Sustainability Assembled
Legal and Regulatory Market Updates Q1 2024
Toolkits and Guidance
In this section, we highlight recently launched sustainability-related toolkits and guidance created by trade associations, standard setters and relevant network organisations.
Green Lease Toolkit published
On 29 January 2024, the Better Business Partnership launched an updated Green Lease Toolkit co-created by and for property owners, occupiers, and legal experts in order to support sustainability across the commercial real estate sector. Key features include legal clauses covering nearly 20 critical areas like building management, circular economy, waste management and renewable energy and specific guidance and drafting notes.
Sustainability-Related Financial Disclosures Toolkit launched for Stock Exchanges
The Sustainable Stock Exchanges Initiative, along with its partners have created a “Sustainability-Related Financial Disclosures Toolkit” to support exchanges and market participants to implement IFRS Sustainability Disclosure Standards. The toolkit, endorsed by Sustainability Disclosure Standards has been developed by the International Sustainability Standards Board (IFRS ISSB), features new “Model Guidance” and a range of publications and includes training resources. Further tools will be added to continue on-going support to stock exchanges and their markets.
The Third GRI and IFRS publish Interoperability considerations for GHG emissions when applying GRI Standards and ISSB Standards
In January 2024, the Global Reporting Initiative (GRI) and the International Financial Reporting Standards (IFRS) jointly published a new analysis and mapping resource: “Interoperability considerations for greenhouse gas (GHG) emissions when applying GRI Standards and ISSB Standards”. Specifically the resource sets out the areas of interoperability between GRI 305: Emissions 2016 and IFRS S2 Climate-related Disclosures that a company should consider when measuring and disclosing Scope 1, Scope 2 and Scope 3 greenhouse gas emissions in accordance with both standards.
According to the GRI and IFRS, the requirements under GRI 305 and IFRS S2 demonstrate a high degree of alignment and alignment can be further enhanced depending on how an organisation applies them. The toolkit does however also indicate areas of divergence (including for example requirements relating to segregation of data and the use of specific metrics for example).
New Guidance from PRI: Corporate Governance, Human Rights
The Principles for Responsible Investment have released two new guides for asset owners:
- Corporate Governance Guide: explains why good corporate governance matters for investors. It highlights key principles, regional variations, and the approaches that asset owners can take to promote good governance within the companies they invest in. These approaches include influencing company policies, strategies, and stewardship practices, along with using proxy voting and engagement strategies. The guide also includes real-world examples; and
- Human Rights Guide: this focuses on how asset owners and advisors can integrate human rights considerations into their investment decisions. It references the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises, and outlines how asset owners can ensure their investment managers understand and implement their human rights commitments.
ISSB issues guidance on standards
On 22 February 2024, the International Sustainability Standards Board (ISSB) released two resources to support jurisdictions in adopting or otherwise using their sustainability standards:
- Preview of the Inaugural Jurisdictional Guide for the adoption or other use of ISSB Standards: the guide sets out information for jurisdictions which are considering incorporating ISSB standards into their legal and regulatory frameworks outlining the different approaches that can be taken. The final version of this guide will be published in H12024; and
- Jurisdictional consultations overview: This report summarises ongoing and completed consultations with various jurisdictions regarding sustainability-related disclosures.
ISDA launches Sustainability-linked Derivative clauses
ISDA has launched a clause library for sustainability-linked derivatives (SLDs), designed to provide standardised drafting options for market participants to use when negotiating SLD transactions with counterparties. A survey in 2022 indicated that there is support for developing the sustainability-linked derivative product which, like the Sustainability-Linked Loans, uses key performance indicators to achieve ESG targets.