Environmental, social, and governance (ESG) investment is on the rise, as more companies are being held to a high regard according to how they meet their ESG goals.
As more countries are putting stricter laws and policies in place, we’re taking a look at some of the newest ESG laws around the globe. The European continent is leading the way by putting a regime for sustainable finance at the forefront of its agenda, but many other countries have added ESG monitoring to their agendas as well.
|Area||ESG Regulations Details|
|EU||Through its Green Deal, announced in 2019, the EU aims to mobilize at least €1 trillion of sustainable investment over the next 10 years.
The EU announced three plans to reach their sustainability goals:
|UK||The UK’s Financial Conduct Authority (FCA) is looking to introduce mandatory climate-related financial disclosure requirements for asset managers and asset owners.|
|Germany||Germany’s Supply Chain Due Diligence Act, which goes into effect in 2023, will require businesses to monitor supply chains for human rights and environmental violations. The legislation will put more focus on ESG initiatives such as:
|USA||The U.S. Securities and Exchange Commission (SEC) monitors advertised claims on ESG approaches and investing guidelines, and measurement and climate change risk. In 2021, the SEC also created a Climate and ESG Task Force in the Division of Enforcement, which aims to identify gaps in public company disclosures of climate risk under current rules.|
|Canada||Canada’s Office of the Superintendent of Financial Institutions (OSFI) has had ongoing engagement with financial institutions on the risks arising from climate change that can affect their safety and soundness. In addition, OSFI’s pilot project launched in 2021 will assess climate risk scenarios.|
|Hong Kong||The Hong Kong Monetary Authority and the agency Green and Sustainable Finance Steering Group has adopted a three-phased approach to promote green and sustainable banking. One initiative is to adopt the common ground taxonomy developed by the IPSF Working Group on Taxonomies co-led by China and the EU.|
|China||The People’s Bank of China are working to build up a green financial system. Green development funds will be established for further investments into sustainable industries.|
|Australia||Australian superannuation (pension) funds are updating their investment strategies with a view to achieving net zero commitments. Australia’s Australian Securities & Investments Commission (ASIC) has been reviewing the market in respect of ESG claims and tackling misrepresentative disclosures.|
|UAE||Last year, the Dubai Financial Services Authority (DFSA) announced the launch of a Task Force on Sustainable Finance in order to support the consistent application and adoption of global regulatory standards relating to sustainable finance. The plan is to launch a DIFC ESG Hub which is intended to be a platform for dialogue and education on sustainability.|
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