Key highlights from January 2024 in the sustainability space.
1-The European Parliament adopts new law banning greenwashing and misleading product information
On the 17th of January 2024 the EU Parliament adopted a Directive Empowering Consumers for the Green Transition. This vote is seen as a further attempt to protect consumers from misleading marketing practices and to help them make better purchasing choices. The Directive adds a number of problematic marketing habits related to greenwashing to the EU list of banned commercial practices by amending the Unfair Commercial Practices Directive and the Consumer Rights Directive.
The rules aim to make product labelling clearer by banning the use of generic environmental claims like “natural” and “biodegradable” without supporting evidence. It also increases the focus of producers and consumers on the durability of goods. This Directive is expected to work together with the Green Claims Directive.
Interestingly, the Directive bans making claims about carbon offsets having a neutral, reduced or positive impact on the environment. Recital 12 of the revised text explains that claims about carbon offsets will only be allowed if they are based on the actual lifecycle of the product, and not on offsetting mechanisms that are outside the product’s value chain.
2-Biodiversity at the forefront of ESG
Biodiversity is poised to attract attention and investment throughout 2024, entering the political mainstream. In January alone, there have been numerous biodiversity related initiatives around the world. A focus on integrating biodiversity into essential climate action is clearly developing.
Importantly, on the 25th of January 2024, the Global Reporting Initiative (GRI) announced the publication of “GRI 101: Biodiversity 2024”. The new standard supersedes “GRI 304: Biodiversity 2016” and will be effective starting January 2026. This is a major update to the existing standard, facilitating disclosures on the significance and management of biodiversity impacts. The standard is a welcome addition to other biodiversity related regulatory initiatives such as the EU Deforestation Act, the EU Corporate Sustainability Reporting Directive and the TNFD recommendations mentioned above.
This focus on biodiversity is not geographically limited to Europe, with investors welcoming China’s plans for a biodiversity disclosure framework. The National Biodiversity Strategy and Action Plan (NBSAP), published on the 18th of January, focuses on biodiversity mainstreaming, addressing threats to biodiversity loss, sustainable use, sharing of biodiversity and modernising biodiversity governance.
Alongside these biodiversity disclosure regimes, it is expected that there will be increasing attempts throughout the year to give legal rights and political representation to nonhuman animals, species and places, in an attempt to increase the legal protection offered to biodiversity.
3-Inclusion of the nuclear sector into the French Greenfin Label
On the 8th of January 2024, the French Ministry for Ecological Transition and Territorial Cohesion published the new Greenfin Label standards.
Eligibility criteria were revised to include nuclear energy in the activities that the label can cover. More specifically, it allows labelled investors to invest in businesses with over 5% turnover generated by nuclear energy. For these purposes, nuclear energy has been defined as “all economic activities enabling the production of energy from nuclear technology, including fuel cycle and radioactive waste management technologies (in accordance with current European regulations (EURATOM directive 2011/70) or equivalent).”
This is consistent with the EU Taxonomy, as nuclear energy is seen as one of the key tools to reduce fossil fuel dependence to meet the Paris Agreement goals.
4-TNFD announces commitment of Early-Adopters
At the World Economic Forum Meeting in Davos, on the 16th of January 2024, the Taskforce on Nature-related Financial Disclosures (TNFD) announced that 320 organisations from over 46 countries have committed to start making nature-related disclosures based on the TNFD recommendations published in September 2023. Firms absent from this Early-Adopters list say they are working out if, when and how they can make the move towards the TNFD recommendations. The firms who are included in the list will publish their disclosures by 2025 at the latest. This does not necessarily mean that they will cover all 14 disclosures. They are expected to phase-in to the disclosures as was the case with the Task Force on Climate Related Financial Disclosures (TCFD) Recommendations.
These recommendations are intended to provide the tools for the halting and reversal of nature loss under the Global Biodiversity Framework. They provide quantifiable disclosure recommendations relating to nature, a crucial counterpart to the sustainability and climate-related disclosures of the ISSB standards. The ISSB has confirmed that it will look to the work of the TNFD in its future endeavours.
- Content prepared with the help of Defne Fresko Tasci.