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Clifford Chance

Clifford Chance

Climate, sustainability, green finance and renewables

Future-proofing our clients' businesses

The profile of corporate sustainability has been growing steadily and pressure on businesses is increasing from multiple angles.

Climate change and the transition to a low carbon economy are top of the political agenda. Governments and regulators are responding to the need to mobilise green, climate smart, environmentally friendly financing. These issues present a range of challenges for businesses and innovation and technology are key to success in the future. We help clients to future-proof their businesses and identify risks and opportunities.

Spring 2019 Global environment newsletter

This edition of the Global Environment Newsletter covers the following topics:

EU

  • Single-Use Plastics Directive Adopted by European Parliament:  A ban on most single-use plastics, and new requirements to make manufacturers fund the costs of waste management
  • New Renewable Energy Directive:  Establishes an EU-wide 32% renewables target, and contains a major package of measures to facilitate the sustainable development of renewable energy
  • Revised Energy Performance of Buildings Directive:  New requirements for national strategies, and measures to encourage uptake of technologies

AUSTRALIA

  • Climate Case Lodged Against Australia: Torres Strait Islanders claim infringement of human rights due to climate inaction

BELGIUM

  • Flemish Asbestos Decree Approved In Parliament: New requirements to provide asbestos inventory for buildings and measures to prevent asbestos exposure

THE NETHERLANDS

  • Phasing-out Coal:  Government publishes legislation to accelerate coal phase out, with compensation generally not provided

UK

  • Environment Bill for the Post-Brexit Period:  Draft Bill provides for statute-based environmental principles, long term environmental improvement plans and a new environmental oversight body
  • Major Waste Management Proposals:  UK Government has launched consultations on reforming producer responsibilities, a deposit return scheme for drinks containers, and a plastic packaging tax

Read the Spring 2019 edition of the Global environment newsletter.

SUSTAINABILITY

ESG issues for corporates: risks and opportunities

Sustainability and environmental, social, and governance (ESG) factors have fast risen towards the top of the board agenda — corporates are increasingly aware that a failure to address these matters can be detrimental to their businesses, both financially and reputationally. This briefing examines reporting frameworks, standards and requirements, highlights key issues for boards to consider and action to take to ensure they are doing everything to mitigate ESG risks and seize ESG opportunities. Read more about the ESG issues for corporates.

Sustainability Snapshot: UK FCA signals next steps in its strategy on climate change and green finance

The UK financial services regulator has signalled the steps it intends to take over the next few months in order to meet its strategic objectives on climate change and green finance. Promoting sustainable finance is a key issue for governments, policy makers, regulators and businesses internationally. Given how serious regulators and policy makers appear to be about tackling this issue, industry players should expect to see more climate-related regulatory initiatives in the pipeline in the short to medium term. In this briefing, we outline the four priority areas the FCA has identified and note some of the issues that may arise. Read more about the UK FCA's strategy on climate change and green finance.

Another step towards sustainability: ESMA consultation on short-termism in financial markets

Another step has been taken towards fostering sustainable growth in the EU with the publication by ESMA of a survey on undue short-term pressure on corporations from the financial sector. This development relates to Action Point 10 of the European Commission’s Sustainable Finance Action Plan, which was published in March 2018. Action Point 10 focused on “fostering sustainable corporate governance and attenuating short-termism in capital markets”. In this briefing, we outline the key areas covered by the survey and some of the issues they may raise for asset managers. Read more about the ESMA consultation on short-termism in financial markets.

The EU's sustainable finance action plan: Clarifying duties - what asset managers need to know

The Sustainable Finance Action Plan was adopted by the European Commission in March 2018 as part of the EU’s efforts to connect finance with the specific needs of the European and global economy for the benefit of the planet and society. Several of the 10 high-level Action Points are particularly relevant to asset managers. This briefing focuses on Action Point 7: clarifying institutional investors’ and asset managers’ duties. Read more about the EU's sustainable finance action plan.

Sustainable Infrastructure: The financing challenge

The recently published IPCC special report on the impact of global warming predicts that an unprecedented level of sustainable infrastructure investment will be needed every year until 2050 and beyond to limit global warming to the Paris Climate Agreement’s target of 1.5 °C. Here we explore the challenges facing infrastructure investment and the potential role of the ‘green finance’ market, governments and multi-laterals in achieving this objective. Read more about Sustainable Infrastructure.

GREEN FINANCE

Blue Bonds: Expanding to The Oceans

The blue economy is of growing importance and gaining momentum amongst policymakers across the world.

The earth’s surface is made up of 71% water, and billions of people rely on the oceans for their livelihoods and socioeconomic well‑being. However, the effects of climate change and human activities are destroying the biodiversity of our oceans. Read more about Blue Bonds.

Greater China Region: The Development of The Green Bond Market

The governments and agencies within the greater China region have continued at their respective pace with the advancement of China’s green financing. Over the course of the past five years, regulators in the greater China region, including those of Mainland China and the Special Administrative Regions of Hong Kong and Macau, have announced and implemented a number of policies and guidelines in support of the overall policy direction on green financing. Read more about the development of the the Green Bond Market in the Greater China Region.

Middle East: the evolution of sustainable capital markets

In keeping with global trends which have seen sustainable finance continue to expand to the level where, at the start of 2018, global sustainable investment in five major markets across the globe amounted to roughly USD30.7 trillion (source: Global Sustainable Investment Alliance), the development of sustainable finance, including through the use of green bonds, green sukuk and green loans, continues to evolve across a region more readily associated with its conventional energy resources, oil and gas. Read more about the evolution of sustainable capital markets in the Middle East.

Sustainability linked loans: the star performer of the loan markets?

The growth of sustainability linked loans has been the success story of the European loan markets over the last 12 months. We explore what this means and how the market has developed. Read more about sustainability linked loans.

Sustainable finance: the impact for banks and investment firms

The focus of financial markets regulators and central banks is increasingly falling on climate change and the green economy, and in particular the resilience of the financial system to climate-related risks. Regulators in both the UK and the EU have turned their attention to environmental, social and governance (ESG) factors, their impact on banks' and investment firms' businesses and the role of the financial sector in supporting the transition to a low-carbon and sustainable economy. This is leading to the introduction of a broad range of new ESG-related regulatory requirements for banks and investment firms, including new product disclosure requirements for issuers and product manufacturers, ESG-related policies and disclosure requirements for investment advisers and managers and requirements for firms to assess their exposures to ESG-related financial risks. Read more about sustainable finance.

EU Sustainable finance action plan: status table

The European Commission launched its Action Plan on Financing Sustainable Growth (the Action Plan) in March 2018. The breadth of the Action Plan and the pace of development can make tracking progress on specific points challenging. Our status table aims to draw together the different strands of the Action Plan and reflects progress made to date on each of the 10 action points. Read more about the EU sustainable finance action plan.

From junk bonds to just bonds - the increasing importance of ESG financing in European high yield

In this article, we discuss the emerging demand from investors for Environmental, Social and Governance (ESG) financing and its potential effects for stakeholders in the leveraged finance market. Read more about the increasing importance of ESG financing in European high yield.

The EU Sustainable Action Plan - an update report

As the current European Parliament's term draws to a close it is an opportune time to take stock of the progress made under the Commission's Sustainable Action Plan (the "SAP"). The SAP published in March 2018 is ambitious with three broad aims (1) to reorient capital flows towards a more sustainable economy, (2) to mainstream sustainability in risk management and (3) to foster transparency and long-termism. These aims are scoped in further detail in 10 separate action points. Some of the action points have been more fully realised than others but the progress made in a year is impressive and reflects the EU's commitment to the sustainability and low-carbon transition agenda. Read more about the EU Sustainable Action Plan.

RENEWABLES

Clean Energy for all Europeans – New EU Rules for Renewable Energy and Energy Efficiency

Three acts of the Clean Energy for all Europeans Package, covering renewable energy, energy efficiency and governance, have entered into force at the end of 2018 and will reshape the renewable energy landscape in Europe over the coming years. Read more about the new EU rules for renewable energy and energy efficiency.

Renewable Incentives Guide: Towards a Subsidy-Free World? - new 6th Edition

The 6th edition of our Renewables Incentives Guide covers renewable incentives in 21 major countries. Read the 6th edition of the Renewable Incentives Guide.

CLIMATE CHANGE

COP25: Disappointing lack of progress at Madrid Climate Conference

The COP 25 Madrid International Climate Change Conference has finished with a disappointing lack of progress in key areas of international action on climate change. In particular, agreement on a new carbon trading mechanism remained elusive, giving cause for concern over the timing of a replacement for the Kyoto Protocol mechanisms. Read more about the lack of progress in key areas of international action at the climate conference in Madrid.

European Green Deal - Resetting the Environmental and Climate Change Agenda

The European Commission has published a bold package of climate change and environmental policies with ambitious aims including climate neutrality by 2050, a zero pollution environment, and a halt to biodiversity loss.The 'European Green Deal' Communication contains a wide range of sector-specific and economy-wide measures to be put in place over the next 2 years.

In this briefing we consider some of the key measures proposed. Read more about the European Green Deal.

A vision for the future of the UK financial system: the van Steenis report – how financial services might evolve in response to technological, social and environmental changes

The Bank of England published a report in June 2019 on the future of the UK financial system and what that means for the Bank. The report, authored by Huw van Steenis, examines how financial services might evolve over the medium term in response to technological, social and environmental changes and how the Bank should respond. It sets out an ambitious vision for the future of the UK financial system and the role of the Bank as a leader of global regulatory standards supporting a global economy.

The van Steenis report identifies wide-ranging drivers of change that are shaping the UK economy, from big data and cyber-crime to climate change and an ageing population. It considers the role of finance in this changing environment and how a responsible and resilient finance industry can serve and support these changes. Finally, the report sets out recommendations for the Bank of England, identifying areas where it could take action to enable innovation, empower competition and build resilience in the financial system. Read more on the van Steenis report.

Climate change disputes: an overview on developments and drivers

Climate change has been dominating the public debate for some time now. The increasing number of lawsuits underlines that legal risks relating to climate change are increasing for companies acting in the oil, gas, energy and even the financial sector. This newsletter provides an overview on the developments and drivers in the field of climate change disputes. It highlights which legal challenges companies face due to the impact of climate change on the society in general and the business operations in particular. Read more about climate change disputes.

Climate change litigation: tackling climate change through the courts

Litigation is becoming an important element of efforts to combat climate change. The number of climate change-related actions now stands at about 1,500 worldwide.

This article looks at some of the major trends and cases involving corporations and governments, outlines the challenges to pursuing climate change litigation, and considers what corporations, financial institutions and other businesses need to do next. Read more about tackling climate change through the courts.

Government commits to 'Net Zero by 2050' Target

The UK Government has committed to reducing UK Greenhouse Gas emissions to net zero by 2050, following the recent recommendations of the advisory Climate Change Committee. However, significant uncertainty about detailed implementation remains. Read more about the Government commiting to 'Net Zero by 2050' Target.

UK climate advisor recommends 2050 net zero carbon emissions target

A report by the UK Climate Change Committee has recommended that the UK toughens its climate target to net zero greenhouse gas emissions (GHG) by 2050. Read more about the report.

Climate change and the pressure on coal - latest developments

This briefing explores some of the action being taken by the public and private sectors and the impact on the industry. Read more about the latest developments on climate change and the pressure on coal.

A green and sustainable round up

Against the well-publicised backdrop of the IPCC Report there have been a number of other papers and publications in recent weeks that also continue to shape the regulatory environment on green and sustainable finance. This briefing summarises the TCFD Status Report, the PRA and FCA papers on climate change and green finance and the European Parliament’s proposed amendments to the Commission’s benchmark regulation proposals from June. It also looks briefly, in the context of the Green GB Week, at some of the key UK government’s proposals on green finance and climate change. Read more about the green and sustainable round up.

New energy and carbon reporting rules: UK Clean Growth Strategy

These briefings look at the proposals published as part of the UK Government's new Clean Growth Strategy, which sets out its plans to promote growth using a low carbon economy. the Government's thinking on corporate reporting on carbon and energy. In the UK Clean Growth Strategy - New energy and carbon reporting rules, we consider the Government's thinking on corporate reporting. In the UK Clean Growth Strategy – Drawing The Strands Together, we consider the broad scope of the Clean Growth Strategy and its key elements. In the future UK corporate energy and carbon reporting framework and the end of the CRC scheme, we look at the BEIS response to the consultation on the proposals.

Themes