ESG Watch is S-RM’s round-up of the latest regulatory and policy updates relating to ESG from around the globe.
Key news in this edition:
- New Supply Chain Due Diligence Act came into effect in Germany on 1 January 2023
- Singapore appoints its first chief sustainability officer
- New York governor unveils Cap-and-Invest Program.
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New Supply Chain Due Diligence Act came into effect in Germany on 1 January 2023
On 1 January 2023, the Supply Chain Due Diligence Act came into effect in Germany, which aims to strengthen human rights and environmental protection in global supply chains. The new act sets specific due diligence requirements for companies’ supply chains, and starting from 2023 will apply to Germany-based companies with over 3,000 employees. According to the act, these companies will be obliged to identify and assess the risks in their supply chains, and among other requirements, will need to publish a policy statement based on its findings. The act also sets out the type of remedial action and preventative measures that will need to be taken. The Federal Office of Economics and Exports Control, the German central licensing agency in charge of implementing the country’s export control policy, will regulate and monitor the implementation of this act. From 2024, this act will apply to companies with at least 1,000 employees. Failure to comply with the act could see firms face fines of up to 2 percent of their global turnover.
Denmark introduces new building requirements to cut carbon emissions
On 1 January 2023, climate-focused building construction regulations established by the Danish Housing and Planning Authority, a government agency responsible for construction and housing, came into force. The regulations say that all new building construction or renovation projects must undertake a lifecycle analysis prior to the start of construction. This would involve evaluating the building’s environmental impact over the course of its lifespan. As of 1 January 2023, new buildings with a surface area of over 1,000 square meters must not emit over 12 kgs of CO2 per m2 a year. The limit on CO2 emissions over a building’s lifespan is set to be reduced in 2024.
Singapore appoints its first chief sustainability officer
On 1 January 2023, Tuang Liang Lim (‘Liang’) took office as Singapore’s first government chief sustainability officer (‘GCSO’). In his new role as GCSO, Liang will oversee the Ministry of Sustainability and Environment’s Public Sector Sustainability Office and the Sustainability Partnerships Office, which are responsible for coordinating the Singapore Green Plan 2030 (‘SGP’). The SGP, unveiled in February 2021, seeks to strengthen Singapore’s commitments under the United Nations’ 2030 Sustainable Development Agenda and the Paris Agreement, pushing the country towards net-zero emissions.
Hong Kong Government Announces Successful Offering of Green Bonds
On 5 January 2023, the Hong Kong government announced that it raised USD 5.75 billion from a green bond issuance as part of its Government Green Bond Programme (‘GGBP’), a government initiative to promote the development of green finance. The green bonds were denominated in three currencies: US dollars, euro and renminbi. The proceeds will go to the Capital Works Reserve Fund to finance or refinance projects that provide environmental benefits and support the sustainable development of Hong Kong. According to the Hong Kong Monetary Authority, which assists in the implementation of green bond issuance under the GGBP, this marks the largest ESG bond issuance in Asia.
World Economic Forum Signs Partnership with Indonesia on Blue Carbon to Support National Climate Goals
On 19 January 2023, the World Economic Forum (‘WEF’) announced that it had signed a partnership agreement with Indonesia to support ocean conservation and to increase the restoration of blue carbon, the carbon captured and sequestered by ocean ecosystems. Indonesia, which globally contains the largest blue carbon resources, has become the first government to create a partnership on blue carbon with the WEF.
South Africa secures EUR 280 million in grants for green energy transition from the European Union
On 27 January 2023, Team Europe – a multilateral agency comprising of European Union member states, the European Investment Bank, and the European Bank for Reconstruction and Development – announced that it was pledging EUR 280 million (c. USD 301.5 million) in grants in South Africa. This investment is part of the newly-launched Just and Green Recovery Team Europe Initiative, which aims to support the South African government in developing policies to meet its goal for socio-economic reforms and to better combat climate change, as well as facilitate investments in transitioning to green energy sources.
New York Governor Unveils Cap-and-Invest Program
On 10 January, New York Governor Kathy Hochul announced a Cap-and-Invest Program aiming to both reduce emissions and fund sustainability programmes in the state. Under the envisioned new programme, large-scale greenhouse gas emitters and distributors of heating and transportation fuels will be required to purchase allowances for the emissions they produce. A cap will be placed on the amount of greenhouse gases permitted to be emitted in the state, which will be reduced every year, on a trajectory aligned with the New York Climate Act. Passed into law in 2019, the New York Climate Act requires the government of New York to reduce economy-wide greenhouse gases emissions by 40 percent by 2030 and at least 85 percent by 2050, in comparison to its 1990 levels. The proceeds accrued from the purchase of allowances will be reinvested in emissions reduction initiatives and support for vulnerable communities facing rising energy prices. The programme is currently being developed by the Department of Environmental Conservation, a local governmental department, and the New York State Energy Research and Development Authority, a public benefit corporation focusing on energy solutions and environmental protection.