September 2023 Newsletter

Please see below for our summary of September’s top ESG stories.

SFDR Public Consultation - September 2023

The EU commission launched a new consultation on the SFDR on 14thSeptember 2023. It focusses on legal certainty, the usability of SFDR regulation, and its ability to help tackle greenwashing. The two-part consultation includes a Public Consultation, aimed at a broad range of stakeholders, and a Targeted Consultation, focussing on stakeholders who are more familiar with the SFDR. Whereas the Public Consultation seeks views of how the SFDR works in practice, the Targeted Consultation will address additional focus areas including whether the SFDR may be reformed into a labelling regime. The EU Commission acknowledged that Articles 8 and 9 are becoming de facto product labels, however, it notes that this usage could lead to risks of greenwashing. LINK

‘Nature risk is financial risk’: Final TNFD framework unveiled at Climate Week NYC

The Taskforce on Nature-related Financial Disclosures (TNFD) published a finalised set of recommendations on 18th September 2023. Structured around the same four pillars (Governance, Strategy, Risk Management and Metrics and Targets) as the TCFD, the TNFD proposes 14 recommended disclosures alongside 14 recommended metrics. Crucially, the Carbon Disclosure Project (CDP) will align its questionnaires, which are completed by c.20,000 companies annually, with the TNFD recommendations. It remains to be seen, however, the extent to which the International Sustainability Standards Board (ISSB) will incorporate TNFD recommendations into its own disclosure policy. See our full write up here. LINK

SDG funding, toxic waste and SMEs: Key research findings from Climate Week NYC

Sunday 17th September saw the beginning of New York Climate Week. A forum for talks and report-sharing, Climate Week saw various new research findings. A report from the Force for Good Initiative highlighted the underfunding of the UN SDGs to the tune of $135trn. The total cost of achieving the SDGs was estimated to have increased over the past year to $134-$176trn today, driven partly by a shortening window to achieve net zero, and high inflation following Russia’s invasion of Ukraine. Elsewhere, a non-profit think tank, Planet Tracker, reported a loophole whereby fossil fuel companies have avoided disclosing pollutants emitted by qualifying certain chemicals in their operations as trade secrets. LINK

Corporate climate action gets a boost with upgrade to target validation and standard setting

The Science Based Targets initiative (SBTi) highlights enhancements to its Target Validation and Standard Setting (TVSS) process for corporate climate action which aim to accelerate the adoption of science-based targets by companies. The updates include a streamlined process, increased automation, and additional support for companies, making it easier and more efficient for them to set science-based targets. The changes also enhance the alignment of targets with the latest climate science. LINK

SEC Fines Deutsche Bank Subsidiary DWS $19 Million Following Greenwashing Investigation

An investigation found that DWS made misleading claims about its environmental and sustainable investment strategies, falsely portraying products as aligned with ESG principles. The SEC found that DWS failed to implement adequate controls to prevent such misrepresentations and failed to integrate fully its ESG integration policy as marketed to clients. The $19m fine which DWS agreed to pay will be the largest ever greenwashing penalty imposed on an asset manager by the SEC. The settlement obliges DWS to disgorge $9.5 million in ill-gotten gains and pay a civil penalty of $9.5 million. LINK

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