1. Dentons' ESG research
1. Dentons' ESG Legal Research Series (9): Legal Watch of the United Nations Climate Change Conference - Key Takeaways from COP28
2. Mr. Yang Zhipeng was invited to participate in the 2023LCOUNCIL 3rd Annual Legal Compliance Practice Hot Forum
2. Global ESG law and policy information
1. EU agreement on sustainable product rules[1]
The European Parliament and the Council have announced that they have reached a provisional agreement on a sustainable product rule, which proposes a new "eco-design" framework for products, which aims to establish sustainability standards for almost all products in the EU and provide consumers with more information about the environmental sustainability of products. The interim agreement is based on a series of sustainability proposals put forward by the European Commission in March 2022 to improve the sustainability of multi-category products and make them more environmentally friendly and efficient throughout their life cycle by replacing the current Ecodesign Directive 2009 (which is limited to energy-related products).
Under the new regulation, the European Commission will have the power to set ecodesign requirements for almost all product categories in order to improve the environmental impact. The European Parliament and the Commission agreed that ecodesign requirements for products such as iron, steel, aluminium, textiles, furniture, tyres, detergents, paints, lubricants and chemicals should be considered first. The proposal covers a broad and comprehensive range of sustainability criteria, including durability, reusability, upgradability and repairability, inhibition of the use of recycled substances, energy and resource efficiency, recycled material content, remanufacturing and recycling, and the carbon and environmental footprint of the product. The proposal would also establish a new "Digital Product Passport" that would provide information on the environmental sustainability of products to help consumers and businesses make informed choices when purchasing products. At the same time, the proposal calls on the Commission to create and manage a public portal that will enable consumers to search for and compare information about products.
2. EU Interim Agreement on Corporate Sustainability Due Diligence Directive[2]
On 14 December 2023, the European Parliament and the European Council reached a provisional agreement on the proposed Corporate Sustainability Due Diligence Directive ("CSDDD"), which will enter into force after formal approval by the European Commission and is expected to be formally implemented after 2026.
The European Commission published the proposed CSDDD proposal in February 2022 and the European Parliament's Committee on Legal Affairs voted to approve its revised draft in April 2023. The interim agreement, which covers the company's upstream supply chain and some downstream activities (such as distribution and recycling), sets out its obligations to identify, assess, prevent, mitigate, address and remediate the company's impact on people and the planet, including the use of child labor, slavery, pollution and emissions, deforestation and destruction of ecosystems.
The interim agreement requires companies to adopt climate transition plans to ensure that their business models and strategies are aligned with the goals of the Paris Agreement to limit global warming to 1.5°C. During the signing of the interim agreement, the European Parliament requested the inclusion of financial service providers in the CSDDD, while the European Council left the decision to member states. Under the negotiated provisional agreement, most of the provisions of the CSDDD temporarily exclude the financial sector, but a review clause is retained for future inclusion of the sector in the scope of the CSDDD.
3. Australia publishes guidance on corporate greenwashing[3]
On 12 December 2023, the Australian Competition and Consumer Commission (ACCC) published the final version of its guidance on environmental and sustainability claims, which aims to help companies comply with relevant regulations and avoid misleading green marketing to protect consumers from the risk of greenwashing. This follows a study conducted by the ACCC, which showed that 57% of the companies surveyed made sustainability claims about their environment-related certifications. The regulator said it would conduct greenwashing investigations into the companies to review them for potential greenwashing risks, and planned to engage with them through educational activities to update the guidelines to improve the integrity and credibility of environmental sustainability claims. In July 2023, regulators released a preliminary draft of the guidance, incorporating feedback from stakeholders, including consumers, companies, and environmental groups, into the final version.
The guidance sets out the ACCC's penalties for companies for making false or misleading statements, which can be up to $50 million, which could be three times the benefit of the breach or 30% of the company's revenue during the relevant period. The ACCC said it will issue guidance on carbon emissions and carbon offset claims in early 2024 and plans to develop guidance designed to help consumers assess environmental sustainability claims.
4. U.S. Government Issues Eligibility Requirements for Clean Hydrogen Tax Credit[4]
On December 22, 2023, the U.S. Department of the Treasury and the Internal Revenue Service issued guidance on the tax credit for 45V clean hydrogen production. The guidelines were developed under the Inflation Reduction Act (IRA) to reduce carbon emissions from critical sectors of carbon reduction, such as heavy industry and long-distance transportation. This tax break will provide a tax credit of up to US$3/kg for hydrogen projects with low lifecycle greenhouse gas emissions, and will be complemented by other hydrogen programs, such as the Department of Energy's Regional Clean Hydrogen Hub Program.
The guidelines set out how producers should use 45V clean hydrogen to calculate greenhouse gas emissions over the life of a project, and determine the rules for electrolysis to produce hydrogen, requiring incrementality, time matching, and regional delivery. In addition, the guidelines also preliminarily clarify the rules for the production of hydrogen using renewable natural gas (RNG) and other pathways, and the development of clean hydrogen projects using various energy resources.
5. Dubai enacts plastic ban for sustainable development[5]
On December 31, 2023, the Emirate King of Dubai, UAE, issued a decree to prohibit the trade and import of single-use plastic bags in Dubai from January 1, 2024. The goal of this ban is to reduce the damage caused by plastic pollution to the natural environment and the diversity of biological resources, while encouraging citizens and companies to adopt recyclable products and accelerate sustainable development. However, the scope of application of the plastic ban does not include thin fresh-keeping bags, garbage bags, etc., which package meat, fish, vegetables, fruits, grains, bread and other products, as well as plastic bag products intended for export or re-export.
This plastic ban is mainly divided into four phases: 1) from January 1, 2024, Dubai will ban the trade and import of single-use plastic bags, 2) from June 1, 2024, Dubai will ban the use of non-plastic single-use products, including single-use packaging bags made of other materials, 3) from January 1, 2025, Dubai will ban the use of single-use plastic products such as plastic mixers, table covers, cups, 4) From January 1, 2026, the plastic ban will be extended to plastic products such as plates, food containers, cutlery and cups.
3. China's new ESG regulations
(1) National laws and regulations
1. Ministry of Ecology and Environment: Measures for Administrative Reconsideration of the Ministry of Ecology and Environment (Draft for Comments)[6]
Compared with the original Administrative Reconsideration Measures for Environmental Affairs, the newly revised Measures for Administrative Reconsideration of the Ministry of Ecology and Environment (hereinafter referred to as the "Draft for Comments") have increased the number of articles by one article to a total of 46 articles, deleted 10 articles, added 13 articles, and amended and merged 34 articles. The Consultation Paper divides the 46 articles into six chapters, with a clearer framework structure.
The Draft clarifies the scope of administrative reconsideration jurisdiction of the Ministry of Ecology and Environment, that is, the Ministry of Ecology and Environment has jurisdiction over the following administrative reconsideration cases: dissatisfaction with the administrative acts made by the Ministry of Ecology and Environment, dissatisfaction with the administrative acts taken in the name of the dispatched agencies established by the Ministry of Ecology and Environment in accordance with the provisions of laws, administrative regulations and departmental rules, and dissatisfaction with the administrative acts taken by organizations authorized by laws, administrative regulations and departmental rules managed by the Ministry of Ecology and Environment. At the same time, strengthen the supervision of the implementation of the administrative reconsideration decision of the Ministry of Ecology and Environment, and revise and improve the administrative reconsideration trial procedures of the Ministry of Ecology and Environment, increase the summary procedure, and promote the "separation of complicated and simple cases".
2. Ministry of Ecology and Environment (MEE) and other four ministries: Guidelines for the Implementation of Eco-Environment-Oriented Development (EOD) Projects (for Trial Implementation)[7]
The Guidelines for the Implementation of Eco-environment Oriented Development (EOD) Projects (for Trial Implementation) (hereinafter referred to as the "Guidelines") are applicable to projects implemented under the Eco-environment Oriented Development (EOD) model, and are used to guide and regulate project planning, design, implementation, evaluation, supervision and other activities.
The Guidelines mainly cover the following four aspects: 1) Strengthen project planning and improve project quality. Carry out EOD project planning, project establishment, implementation and evaluation in strict accordance with the Implementation Guidelines. 2) Actively and steadily promote and accelerate the implementation of the project. Promote the implementation of the project, improve the value-added space of the project, improve the re-warehousing procedure, and pay attention to the project construction and later operation. 3) Strengthen tracking and scheduling, and summarize the results in a timely manner. Create and form typical cases, and strengthen the publicity and promotion of typical cases. 4) Strengthen risk prevention and control and promote sustainable development. Strictly guard against various risks such as debt, finance, and integrity, strengthen the spirit of contract, prevent default or disputes, and strengthen project review.
3. China Securities Regulatory Commission (CSRC) and State-owned Assets Supervision and Administration Commission (SASAC) of the State Council: Notice on Supporting the Issuance of Green Bonds by Central Enterprises[8]
In order to give full play to the important function of the capital market in optimizing the allocation of resources and the leading and exemplary role of green investment of central enterprises, the China Securities Regulatory Commission and the State-owned Assets Supervision and Administration Commission of the State Council jointly issued the Notice on Supporting the Issuance of Green Bonds by Central Enterprises (hereinafter referred to as the "Notice").
The "Notice" mainly elaborates from four aspects: 1) improve the green bond financing support mechanism, provide precise support, Financing facilitation, and optimize the supervision and evaluation of intermediaries, and promote the concept of green investment;2) Assist central enterprises in green and low-carbon transformation and high-quality development, promote green and low-carbon transformation and scientific and technological innovation, and play a demonstration role in low-carbon development;3) Give full play to the leading role of central enterprises in green investment, guide the supply of funds in key areas, and support central enterprises to carry out pilot projects of infrastructure REITs in the green field;4) Strengthen the organization and implementation guarantee, the China Securities Regulatory Commission and dispatched agencies provide service support, the State-owned Assets Supervision and Administration Commission of the State Council optimizes the assessment mechanism, and the stock exchange improves the efficiency of green bond financing services。 We will further enhance the ability of the capital market to serve green and low-carbon development, support the issuance of green bonds by central enterprises for financing, and jointly promote carbon reduction, pollution reduction, green expansion and growth, so as to promote the green and low-carbon development of the private economy and promote the comprehensive green transformation of the economy and society.
4. Green Bond Standards Committee: Guidelines for Disclosure of Green Bond Duration Information[9]
In order to establish and improve the standard system of green bonds and improve the quality of environmental information disclosure of green bonds, the Green Bond Standards Committee has formulated the Guidelines for Information Disclosure of Green Bond Duration (Chinese and English versions) (hereinafter referred to as the "Guidelines").
The Guidelines apply to green bonds issued by issuers in China, and put forward six key disclosure points: 1) the basic information of green bonds and the overall use of the proceeds, and explain whether each purpose is consistent with the latest uses promised or disclosed in the issuance documents; 2) the details and environmental benefits of green projects corresponding to green bonds; 3) whether there are major pollution liability accidents in green projects and operating entities corresponding to green bonds, Information on administrative penalties and other environmental violations due to environmental issues, and whether they will have a significant impact on debt repayment, 4) the management of funds raised by green bonds, 5) the evaluation and certification bodies and reports of green bonds are encouraged to be disclosed, and 6) the disclosure of corporate governance information related to green development and transformation and upgrading.
(2) Local regulations
1. Shanghai Municipal People's Congress: Regulations on Promoting the Green Transformation of Shanghai's Development Mode[10]
The 9th Session of the Standing Committee of the 16th Shanghai Municipal People's Congress passed the Regulations on Promoting the Green Transformation of Shanghai's Development Mode (hereinafter referred to as the "Regulations"), which will come into force on January 1, 2024, aiming to accelerate the green transformation of the city's development mode and promote sustainable and high-quality economic and social development.
The "Regulations" emphasize the need to promote the green transformation of energy development and build a clean, low-carbon, safe and efficient new energy system; promote the green transformation of the industrial structure, vigorously develop strategic emerging industries and modern service industries, promote the deep integration of industrial digitalization and greening, and promote the green transformation of steel, petrochemical, electric power, transportation, construction and other fields; At the same time, the "Regulations" propose to establish a diversified green investment and financing mechanism, support financial infrastructure institutions and financial institutions in Shanghai to develop green credit, green bonds, green insurance, green bills, green financial leasing and other financial products and services, encourage and guide social funds to participate in green transformation related activities, and increase support for the green transformation of small and medium-sized enterprises.
2. Shenzhen Municipal Bureau of Ecology and Environment: Guidelines for the Management of Carbon Emission Allowances in Shenzhen[11]
In order to further standardize the activities related to the management of carbon emission allowances in Shenzhen, the Shenzhen Municipal Bureau of Ecology and Environment has formulated the Guidelines for the Management of Carbon Emission Allowances in Shenzhen (hereinafter referred to as the "Guidelines") in accordance with the Administrative Measures for Carbon Emission Trading in Shenzhen (Decree No. 343 of the Shenzhen Municipal People's Government). The Guidelines apply to the management of carbon emission allowances (hereinafter referred to as "allowances") in Shenzhen.
The Guidelines point out that the Shenzhen Municipal Bureau of Ecology and Environment is the competent department, which is responsible for the determination of the list of key emitting enterprises in the city, the allocation of quotas, the implementation of quotas, Information disclosure and other related supervision and management work, and emphasize the responsibilities of key emitting units, that is, key emitting entities should perform the main responsibility of carbon emissions, establish and improve the carbon emission management system, allocate carbon emission management personnel, strengthen their own carbon emission control and data management, take measures to reduce carbon emissions, and be responsible for the authenticity, completeness and accuracy of their annual carbon emission reports and production activity output data reports, and complete quota fulfillment. At the same time, the Guidelines provide for other aspects such as the application for change/removal of key emitting enterprises, the management of quota allocation, and the handling of objections.
3. Shandong Provincial Department of Ecology and Environment: "Implementation Opinions on Further Optimizing Environmental Impact Assessment" [12]
In order to strengthen the guarantee of EIA elements, continue to deepen the reform of the EIA system, and support high-quality economic and social development with high-level protection of the ecological environment, the Shandong Provincial Department of Ecology and Environment issued the "Implementation Opinions on Further Optimizing the Environmental Impact Assessment Work" (hereinafter referred to as the "Opinions"), requiring that by 2027, positive progress has been made in the standardization and institutionalization of pilot results, the joint efforts of the system will be further exerted, the role of source prevention will be further improved, and the first line of defense will be guarded.
The "Opinions" put forward requirements from four aspects: strengthening the linkage of the system, deepening the reform of the EIA system, guarding the bottom line of ecological and environmental protection, and strengthening grassroots capacity building, pointing out that it is necessary to further promote the zoning control of the ecological environment, optimize the planning and EIA of the industrial park with the results of the zoning control of the ecological environment, actively explore and promote the "integration of two certificates of approval", carry out the linkage pilot of planning EIA and project EIA, implement a batch of registration form exemption management, promote the "bundling" approval of a batch of report forms, and simplify the content of a batch of reports (forms). Optimize the review and management of the total EIA indicators of a number of projects, continue to promote pilot projects such as environmental impact assessment of greenhouse gas emissions in key areas and key industries, strictly abide by the bottom line of environmental access, strengthen the management of environmental impact projects in environmental impact projects, continue to promote supervision during and after the event, strengthen EIA guidance and assistance, improve EIA service capabilities, and strengthen organization and implementation.
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