UK: Department for Energy Security and Net Zero Announces Plans for Carbon Capture and Clean Energy
On March 30, 2023, the United Kingdom’s Department for Energy Security and Net Zero, a department established on February 7, 2023, unveiled plans to build upon the nation’s investments in clean energy and affiliated industries. The measures announced include:
- Setting up carbon capture clusters in industrial areas;
- Increasing investment in floating offshore wind energy facilities through the launch of a £160 million fund to support port infrastructure projects;
- Backing a tranche of new green hydrogen production projects supported by the £240 million Net Zero Hydrogen Fund;
- Opening a fifth round of the UK Contracts for Difference scheme, set up to incentivize investment in renewable electricity;
- Establishing ‘Great British Nuclear,’ a government body that will oversee a competition to select Small Modular Reactors, an advanced nuclear technology, for development later this year; and
- Expanding the Great British Insulation Scheme to upgrade 300,000 of the least energy-efficient British households.
Since 2010, the United Kingdom has spent, through a mix of government and private investment, £198 billion on investments in low carbon energy. It anticipates about £100 billion of private investment will be needed to bolster its new and expanded clean energy initiatives.
Global: TNFD Releases Final Draft Nature-Related Risk Management and Disclosure Framework
On March 28, 2023, the Taskforce on Nature-Related Financial Disclosures (the “TNFD”) released the final beta framework for nature-related risk management and disclosure. This is the fourth and final draft of the framework, open for consultations until June 1, 2023, with final recommendations expected in September 2023.
Established in 2021, the TNFD is developing a risk management and disclosure framework for organizations to report and act on nature-related risks and opportunities, which include biodiversity loss and ecosystem degradation. Modeled on the Taskforce on Climate-Related Financial Disclosures (the “TCFD”) framework, the TNFD framework is anchored by the same four pillars (governance, strategy, risk management and metrics & targets) and incorporates all of the TCFD recommendations. The TNFD’s draft framework includes general recommendations to be used by organizations across sectors as well as industry-specific guidance. The TNFD framework also adapts the notion of scopes (which are used to categorize greenhouse gas emissions in the climate disclosure context) to the nature context.
Based on feedback on previous drafts, the TNFD adapted the concept of Scopes 1, 2, and 3 emissions to the nature context as referring to risk and impact management flowing from “direct operations” and “value chains.” The latest draft also provides guidance on a proposed approach for using nature-related scenarios. Finally, the TNFD released guidance for four sectors (Agriculture and Food, Mining and Metals, Energy and Financial Institutions) and four biomes (tropical forests, rivers and streams, intensive land use systems and marine shelves).
Europe: European Court of Human Rights to Decide Whether Climate Change Breaches Human Rights Obligations
The European Court of Human Rights (the “ECtHR”) has been asked to determine whether state parties to the European Convention on Human Rights (“ECHR”) have breached their human rights obligations by failing to tackle climate change.
On March 29, 2023, the ECtHR held hearings in two separate cases:
- Verein KlimaSeniorinnen Schweiz v. Switzerland, brought by an association of elderly Swiss women against Switzerland regarding the government’s failure to cut emissions in line with the Paris Agreement goals. They argue that climate change-induced heatwaves undermine their living conditions, violating their right to life (Article 2 of the ECHR) and right to a private and family life (Article 8 of the ECHR). The applicants also allege that Switzerland violated their right to an effective remedy (Article 13 of the ECHR) as they could not bring their claim before any Swiss court, tribunal or other body. The application has received a large number of requests to intervene from other states and NGOs.
- Carême v. France, brought by a former French mayor, now a member of the European Parliament for the French Green Party, who alleges that France has taken insufficient measures to tackle climate change. Mr. Carême first lodged the application with the French Council of State (Conseil d’État), which resulted in the 2021 decision ordering the government to take additional measures to cut emissions by 40% by 2030. The applicant further complained to the ECtHR, alleging that France had failed to protect its citizens from environmental hazards that may harm life (breaching Article 2 of the ECHR) and that are affecting people’s homes (breaching Article 8 of the ECHR).
A third climate change case is due to be heard later in the year. Duarte Agostinho and others v. Portugal and 32 other States has been brought by six Portuguese youth against all 27 EU Member States, the United Kingdom, Norway, Russia, Switzerland, Turkey and Ukraine. The applicants allege that the states have failed to comply with their positive obligations to protect their right to life (Article 2 of the ECHR) and to private and family life (Article 8 of the ECHR). They also allege that their generation is particularly affected by global warming, in violation of the prohibition of discrimination (Article 14 of the ECHR). The applicants further refer to the impact of climate change-induced wildfires, which have prevented children from attending school. This application has also received a large number of requests to intervene.
ECtHR Fact Sheet
EU: European Commission Publishes Two Sets of Forest Biodiversity Guidelines
On March 20 and 21, 2023, the European Commission adopted two Staff Working Documents that set out guidelines related to forest biodiversity. The guidelines were published to support the European Green Deal commitment to improve the forested area of the European Union, both in quantity and quality.
The guidelines on Biodiversity-Friendly Afforestation, Reforestation and Tree Planting provide practical recommendations to support authorities, landowners and civil society to better implement local EU projects.
The guidelines on Defining, Mapping, Monitoring and Strictly Protecting EU Primary and Old-Growth Forests are addressed to national policymakers and decision-makers to guide them in identifying and protecting primary and old-growth forests in the EU.
Both sets of guidelines are voluntary.
Guidelines on Biodiversity-Friendly Afforestation, Reforestation and Tree PlantingGuidelines on Defining, Mapping, Monitoring and Strictly Protecting EU Primary and Old-Growth Forests
U.S.: 2023 Proxy Season Sees 60% Increase in Anti-ESG Proposals
The Proxy Preview annual report shows that the number of “anti-ESG” proposals at companies in the United States is up to 43 this season—an increase of 60% compared to this time last year. The bulk of the anti-ESG resolutions reportedly question racial and ethnic board diversity, with suggestions that diversity, equity and inclusion initiatives discriminate against conservative white people. The Proxy Preview report also shows that, thus far, there has been an increase in climate change proposals and decrease in diversity in the workplace proposals. The report is based on data as of February 15, 2023.
Despite the uptick in anti-ESG proposals, few so far have been successful. In 2022, most were excluded from consideration due to procedural errors, while others failed for breach of the SEC’s “ordinary business” rule—that is, for dealing with a matter relating to the company’s ordinary business operations, rather than management and/or the board of directors. The SEC further halted at least nine resolutions through its “no-action” process. The Proxy Preview report indicates that the anti-ESG proposals that are ultimately considered receive, on average, less than 4% support.
A number of these efforts were supported by the U.S. conservative think tank National Centre for Public Policy Research (“NCPPR”). In recent years, NCPPR has sought to block pro-ESG proposals by putting forward similar proposals, with the aim of having the former excluded by the SEC’s substantial duplication rule. NCPPR’s actual, anti-ESG, position is set out in the statement accompanying their core request. To prevent such tactics, the SEC has proposed amending the substantial duplication rule, so that a resolution would only be excluded “if it addresses the same subject matter” and “seeks the same objective by the same means.”
Proxy Preview Report