1 Setting the Scene – Sources and Overview
1.1 What are the main substantive ESG-related regulations?
The main substantive ESG-related regulations are (i) the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088), (ii) the Taxonomy Regulation (Regulation (EU) 2020/852), (iii) the Low Carbon Benchmark Regulation (Regulation (EU) 2019/2089), and (iv) the European Union (Disclosure of Non-Financial and Diversity Information by certain large undertakings and groups) Regulations 2017 as amended, which transposed into Irish law the Non-Financial Reporting Directive (Directive 2014/95/EU).
1.2 What are the main ESG disclosure regulations?
The main ESG disclosure regulations are the Sustainable Finance Disclosure Regulation (Regulation (EU) 2019/2088), the Taxonomy Regulation (Regulation (EU) 2020/852) (including the regulatory technical standards), and the Low Carbon Benchmark Regulation (Regulation (EU) 2019/2089).
1.3 What voluntary ESG disclosures, beyond those required by law or regulation, are customary?
Voluntary disclosures beyond those required by law or regulation include the consideration of principal adverse impacts of investment decisions on sustainability factors. The voluntary regimes that are currently in existence with respect to ESG include the Global Reporting Initiative, the Financial Stability Board's Task Force on Climate-related Financial Disclosures, and the Sustainability Accounting Standards Board. In order to improve disclosure in respect of ESG matters, companies are increasingly looking to issue sustainability reports prepared in accordance with the Global Reporting Initiative's Sustainability Reporting Standards. In addition, certain ESG-related regulations have introduced voluntary disclosures; for example, the Low Carbon Benchmark Regulation has introduced two new categories of low-carbon benchmarks, namely: (i) a climate-transition benchmark; and (ii) a specialised benchmark that brings investment portfolios in line with the Paris Climate Agreement regarding the goal to limit the global temperature increase. The categories are voluntary labels designed to assist investors who are looking to adopt a climate-conscious investment strategy.
1.4 Are there significant laws or regulations currently in the proposal process?
In addition to the ESG disclosure regulations noted above, there are several other legislative proposals in various stages of the EU's legislative process, including the regulatory technical standards for the Taxonomy Regulation, the regulatory technical standards for the Sustainable Finance Disclosure Regulation, the Corporate Sustainability Reporting Directive (the "CSRD"), which will amend and enhance the existing reporting requirements of the Non-Financial Reporting Directive, a delegated regulation supplementing Article 8 of the Taxonomy Regulation (specifying the content methodology and presentation of information to be disclosed), the EU Green Bond Standard (the "EU GBS"), the EU Ecolabel, guidelines on credit ratings, and guidelines on loan origination and monitoring.
1.5 What significant private sector initiatives relating to ESG are there?
There are a number of significant private sector initiatives relating to ESG. In Ireland, the prominent private sector initiative is the Sustainable and Responsible Investment Forum ("SIF Ireland"). SIF Ireland is a national platform to advance responsible investment practices across all asset classes, and it aims to raise awareness of responsible investment nationally, bringing together policymakers, asset owners, asset managers and other investment intermediaries to stimulate and advance the growth of responsible investment practices in Ireland. SIF Ireland also aims to grow the market by increasing understanding, acceptance and demand for sustainable investments.
The Industrial Development Authority (the "IDA") is also working with the financial sector associations on promotion of Ireland as a location for sustainable finance and environmental sustainability and partnering with multinational corporations on green economy initiatives and opportunities. These initiatives and partnerships are a key pillar of the IDA's new strategy "Driving Recovery and Sustainable Growth 2021–2024". The Banking and Payments Federation Ireland has also endorsed the UN Principles for Responsible Banking. In addition, Irish Funds announced the launch of "The Green Team Network", an industry initiative that aims to provide a central forum to facilitate knowledge sharing and collaboration in the field of sustainability across the Irish funds industry.
To see the full article click here
Originally published by ICLG
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
