Companies involved in carbon farming projects, industrial carbon removal technologies and binding carbon in long-lasting products and materials will be able to have their products or services certified under the first EU-wide voluntary framework for the certification of high-quality carbon removals.

Companies are making encouraging progress with initial climate and sustainability disclosures, especially in sectors like utilities and real estate, demonstrating how capital expenditures associated with the EU Taxonomy can facilitate the transition of key industrial activity.

The world’s first climate-focused guarantee company will leverage an initial US$100 million from the US, UK, Nigeria and private investors to provide guarantees for institutional investors to buy green bonds.

Companies that develop net-zero technology manufacturing projects identified as having a greater potential for decarbonisation will benefit from fast-track permit procedures for construction or expansion and guidance in accessing finance, under new legislation set to be passed at EU level.

Proposed changes to the UK’s ETS are set to place pressure on businesses to reduce their carbon emissions by reinforcing the mechanisms that incentivise emission reductions, mitigate market risks, and promote sustainable practices.

The implementation of sustainability reporting standards for certain sectors and for third-country companies in the EU will be delayed by two years following concerns by industry that there is not enough time to embrace them.

Financial institutions will be required to adhere to minimum standards and reference methodologies for the identification, measurement, management, and monitoring of ESG risks under guidelines for ESG risk management released by the European Banking Authority (EBA).

The body tasked with developing EU financial reporting standards, including sustainability reporting, has developed a set of reporting guidelines for small to medium businesses (SMEs) to help facilitate their access to finance and to standardise sustainability data requests.

The use of generic environmental and climate claims which are not based on fact and supported by evidence will be banned in the EU by 2026 and added to the list of unfair commercial practice, under new legislation agreed by EU legislators.

The US has pledged an extra US$3 billion to the global Green Climate Fund (GCF) as part of its second replenishment to fund projects in climate-vulnerable countries.

The UK government has announced plans to implement a Carbon Border Adjustment Mechanism (CBAM) by 2027 as it seeks to keep the UK on track to meet its carbon reduction efforts.

Companies required to disclose and publish sustainability information under the EU Corporate Sustainability Reporting Directive (CSRD) and the EU Taxonomy Regulation have the opportunity to comment on the European Securities and Markets Authority’s (ESMA) approach to enforcement when the requirements take effect from 1 January 2025.

The EU has released a methodology for calculating carbon emissions embedded in products to be imported into the EU as part of Carbon Border Adjustment Mechanism (CBAM) that came into effect in October 2023. Since October, importers of goods in certain sectors have needed to calculate the amount of carbon emitted during the production of goods being imported into the EU and the newly released methodology will enable them to make the necessary calculations.

The International Sustainability Standards Board (ISSB), the standard-setting body working to establish a globally recognised set of sustainability reporting standards, has published amendments to the US-based Sustainability Accounting Standards Board (SASB) to further align the two sets of standards.

Operators of ESG indexes will be placed under scrutiny this year as the European Securities and Markets Authority (ESMA) launches a surveillance and assessment exercise in cooperation with other EU member state regulatory authorities.

EU legislators have agreed on a new piece of draft legislation that imposes a due diligence obligation on company directors to assess, identify, and evaluate risks, and implement mitigation strategies in respect to human rights and environmental supply chain issues. Negotiators of the EU Parliament and European Council, two key legislative bodies of the EU, reached agreement of the text, making it almost certain that the requirements will become law throughout the EU.

EU member states have reached agreement that will pave the way for ESG rating providers to be authorised and supervised by the European Securities and Markets Authority (ESMA) and comply with transparency requirements, notably in regard to their methodology and sources of information.

Negotiators at the European Council, the EU institution which represents EU member state heads of state, reached agreement in late December for negotiations on the final text of the legislation to begin with other EU institutions, notably the European Parliament.

The COP28 UN Climate Change Conference in Dubai has set the world on a clear path towards decarbonisation, with a pledge to transition away from fossil fuels, reduce global emissions by 43% by 2030, and accelerate emission reductions towards net zero by 2050. Additionally, world leaders have committed to tripling renewable energy capacity and doubling the rate of energy efficiency improvements by 2030.

The US Securities and Exchange Commission (SEC) is expected to release within months details of its proposed rule requiring large corporates to make certain disclosures about their global greenhouse gas emissions and climate-related risks that are likely to have a material impact on their business.

The Basel Committee on Banking Supervision (BCBS), the global body that sets the basis for banking prudential rules globally, has proposed a new set of metrics which could require banks and financial institutions globally to make more detailed climate-related financial risk exposures to market participants. The proposed changes could consider qualitative and quantitative disclosures as to how banks are managing these risks in various sectors and could be mandatory to facilitate comparability across banks.