Introduction
EU institutions face further demands to scale back corporate sustainability legislation requirements
The European Commission is continuing to draw up proposals to scale back the scope of EU sustainability due diligence and reporting requirements, under pressure from some member states as well as trading partners abroad. Following the Omnibus simplification package designed to reduce the sustainability reporting burden on companies based or trading in the single market, the Commission has recommended lifting due diligence requirements under the EU's Deforestation Regulation for some retailers and manufacturers within the EU and for small businesses in low-risk countries, following suggestions that implementation of the legislation might be delayed for as much as a year. Under the directive, companies using or importing into the EU commodities such as palm oil, timber and soy, or finished goods including furniture and chocolate, must demonstrate that the land from which products were sourced did not undergo deforestation after 2020. The EU has also been challenged by the US and Qatar, which have jointly warned that their liquefied natural gas exports on which Europe depends to shed its dependence on fossil fuels from Russia could be threatened by the provisions of the Corporate Sustainability Due Diligence Directive, which would require businesses operating in the EU to not just report on but remedy human rights and climate and environmental issues in their supply chains, or face penalties of up to 5% of global turnover. The European Parliament has agreed to consider further changes to the directive that are intended to be enacted before the end of the year; some member states including France and Germany would scrap the law altogether.
Key Governance Developments
European Commission proposes easing due diligence requirements in planned Deforestation Regulation
The European Commission has proposed removing due diligence requirements under the EU's Deforestation Regulation for some retailers and manufacturers within the EU and for small businesses in low-risk countries. Companies using or importing into the EU commodities such as palm oil, timber and soy, or finished goods including furniture and chocolate, will have to trace products back to the land from which they were sourced and demonstrate that it did not undergo deforestation after 2020. The regulation is due to come into force at the end of the year, with larger companies having six months to comply and smaller businesses until the end of next year. The Commission's proposed changes would mean only companies placing products on the market will have to comply, but not downstream businesses such as retailers or manufacturers using the products, requiring only a single submission.
Best source: ESG Today
Norway’s sovereign wealth fund to press heaviest greenhouse gas emitters to reduce carbon output to zero by 2050
As part of its 2030 Climate Action plan, the Norwegian sovereign wealth fund is to add more companies to its list of the heaviest producers of greenhouse gas emissions and urge them to draw up a strategy to reduce emissions to zero by 2050, in line with the Paris Agreement's climate change targets. Norges Bank Investment Management, which manages the Government Pension Fund Global, is aiming for all 8,500 companies in its investment portfolio to be aligned with the Paris Agreement. It will also add scope 3 value-chain emissions to its dialogue with portfolio companies, which already covers scope 1 and 2 emissions directly related to their activities.
Best source: Reuters (subscription required)
Single Resolution Board guidance emphasises importance of communications by banks during resolution process
The Single Resolution Board has launched a consultation, open until December 12, on its operational guidance for communication by banks involved in a resolution process. The board says timely and accurate communication is essential when resolution action is taken in cases where banks are failing or likely to fail, and that in addition to communication from public authorities, banks should deploy strategies for robust and consistent communication to stakeholders. The organisation is also seeking industry views on a supplement to its Operational Guidance on Resolvability Testing for banks on communication testing to assess the governance and timeliness of bank communications and media channels and their strategies to counter the effect of negative market reaction, leaks and misinformation.
Best source: Single Resolution Board
Alliance for Financial Inclusion and University of Luxembourg study finds inclusion boosts economic stability and growth
Financial inclusion boosts economic stability, benefits financial institutions' profitability and makes intermediation more efficient, according to findings from the first phase of the Alliance for Financial Inclusion's Complementarity Research Initiative study, conducted in partnership with the University of Luxembourg. The research, presented at a policymaker roundtable in Washington, DC, recommends that inclusion strategies be paired with policies that strengthen quality of inclusion, improve digital financial literacy, strengthen oversight of digital financial services and provide safeguards against fraud.
Best source: Alliance for Financial Inclusion
Pay gap between German listed companies’ female and male board members widens, reversing 10-year trend: EY study
Average pay for female board members at Germany's largest listed companies fell by 11% in 2024 to €2.15m, according to research by consultancy EY, while earnings for their male counterparts rose by 0.4% to €2.27m. This is the first time since 2014 that women in board positions have earned less than men in the same positions. EY attributes the shift to the increased presence of women on company boards, which has reduced the scarcity value that allowed them to command higher remuneration.
Best source: MSN
See also: MarketScreener
See also: AFP
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