Sustainability and ESG Legislations: What You Need to Know

John Miller • April 1, 2021

This post provides an overview of the major sustainability and ESG legislations in the United States, the European Union, the United Kingdom, and Asia Pacific. It also discusses the implications of these legislations for businesses and investors.

Why ESG and Sustainability Regulations Matters?


Organizations must understand and comply with the specific ESG reporting obligations in each jurisdiction, especially when operating across multiple regions. With a multitude of regulations, directives, acts, frameworks, and standards, each with distinct requirements, scope, and implementation dates, staying informed about the mandatory disclosures for each organization can be challenging.


Actionable Insights


  • EU Focus: Prepare for the increasing number of reporting requirements as the European Green Deal reinforces ESG reporting standards. The Corporate Sustainability Reporting Directive (CSRD) and Sustainable Finance Disclosure Regulation (SFDR) are already in effect, with the Corporate Sustainability Due Diligence Directive (CS3D) forthcoming.
  • UK Consideration: Evaluate the additional disclosures mandated by the UK Financial Conduct Authority's (FCA) Sustainable Disclosure Requirements (SDR). Organizations within the scope must include double materiality disclosures, in alignment with the Taskforce on Climate-related Financial Disclosures (TCFD) requirements that are already in force.
  • Scope 3 Reporting: Anticipate the likely requirement for Scope 3 reporting under the SEC climate proposal. Previously, many US and international companies only reported Scope 1 and 2 emissions and may need to expand their measurement to encompass the full scope of their greenhouse gas (GHG) emissions.
  • APAC Awareness: Assess the diverse ESG disclosure requirements across the APAC region. Organizations should familiarize themselves with country-specific ESG requirements due to the absence of a single regulatory body.

     

Key Regulations:


  • U.S. Inflation Reduction Act (IRA)
  • U.S. Securities Exchange Commission (SEC) climate disclosure rules
  • U.S. Employee Retirement Income Security Act (ERISA)
  • EU Corporate Sustainability Reporting Directive (CSRD)
  • EU Sustainable Finance Disclosure Regulation (SFDR)
  • EU Taxonomy
  • EU Corporate Sustainability Due Diligence Directive (CS3D/CSDDD/CSDD Directive)
  • EU Green Claims Directive
  • UK Green Taxonomy
  • UK Sustainable Disclosure Requirements (SDR)
  • UK Financial Conduct Authority (FCA)
  • Asian Pacific (APAC) Regulations
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