2024 Global Regulatory Update
Recent Developments and Key Themes in ESG-Related Regulations Globally
October 29, 2024
- The establishment of the IFRS Sustainability Disclosure Standards and the EU’s European Sustainability Reporting Standards under the Corporate Sustainability Reporting Directive ushered in a transformative change in corporate sustainability reporting globally. Multiple jurisdictions have adopted the IFRS standards, and how companies adjust to a broader degree of disclosure expectations remains to be seen.
- Investment fund managers must navigate a complex regulatory landscape at the product and manager levels due to policymakers’ anti-greenwashing measures that govern the use of ESG-related terms. Reporting regimes include the U.K. Sustainability Disclosure Requirements and the Anti-Greenwashing Rule, the EU Sustainable Finance Disclosure Regulation, and the European Securities and Markets Authority’s Guidelines on Funds’ Names and apply at the product and manager levels.
- Japan and South Korea have increased the pace of a series of regulatory initiatives designed to improve the market valuation of issuers and to reform corporate governance.
- Multiple countries in the Asia-Pacific region have adopted taxonomies designed to enable investors to assess investments against environmental standards and criteria and allocate capital accordingly. Given the region’s growth and adoption of mechanisms to promote green and transition fixed-income instruments, the taxonomies may noticeably impact the labeled bond market.
- Key issues to watch in ESG-related financial regulation are the growing focus on the green transition; a more prescriptive approach among some regulators to sustainable investment products; supervisory efforts to combat greenwashing; and the post-election tensions arising in certain jurisdictions between expanding regulation and promoting growth.
