Europe: Danone Sued Over Plastic Use Under Landmark Law
On January 9, 2023, three environmental groups sued Danone under the French Corporate Duty of Vigilance Law. This law requires corporations to implement a “vigilance plan” that identifies risks and prevents serious human rights violations and environmental damage resulting directly or indirectly from a company’s activities. The lawsuit claims that Danone has not met its duty under the law because its vigilance plan does not address plastic consumption. Danone denies the accusation, stating that it is working to reduce plastic use and increase reuse and recycling.
In 2021, Danone used 750,000 metric tons of plastic. The company has pledged to use only reusable, recyclable or compostable plastic packaging by 2025, but a recent report from the Ellen MacArthur Foundation found that Danone is not on track to reach that target. The environmental groups request the judge in the case to compel Danone to release a new vigilance plan within six months which would include a phase-out of plastics. If the company refuses, the groups request a damages award of EUR 100,000 per day without the updated plan.
ClientEarth press release
Global: U.S.-Japanese Task Force to Focus on Human Rights in Global Supply Chains
On January 6, 2023, U.S. Trade Representative Katherine Tai and Japan's Minister for Economy, Trade, and Industry Nishimura Yasutoshi signed a Memorandum of Cooperation to establish a joint task force aimed at promoting human rights in supply chains. The initiative, entitled the “Task Force on the Promotion of Human Rights and International Labor Standards in Supply Chains,” was formed pursuant to authority granted by the U.S.-Japan Partnership on Trade, entered into in November 2021.
In order to carry out its objectives, the task force intends to exchange information on efforts to address issues relating to human rights and the protection of internationally recognized labor rights. This will include sharing guidance, best practices, and lessons learned concerning human rights due diligence in supply chains, as well as policies and enforcement practices related to the eradication of forced labor. Under the Memorandum, the U.S. and Japan also intend to facilitate dialogue between the task force and key stakeholders, including civil society, worker organizations, and businesses.
The task force was launched in the context of increased global concern regarding forced labor involving Uyghur Muslims in China’s Xinjiang region. In December 2021, the United States enacted the Uyghur Forced Labor Prevention Act, aimed at barring U.S. imports of goods from Xinjiang. Japanese officials have indicated that similar legislation may be forthcoming in Japan.
The task force consists of a number of U.S. agencies, including the Office of the United States Trade Representative, the Department of State, the Department of Commerce, the Department of Health and Human Services, the Department of Labor, the Department of Homeland Security, the U.S. Customs and Border Protection and Immigration and Customs Enforcement, and the U.S. Agency for International Development. In Japan, the Ministry of Economy, Trade, and Industry as well as the Ministry of Foreign Affairs are part of the task force. The participation of other countries in the human right initiative is being welcomed.
U.S.: Biden-Harris Administration Releases Blueprint to Decarbonize America’s Transportation Sector
On January 10, 2023, the Biden-Harris Administration released the U.S. National Blueprint for Transportation Decarbonization (the “Blueprint”), which aims to eliminate greenhouse gas emissions from the U.S. transportation sector by 2050.
The Blueprint is the latest step in the U.S.’s cross-government effort to achieve net-zero carbon emissions by 2050. It follows on from the Infrastructure Investment and Jobs Act, which provides investments in energy modernization, transportation and building decarbonisation, and the Inflation Reduction Act, which provides significant incentives helping to decarbonize the U.S. economy.
Asia: Philippines Finalizes Rules for Sustainable Funds
On January 3, 2023, the Philippines’ Securities and Exchange Commission (“SEC”) published its final rules for Sustainable and Responsible Investment (“SRI”) funds. Under these rules, SRI-designated funds must adopt one or more sustainability principles or ESG factors as their key investment focus, which must be reflected in the funds’ sustainable investment objective. ESG factors that may be adopted by SRI funds include:
- The UN Sustainable Development Goals;
- The UN Global Compact Principles;
- The Common Principles for Climate Mitigation Finance Tracking;
- The Green Bond Principles of the International Capital Market Association;
- The Climate Bonds Taxonomy of the Climate Bonds Initiative; or
- Any other “nationally or globally acceptable ESG or sustainability principles or criteria.”
The SRI funds must also invest at least two thirds of their net asset value in a manner consistent with their sustainable investment objective.
Furthermore, the rules require SRI funds to have names that “accurately and fairly” reflect the ESG factors set out in their sustainable investment objectives. Additionally, an explanation must be submitted to the SEC as to how the proposed name is proportionate to the ESG features of the SRI fund as a whole, and will not mislead investors as to the role of ESG in its overall investment objective and strategy. The SEC makes clear that no investment company other than an SRI fund can use words such as “ESG” or “sustainability” in its name or marketing materials unless permitted by the SEC.
The rules also set out information that must be provided in prospectuses, including identifying the key ESG investment focus and the minimum asset allocation that will be put toward the sustainable investment objective.
SEC Press Release
Asia: Taiwan Passes Climate Law
On January 10, 2023, Taiwan’s legislature passed the Climate Change Response Act, establishing the goal of reaching net-zero carbon emissions in Taiwan by 2050. This plan will be implemented by local government and is subject to review a minimum of every four years.
In order to reach this Net Zero target, the Act also establishes a carbon fee mechanism whereby emitters who reach a certain threshold will need to pay for their direct and indirect emissions. Carbon discounts will be available to companies that switch to low carbon fuels, adopt carbon negative technologies, or use renewable energy sources. Revenues from the carbon fee systems will be placed into a “Greenhouse Gas Management Fund,” which will be used to, among other things, subsidize corporate investment in carbon reduction technologies and reimburse local governments for climate policy-related costs.
The carbon fee system is expected to roll out in early 2024. In its initial stage, fees are expected to be imposed on 287 companies in Taiwan with annual carbon dioxide emissions of 25,000 tons or more.