosure rule after nine lawsuits were filed against it and states like Oklahoma and Texas are losing hundreds of millions in taxpayer dollars for banning responsible investing.
Below is a round up of these latest developments on responsible investing from America’s global peers.
- European Union: In May, the European Commission welcomed new reporting guidelines to align European reporting standards with global metrics. In January 2023 the European Union’s Corporate Sustainability Reporting Directive (CSRD) entered into force, establishing new rules to ensure that “investors and other stakeholders have access to the information they need to assess the impact of companies on people and the environment and for investors to assess financial risks and opportunities arising from climate change and other sustainability issues.”
- China: China announced in February 2024 it would establish requirements for more than 400 companies to publish sustainability reports by 2026. Since then, several Chinese regulators, including the People’s Bank of China, the National Financial Regulatory Administration, and the China Securities Regulatory Commission, have published recommendations on the development of green and low-carbon economy policy.
- Canada: In April 2022, Canada introduced mandatory climate disclosures for banks and insurance companies set to take effect in the beginning of 2024. In April 2024, the government’s Sustainable Jobs Act, which supports investments in and a transition to a lower-carbon economy, moved forward to the Senate and is expected to pass this year.
- United Kingdom: In November 2023, the United Kingdom’s Financial Conduct Authority (FCA) finalized anti-greenwashing guidelines improving transparency of investment products. The Sustainability Disclosure Requirements Rule goes into effect in May 2024 and ensures the sustainability characteristics of FCA-authorized firms are consistent and not misleading to consumers, allowing consumers to make better informed investing decisions.
- United Kingdom: Currently, the FCA is considering a proposal to expand the Sustainability Disclosure Requirements to standardize reporting for portfolio managers for UK fund managers. The comment submission period closes June 14, 2024.
- Hong Kong: In June 2023, the Stock Exchange of Hong Kong Limited (SEHK) presented final considerations for improving sustainability disclosures under its current ESG framework. These recommendations were developed using the International Financial Reporting Standards IFRS S2 Climate-related Disclosures. The final proposal will go into effect beginning in 2025 and will be rolled out in multiple phases.
- Nigeria: The Financial Reporting Council of Nigeria released a roadmap report in March 2024 outlining Nigeria’s adoption of the International Sustainability Standard Board’s (ISSB) reporting standards.
- Brazil: In October 2023, the Brazilian Ministry of Finance and the Comissão de Valores Mobiliários (CVM) announced the adoption of the ISSB reporting standards into the country’s regulatory framework. The standards will be incorporated for “voluntary use” this year and will go into effect for “mandatory use” beginning in 2026.
