EU: Parliament Adopts New Anti-Greenwashing Law
On January 17, 2024, the European Parliament adopted a directive aimed at combating greenwashing by improving product labelling and banning the use of misleading environmental claims.
In a recent study, the European Commission found that more than half of green claims by companies in the European Union were vague or misleading, and 40% were unsubstantiated.
In particular, the rules aim to make product labelling clearer by banning the use of claims such as “environmentally friendly,” “natural,” “biodegradable,” or “climate neutral” without proof. The use of sustainability labels will also be regulated, meaning that only sustainability labels based on official certification schemes will be allowed in the EU. Additionally, the directive will ban claims that a product has a neutral, reduced or positive impact on the environment because of emissions-offsetting schemes.
The directive also includes rules focused on product durability, requiring guarantee information on products to be more visible and allowing new labels to give increased prominence to goods with an extended guarantee period. The directive will also ban unfounded durability claims, prompts to replace consumables earlier than strictly necessary, and presenting goods as repairable when they are not.
The directive requires final approval from the EU Council. EU Member States will have two years thereafter to transpose it into national law.
Questions and Answers on European Green Claims
U.S.: Environmental Protection Agency Proposes Methane Fee on Producers
On January 12, 2024, the U.S. Environmental Protection Agency (the “EPA”) announced a proposed rule to combat methane emissions from the oil and gas sector.
In particular, the rule would introduce a waste emissions charge for emitters from the oil and gas sector exceeding 25,000 metric tons of carbon dioxide equivalent per year. The charge is set to start at $900 per metric ton in 2024 and will increase annually thereafter.
The proposed rule was first announced late last year at COP28 in Dubai. The proposal further delivers on the Inflation Reduction Act goal to reduce pollution by incentivizing the adoption of technologies and introducing best practices. The oil and gas industry is the largest industrial source of methane emissions, with methane being categorized as a climate “super pollutant,” responsible for one-third of the warming from greenhouse gases in the United States.
The proposal builds on the EPA rule introduced in December 2023, which aims to reduce emissions from new and existing oil and gas operations.
EPA Press Release
Global: Early Adopters of the Taskforce on Nature-Related Financial Disclosures
On January 16, 2024, the Taskforce on Nature-Related Financial Disclosures (“TNFD”) announced that 320 organizations had indicated their intention to adopt and publish TNFD-aligned disclosures in their annual corporate reporting.
The TNFD guidelines were introduced in September 2023 (which we reported here). The guidelines recommend that organizations publish information on their nature-related dependencies and consider relevant risks and opportunities. The guidelines follow the well-established disclosure pillars: governance, strategy, risk and impact management, and metrics and targets.
The latest TNFD release shows that most organizations (referred to as “Early Adopters”) were based in Europe and Asia, with 55 and 36 organizations signing on from each region, respectively. The sole U.S. signatories were Bank of America and Paine Schwartz Partners, a private equity firm. Thirty-three percent of the Early Adopters were financial institutions, 56% companies and 5.5% market service providers. The total estimated market capitalization of all Early Adopters reached $4 trillion.
Debevoise Biodiversity 101
U.S.: New Hampshire Republicans Introduce Bill to Criminalize Usage of ESG Criteria
On January 3, 2024, Republicans in the New Hampshire House of Representatives introduced House Bill 1267, which would prohibit executive branch agencies from investing in investment funds that consider ESG criteria.
The bill targets New Hampshire’s retirement system and directs agencies “not to invest with any firm that will invest state retirement system funds in investment funds that consider environmental, social, and governance (ESG) criteria.” The bill would task New Hampshire’s treasurer with submitting an annual report to the governor and legislature detailing “the existence of any investment funds that may have mixed, rather than pure, fiduciary interest investment motivations.” The bill would make a “knowing” violation of the law punishable by a minimum of one year and up to 20 years in prison.
A public hearing on the bill is scheduled for February 1, 2024.
House Bill 1267