NOVEMBER 2021: COP26 fails, new ESG standards, and sustainable fashion

Here are some sustainability highlights from the month of November 2021:

COP26 fails – After months of preparation and two weeks of negotiations ending November 12, 197 countries adopted the Glasgow Climate Pact. While consensus should generally be applauded, the 11th hour change in the wording of the agreement, from “phasing out” to “phasing down” coal made it impossible for the summit to reach its initial goals. Beyond diplomatic shortcomings, prospects aren’t encouraging. New projections from Climate Action Tracker reflect that even with a full implementation of COP26 pledges and long-term targets, global temperatures will increase by 2.1°C to 2.6°C, well beyond the 1.5°C Paris Agreement goal.

New ESG standards – Early November, the IFRS Foundation Trustees announced the creation of the International Sustainability Standards Board (ISSB) to help enhance the quality, transparency and comparability of ESG reporting. The new Board is intended to develop standards that will provide a baseline of ESG information about companies’ sustainability-related risks and opportunities which will, in turn, help investors and capital markets make informed decisions.

These standards will build upon two prototypes developed by the TRWG, which focus on climate-related disclosures and general disclosures on other material ESG matters.

A first draft of the standards is expected in the first quarter of 2022 for a formal publication by the end of the year. 

Circularity, a path towards Sustainable fashionGlobal Fashion Agenda and McKinsey & Company released a report on how circularity could be a path towards a sustainable fashion industry. Scaling Circularity, which was published on November 23, sets the stage with a bleak reminder that the clothing and textile industry accounts for approx.. 4% of global CO2eq emissions with 70% of GHG emissions stemming from upstream production. The industry is also responsible for 20% of global wastewater and 35% of all ocean plastic microfiber pollution. Meanwhile, the report points out, “less than 1% of textile waste is recycled into new fibers for clothing.”

There is hope, however, since the authors find that nearly 25% of CO2e emissions could be reduced through circular models, and existing recycling technologies could drive 80% circularity in the industry if they were fully scaled.

Civil courts get jurisdiction over French duty of vigilance law – After almost two years of uncertainty, it appears that things are finally set: the Paris civil court (as opposed to any French commercial court) will have jurisdiction over duty of vigilance litigations.

On November 18, 2021, the Versailles court of appeals ruling in one of the first litigations applying this new law, confirmed that civil courts had jurisdiction over these disputes. This ruling came out approximately a year after a conflicting ruling by the same court.

Aware of this unexpected but regrettable uncertainty, MPs had tried to fill the unintentional gap left by the 2017 law. In July 2021, the French Parliament adopted the Climate and Resilience Bill. Both chambers initially agreed on a provision designating certain civil courts to oversee matters related to the duty of vigilance. The provision, however, was eventually deleted. Months later, French MPs and senators finally agreed to confer jurisdiction to the Paris Civil Court. The new provision can be found at article 34 of the Bill for building confidence in the justice system and will come into force on the day that follows the publication of the adopted Bill.

A roadmap for business & human rights – This month, the UN Working Group on Business & Human Rights published a roadmap for the next decade of business & human rights. Following an assessment of the first 10 years of implementation that was published last June around the 10th anniversary of the UNGPs, the roadmap provides a framework to implement the Working Group’s new targets: a raised ambition, increased pace of implementation, improved coherence and greater impact.

As a very first goal, the Roadmap lists making businesses respect human rights a core element of just transition and sustainable development strategies. Noting that “Respecting people and the planet, by preventing and addressing adverse impacts across business activities and value chains, is the most significant contribution most businesses can make toward sustainable development.”

European directive on corporate due diligence and accountability further delayed – There are growing concerns over this new delay for a regulation that has long been awaited by civil society. In March 2021, the European Parliament had  adopted a resolution with recommendation to the Commission on corporate due diligence and corporate accountability and a draft directive from the Commission was expected in June. The year ends without more clarity on the text or a calendar.

 

October 2021: New sustainability reporting standards, sustainable environment as a human right

Here are some sustainability highlights from the month of October 2021:

New sustainability reporting standards: the Global Reporting Initiative (GRI) issued revised reporting standards on October 5, incorporating human rights and environmental due diligence to prior versions. This update aligns the standards with new and upcoming regulations, including the EU Corporate Sustainability Reporting Directive (CSRD). GRI also updated its Oil & Gas sector standards, which provide guidance on likely material topics companies in the sector should report on. Other sector standards will follow. The new standards will be effective on 1 January 2023 although companies reporting in accordance with GRI Standards are encouraged to adopt them before their effective date.

Sustainable environment as a human right: in a resolution adopted on October 8 2021, the UN Human Rights Council recognized the right to a clean, healthy and sustainable environment as a human right. The Council further called on States to work together to implement this newly recognized right. 

At the outset of the Council’s 48th session, Michelle Bachelet, UN High Commissioner for Human Rights had stated that “a safe, clean, healthy and sustainable environment is the foundation of human life.” She had noted that intensifying pollution, climate change and biodiversity would constitute “the single greatest challenge to human rights in our era.”

Fighting microplastics pollution: in a recent policy report, the OECD raises concerns over the projected trends of plastics production, use and disposal, leading to concentrations of microplastics and related environmental and human health hazards. Focusing on microplastics originating from textile products and vehicle tyres, the October 20 report covers knowledge and techniques currently available to mitigate the leakage of microfibres and tyre particles into the environment. An interesting read for practitioners looking for mitigation best practices, actions and technologies to implement at different stages of products’ lifecycle.

Historic GHG ruling against France: on October 14, a Parisian court ordered France to compensate for its failure to comply with its commitments relating to reducing greenhouse gas emissions. The Court ordered the French Prime Minister and the competent ministers to “take all necessary sectoral measures to compensate for the damage caused by the uncompensated share of greenhouse gas emissions under the first carbon budget.”

The State has until the end of 2022 to take appropriate measures.

Italy called out by UN working group: In a statement following a 10-day country visit, the UN Working Group on Business & Human Rights issued a statement in which it asks Italy to “take urgent steps to resolve in the short-term, while developing plans to address systemic problems in the medium and long-term” including the treatment of migrant workers, which tarnishes the country’s reputation in the field of business and human rights. The statement condemns “the lack of robust judicial and non-judicial mechanisms to seek effective remedy for business related human rights abuses” flagging a lack of information about rights and remedies, inadequate legal aid, judicial delays, and a general lack of trust in approaching remedial institutions. As a result, the statement notes that businesses frequently act with impunity. The statement should inform other countries as to what is – and isn’t – acceptable in terms of framework and practices in this area.

New ILO health and safety code for the textile industry: Also this month, the international labor organization adopted a new code of practice on safety and health in textiles, clothing, leather and footwear industries.  The code includes provisions on building and fire safety, hazardous substances, waste and emissions management among others. It is designed to provide comprehensive and practical advice on how to eliminate, reduce and control all major hazards and risks faced by over 60 million workers globally.

 

September 2021: Lafarge indictment, Ruggie's passing, and California Minimum Wage

Here are some sustainability highlights from the month of September:

Lafarge Indictment: The French Supreme Court issued a noteworthy ruling finding that the French cement conglomerate Lafarge may be indicted for complicity in crimes against humanity. The Paris Court of Appeal had annulled the indictment in November 2019, finding that payments to terrorist groups did not amount to aiding and abetting their criminal plans. The highest Court found that “It is sufficient that [the accomplice] has knowledge that the principal perpetrators are committing or are about to commit such a crime against humanity and that by his aid or assistance he facilitates the preparation or commission thereof.” (para. 67).

Mourning John G. Ruggie: John G. Ruggie, father of the United Nations Guiding Principles on Business and Human Rights passed away on September 16. A large number of tributes were shared online by the Business & Human Rights community.

Focus on Climate Change: On September 22, the SEC’s Division of Corporation Finance issued a sample comment letter regarding disclosure relating to climate change, signaling an increasing focus on this issue.

Minimum Wage in California: California Governor Gavin Newsom signed the Garment Worker Protection Act (Senate Bill 62) on September 28, paving the way for garment workers in California to be paid a minimum hourly wage rather than a piece-rate compensation. For businesses with 26 employees or more, the rate is set at $14/hour. Of particular note, the bill provides for the joint and several liability of Brand guarantors for the full amount of unpaid wages, attorneys’ fees and penalties.

Duty of Vigilance: Representatives of the French government, trade unions, the OECD, civil society and academics met in Paris around Dominique Potier – rapporteur of the 2017 Law on the duty of vigilance – on September 29 to discuss the challenges and opportunities around the awaited European legislation on sustainable corporate governance and accountability. The European Commission has been silent regarding the status of the draft, which was expected before the summer.