Australia: Government Codifies Climate Goals
On September 13, 2022, the Australian Climate Change Bill 2022 received assent, enshrining targets of: (i) net zero greenhouse gas emissions (“GHG”) by 2050; and (ii) a 43% reduction in emissions by 2030 compared to 2005 levels.
The new law also requires the Minister for Climate Change and Energy to submit an annual report to Parliament on the country’s progress toward achieving its climate goals. Specifically, the annual climate change report must include:
- progress during the previous year in Australia’s GHG reduction targets;
- international developments during the year that are relevant to addressing climate change;
- general issues for climate change policy, such as climate change adaptation and mitigation policies;
- existing policies’ effectiveness in helping to achieve Australia’s GHG reduction targets and reducing emissions in the sectors covered by these policies;
- the impact of the climate change policies on rural and regional Australia, including the social, employment, and economic benefits being delivered by those policies; and
- risks to Australia from climate change impacts, such as on biodiversity, the economy, or national security.
The Climate Change Bill 2022 also requires the Climate Change Authority, an independent body established in 2011, to advise the government on preparing the annual climate change report. Under the bill, the government is required to consider the Climate Change Authority’s advice and, if it chooses not to accept material aspects of that advice, prepare a written statement of reasons for not accepting it.
Further, the Climate Change (Consequential Amendments) Bill 2022, which was passed on the same date as the Climate Change Bill 2022, provides for incorporating climate change targets into a range of legislation to guide certain statutory bodies, such as the Clean Energy Finance Corporation, Australian Renewable Energy Agency, and Infrastructure Australia.
Climate Change Bill 2022
Climate Change (Consequential Amendments) Bill 2022
U.S.: OCC Hires Chief Climate Risk Officer
On September 12, 2022, the Office of the Comptroller of the Currency (the “OCC”), the U.S. federal banking regulator, announced the appointment of Dr. Yue (Nina) Chen as Chief Climate Risk Officer. She will oversee the OCC’s Office of Climate Risk and report directly to the acting Comptroller of the Currency.
This appointment is part of the OCC’s ongoing effort to integrate climate change concerns into its regulation of the financial sector. Dr. Chen has been tasked with developing a new system to assess climate-driven risks to banks, and figure out how to monitor and manage them. The OCC has not yet provided further detail regarding the new risk monitoring and managing system. While other types of risk analysis are standard for banks, the focus on climate risks has grown. The OCC, for instance, intends to support banks in adequately engaging with these climate risks.
The acting Comptroller of the Currency said in March 2022 that the OCC intended to finalize later this year principles that would support the identification and management of climate-related financial risks. Following a transition period, the OCC will begin its assessment of large banks’ risk-management capabilities. For now, the OCC will continue providing guidance to banks to assist in developing tailored climate-risk profiles and integrating considerations of climate-related financial risks into decision-making processes.
U.S.: Fed Vice Chair Announces Launch of Pilot Climate Risk Guidance Scheme
On September 7, 2022, Michael S. Barr, the Vice Chair for Supervision of the Board of Governors of the Federal Reserve System, announced an initiative to work with the OCC and the Federal Deposit Insurance Corporation to develop guidance for large banks on how to “identify, measure, monitor, and manage the financial risks of climate change.” Barr explained that this would include the launch of a “pilot micro-prudential scenario analysis” exercise - a stress test of specific financial institutions – that would be aimed at improving the assessment of climate-related financial risks for large institutions.
The speech stressed the importance of “promoting a safe and stable financial system,” which is the goal of the proposed guidance. The pilot is expected to launch next year.
Global: UN PRI Publishes Guide on Human Rights Benchmarks for Investors
On August 30, 2022, the UN Principles for Responsible Investment (the “PRI”) published a guide identifying 18 key human rights benchmarks that institutional investors may use in assessing human rights performance in their portfolio companies. For each benchmark, the PRI has set out its general context and objective, methodological approach, sector scope, company scope, geographical coverage, and topical focus.
Of the benchmarks endorsed in this guide, four stand out as having the widest sectoral coverage:
- the Global Child Forum (GCF) Corporate Sector and Children’s Rights Benchmark Series;
- the Racial Justice Scorecard;
- The Times Top 50 Employers for Women; and
- the World Benchmarking Alliance (WBA) Social Transformation Baseline Assessment.
The WBA Social Transformation Baseline Assessment and The Times Top 50 Employers for Women are sector-agnostic, while the GCF Corporate Sector and Children’s Rights Benchmark Series and the Racial Justice Scorecard are sector-specific but have wide sectoral coverage. A helpful summary of the sectoral coverage of all 18 benchmarks can be found in the table at the end of the guide.
UN PRI Guide to Benchmarks