ISSB
International Sustainability Standards Board and International Accounting Standards Board Hold Joint Meeting on Climate Risk
The International Sustainability Standards Board (ISSB) and the International Accounting Standards Board (IASB) held a joint board session on February 19 to discuss the results of the IASB’s consultation on its Exposure Draft on Climate-related and Other Uncertainties in the Financial Statements. The Exposure Draft provides illustrative examples for companies looking to apply the International Financial Reporting Standards (IFRS) Accounting Standards in their climate-related risk disclosure (See also September Newsletter). In their joint board session, the two organizations discussed stakeholder feedback on the Exposure Draft; the boards were asked to make any decisions with regards to the finalization of the IASB’s publication at the joint board session.
TNFD
Taskforce on Nature-Related Financial Disclosures Issues New Draft and Final Sector Guidance
The Taskforce on Nature-related Financial Disclosures (TNFD) released a tranche of new draft and final sector guidance documents on January 23, covering 50% of the SICS industries. These documents included final guidance for the apparel, textiles, & footwear; beverages; construction materials; and engineering, construction & real estate sectors. The TNFD had consulted on draft guidance for these sectors in June 2024. The TNFD also published draft sector guidance for three additional sectors: fishing; marine transportation & cruise lines; and water utilities & services. The three draft sector guidance proposals are open for consultation until April 4 and the TNFD plans to release final sector guidance in June 2025.
TNFD Releases Capacity-Building Platforms to Support Nature-Related Financial Disclosures
The TNFD launched its new Learning Lab and Trainer Portal on February 18 to “organize and curate” the TNFD’s “learning and education materials.” The two new open-access platforms are available on the Knowledge Hub on the TNFD website. The platforms aim to support businesses and financial professionals to leverage the work of the TNFD to “help them identify, assess, report, and act on their nature-related issues.” The platforms also contain capacity-building materials from TNFD’s knowledge partners.
GRI
Global Reporting Initiative and Partner Organizations Issue Public Letter to UN Member States
The Global Reporting Initiative (GRI) and 11 of its partner organizations published a letter on February 10 calling for UN Member States to “retain key corporate sustainability disclosure provisions in the Fourth International Conference on Financing for Development (FfD4) negotiations.” The letter advocates for the retention of “double materiality-based reporting” and the adoption of “GRI and ISSB standards in parallel.”
Global Reporting Initiative Publishes Letter to European Commission in Support of Double Materiality Standard
GRI CEO Robin Hodess sent a public letter to the European Commission (EC) on February 20 advocating for the retention of a double materiality principle for corporate sustainability disclosures. The letter asks EC officials to maintain the double materiality framework governing the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD). The letter also requests that the EU maintain alignment between the ESRS and other international disclosure standards. GRI argues that maintaining double materiality is important for European competitiveness and any “dilution” of related principles would lead to investors having less decision-useful, and internationally comparable, information to allocate their capital.
SBTi
Science Based Targets Initiative Announces New Working Groups and Consultations for Corporate Net-Zero Standard Revision
The Science Based Targets initiative (SBTi) launched new Expert Working Groups, and announced upcoming consultations, on February 10 to seek input on its revised Corporate Net-Zero Standard. The SBTi Expert Working Groups will focus on five topics related to the revised Standard: target setting for scope 2 and scope 3 greenhouse gas (GHG) emissions; neutralization and removal targets related to Carbon Dioxide Removal (CDR); “scale of action and allowable measures” standards for “ongoing emissions in the transition to net-zero through Beyond Value Chain Mitigation (BVCM) activities”; and data quality, assurance, and claim substantiation for reporting against SBTi standards.
The SBTi also announced its aim to publish a draft version of the revised Corporate Net-Zero Standard, as well as an accompanying consultation and pilot testing, no earlier than March 2025. According to the announcement, the revised Standard will include a new categorization system for companies based on their size and geography; guidance for companies on how to report on target setting and progress reporting; clarity on how to effectively set and implement scope 3 GHG emission targets; increased information on how to set emission removal targets; and capacity building documentation on the interoperability of the SBTi standard with other global frameworks and regulations.
Japan
Japanese Ministry of the Environment and European Commission Agree to Collaborate on Climate-Related Initiatives
High-level officials from the Japanese Ministry of the Environment (MoE) and the European Commission (EC) met in Tokyo on February 18 to discuss areas of collaboration for “climate change-related challenges.” MoE and EC officials agreed to promote international efforts for global decarbonization, such as COP30 and related conversations in the G7 and G20. MoE and EC officials also agreed to collaborate on future climate policy initiatives such as climate pricing, carbon border adjustment mechanisms, decarbonization technologies, sustainable finance and transition finance, and satellite utilizations.
Ministry of the Environment Publishes Revisions to Green Project Criteria in Japan’s Green Bond and Green Loan Guidelines
The MoE published revisions to Annex 1 of its Green Bond and Green Loan Guidelines on February 5. Annex 1 covers Guidance on Eligibility Criteria for Green Projects with Clear Environmental Benefits and was first published in July 2022; MoE’s recent revisions expand and refine the “Green List” of projects eligible for green bonds and loans. MoE’s publication follows the suggestions of the Working Group on the Green List, which was charged in August 2023 with assessing how to expand green financing to more issuers and sectors. The revisions to the Green List aim to align Japan’s green financing selection criteria with international guidance and guidelines, as well as with Japan’s national plans and strategies.
Hong Kong
Cross-Agency Steering Group Publishes Key Priorities to Promote Sustainable Finance Growth in Hong Kong
The Hong Kong Cross-Agency Steering Group (Steering Group) published three key priorities on February 6 “to foster the growth of sustainable finance in Hong Kong.” The Steering Group is the coordinating body for climate and environmental risk management in the financial sectors and is co-chaired by the Hong Kong Monetary Authority (HKMA) and the Securities and Futures Commission (SFC).
The Steering Group’s first listed priority is to develop a “comprehensive sustainability disclosure ecosystem.” The Steering Group will help the implementation of ISSB Standards in Hong Kong, including through offering technical assistance for sustainability reporting, developing a sustainability assurance framework, and coordinating capacity-building efforts.
The second listed priority is to strengthen Hong Kong’s status as a “leading sustainable and transition finance hub.” The Steering Group is working to expand Hong Kong’s Taxonomy for sustainable finance to include new sustainable activities, engaging industry to develop sectoral transition finance guidance, and finalizing an online Transition Finance Knowledge Hub.
Last, the Steering Group will prioritize promoting internal and third-party data and technology solutions for sustainable finance and sustainability reporting, while continuing to promote and enhance its “free-for-all public utility data tools on its website,” which include GHG emissions calculation and estimation tools and a “Climate and Environmental Risk Questionnaire for Non-listed companies/small and medium-sized enterprises.” The Steering Group will also work to finalize and publish its Hong Kong Green Fintech Map in the first half of 2025.
Securities and Futures Commission Signs Memorandum of Understanding with Regional Partners on Regulatory, Technology, and Sustainability Issues
The Hong Kong SFC co-chaired a meeting of the Asia-Pacific Regional Committee (APRC) of the International Organization of Securities Commissions (IOSCO) on February 21. Regulators from Hong Kong and its regional counterparts signed a Multilateral Memorandum of Understanding for Supervisory Cooperation (SMMoU) on “supervisory cooperation, crypto regulation, and capital market issues of common interest.” At the APRC meeting, regulators discussed sustainability as a key concept for multinational cooperation.
Malaysia
Securities Commission Malaysia and Institute of Chartered Accountants in England and Wales Announce Collaboration on Sustainability Disclosures
The Securities Commission Malaysia (SC) and the Institute of Accountants in England and Wales (ICAEW) signed a Letter of Intent on February 19 to collaborate on capacity building for global sustainability disclosure requirements. As part of the collaboration, the ICAEW coordinated a workshop at the Association of Southeast Asian Nations Capital Markets Forum (ACMF), which is currently chaired by Malaysia. The ICAEW workshop covered best practices for international sustainability disclosure standards. The workshop included specialized training and educational forums on IFRS S1 and S2 disclosure standards; scope 3 GHG emissions; the Carbon Border Adjustment Mechanism (CBAM) and CSRD standards; and the role of regulators in sustainability policy and stakeholder engagements.
Indonesia
Financial Services Authority Hosts Forum to Support Improved Governance in the Financial Services Industry
The Indonesian Financial Services Authority (Otoritas Jasa Keuanga; OJK) Audit Board hosted a Governance Insights Forum on February 18 to support improved governance and risk management practices in the Indonesian financial services ecosystem. OJK emphasized the importance of improved governance practices to maintain financial stability and support economic growth. OJK particularly emphasized its push for proactive monitoring systems and improved risk management and anti-bribery systems. OJK and other participants at the forum agreed to collaborate on educational outreach to other market participants, as well as the public, to promote good governance practices in Indonesia.
ASEAN
Securities Commission Malaysia Hosts ASEAN Capital Markets Forum Chairs’ Meeting
The SC hosted the 42nd Chairs’ Meeting of the ASEAN Capital Markets Forum on February 13 to “facilitate regional growth through sustainable, resilient and inter-connected capital markets.” At the meeting, the ASEAN Capital Markets Forum endorsed the ACMF Action Plan 2026-2030, a five-year roadmap for economic collaboration. Meeting participants agreed to collaborate with the Economic Research Institute for ASEAN and East Asia (ERIA) on a Carbon Market Ecosystem Roadmap and a Mitigation, Adaption, Resilience and Sustainable Finance (MARS) Framework and to continue governance, stewardship, and sustainability capacity building activities.
ACMF Chairs also agreed to sustainable disclosure and taxonomy-related collaboration at the meeting. The ASEAN Capital Markets Forum agreed to collaborate with the ISSB Board and the ICAEW on the implementation of the ISSB sustainable disclosure standards and GHG emissions disclosure. The Chairs Meeting also led to progress on the ASEAN Taxonomy for Sustainable Finance, Version 3, as well as on the Asia Green Transformation Consortium, a collaboration among the Financial Services Agency of Japan, the ASEAN Working Committee on Capital Market Development, the Asian Development Bank, and various private industry participants.
Australia
Commissioner of the Australian Securities & Investments Commission Delivers Speech on Superannuation Reform
Commissioner Simone Constant, of the Australian Securities & Investments Commission (ASIC), delivered the keynote speech at the Conexus Financial Super Chair Forum on January 30. The speech emphasized the ongoing efforts of ASIC and the Australian Prudential Regulatory Authority (APRA) to improve governance and risk-management in superannuation (See also February Newsletter). ASIC confirmed that, following its 2024 efforts to improve accountability and good governance in superannuation, it will continue prioritizing the same reforms in 2025 through engagement, supervision, and regulatory initiatives.
EU
European Commission Adopts Omnibus Package to “Simplify” Sustainability Reporting Requirements
The European Commission (EC) published its first proposed omnibus bill package (Omnibus) on February 26. The Omnibus is designed to, if adopted, “streamline” and “simplify” reporting requirements related to CSRD, the Corporate Sustainability Due Diligence Directive (CSDDD), the EU Taxonomy, and the CBAM. The EC explains that it seeks to maintain the European Green Deal objectives while reducing administrative burdens for European companies, particularly for small and medium-sized enterprises (SMEs). The EC has promised to reduce the administrative burden for EU companies by 25%, with a 35% reduction target for SMEs, by the end of its new mandate.
The Omnibus, as proposed, would narrow the scope of which companies are subject to, and delay the implementation timeline for, CSRD requirements. Companies due to report against CSRD in 2026 or 2027 would be granted a two-year delay. The Omnibus package would largely align the scope of CSRD with that of CSDDD by making the sustainability reporting requirements mandatory only for companies with over 1,000 employees and 50 million Euros in turnover or a balance sheet greater than 25 million Euros. The altered scope would “remove around 80% of companies from the scope of CSRD.” It also includes provisions to protect SMEs from administrative burdens related to downstream reporting requirements stemming from value-chain reporting of larger EU companies. The EC has also committed to review the first set of ESRS standards, with a view to “substantially reducing” the number of data points; prioritizing quantitative data points over narrative text; and clarifying how companies should apply a materiality assessment when considering which information to disclose.
The EC also proposes adjusting the scope of the EU Taxonomy in line with the amendments to CSRD. Companies not subject to the Taxonomy will be allowed to voluntarily disclose against it, while companies will also be allowed to report on activities that are partially aligned with the EU Taxonomy. The Omnibus also proposes greatly reducing reporting requirements associated with the EU Taxonomy: reporting templates will be reduced by 70%, Do No Significant Harm (DNSH) criteria will be simplified, the Green Asset Ratio will be amended, and a financial materiality threshold for Taxonomy reporting will be introduced.
The Omnibus also delays the implementation date of CSDDD, with the first reporting requirement for the largest companies now proposed to come into effect in July 2028. Companies would only be subject to systematic due diligence requirements for their direct business partners and provide periodic assessments and monitoring for direct business partners every five years, rather than annually. The SME administrative burden from CSDDD would also be reduced, as disclosing companies would be limited in what information they can request from SMEs in their value chain. The EC proposes removing certain liability provisions and “last resort” measures from the original CSDDD text.
Last, the Omnibus proposes changes to the CBAM, including exempting SMEs such as small importers from CBAM. Rules relating to authorization, CBAM obligations, and embedded emissions calculation and reporting will be simplified. The Omnibus includes strengthened rules to combat CBAM “circumvention and abuse,” while the EC stated it will issue a new legislative proposal in early 2026 on extending CBAM’s scope.
Importantly, the legislative changes envisaged by the Omnibus will be subject to approval by the Council of the EU and the European Parliament (the EU’s co-legislators), both of which will have the opportunity to amend the EC’s proposals. For its part, the EC has requested that the co-legislators approve the Omnibus without delay in order to give companies affected by the proposed changes legal certainty and time to adapt. Changes to the EU Taxonomy disclosures are open for public comment through March 26.
EU and International Partners Meet to Negotiate Implementation of the Global Biodiversity Framework
The EC, EU member states, and other international parties met at the 16th Conference of the Parties to the Convention on Biological Diversity (CBD COP16) on February 25 to negotiate the implementation of the Kunming-Montreal Global Biodiversity Framework (GBF). The GBF is an international agreement on targets and goals and a roadmap designed “to halt and reverse biodiversity loss by 2030”: nations signing onto the GBF must design National Biodiversity Strategies and Action Plans (NBSAPs) and set national biodiversity targets in line with the provisions of the agreement. During the CBD COP16 meeting in Rome, parties discussed how to mobilize financial flows to address the biodiversity funding gap, how to increase “cooperation between Multilateral Environmental Agreements and International Organization and processes,” and how to ensure ongoing review and monitoring mechanisms for compliance with the GBF.
European Environmental Agency Publishes Report Advocating for Legislation to Ensure Compliance with Climate and Environmental Targets
The European Environment Agency (EEA) published its second progress report “on the climate and environmental objectives of the 8th Environment Action Programme (8EAP)” on February 20. The report concludes that “the EU is partially on track towards its 2030 climate and environmental goals and targets.” The progress report found that the EU’s environmental policies have successfully reduced GHG emissions, promoted financial flows into green financing, and improved air quality in EU member states. The EU still has not fulfilled goals related to biodiversity and ecosystem loss nor achieved certain desired systemic changes. The EEA also directly advocates for the EC and EU legislative bodies to implement, finalize, and continue developing environmental legislation to address sector-related production and consumption issues, energy concerns, biodiversity protection, water resilience, and tax policy.
EU and Mexico Agree to Expand Collaboration on Environmental Issues
The EC and EU member states met with representatives of the Mexican Government for a two-day dialogue on February 17 to discuss collaboration on climate change, pollution, and biodiversity-related initiatives. The EU and Mexico agreed to cooperate on industrial decarbonization and biodiversity protection and to promote a green transition by jointly advocating for increased Nationally Determined Contributions (NDC) to international climate financing. As part of the collaboration, the EU and member states agreed to support Mexican sustainable infrastructure investments through the Global Gateway Investment Agenda (GGIA). Governmental officials and stakeholders also held several workshops to discuss common challenges and priorities with regards to promoting a circular economy and expanding carbon markets.
European Commission Adopts 2025 Work Programme
The EC adopted its 2025 work programme on February 11. The programme outlines the legislative measures to be adopted in 2025 to boost European competitiveness, security, and resilience. The 2025 work programme includes a series of omnibus packages designed to streamline existing regulations and ease the compliance burden for European issuers and investors. The first such omnibus package, published on February 26 (see update above) aims to streamline CSRD, CSDDD, and EU Taxonomy reporting. The EC’s work programme also includes new policy and regulatory proposals related to decarbonization, water resilience, social policy, and the blue economy.
European Insurance and Occupational Pensions Authority Recommends Update to Nature Risk Standards
The European Insurance and Occupational Pensions Authority (EIOPA) submitted a proposal to the EC on January 30 recommending that insurers’ standard formula recalibrate its natural disaster risk formulation because of climate change. As a result of new scientific climate data and advanced risk modeling, EIOPA recommends the inclusion of new factors in insurers’ natural risk formula standards for “24 regions across natural hazards like floods, windstorms, hail, earthquakes and subsidence.” EIOPA’s proposal assesses the updated risk of each natural catastrophe in each EU member state. EIOPA also proposes analyzing whether wildfires, coastal floods, and droughts should be incorporated into future natural risk standard formula calibrations.
European Financial Reporting Advisory Group Initiates Self-Assessment Mapping for SME Sustainable Reporting
The European Financial Reporting Advisory Group (EFRAG) announced a “Call for Expression of Interest” on February 4, seeking stakeholders to submit a self-assessment form to map “existing and ongoing initiatives on SME sustainability reporting.” EFRAG is seeking input on existing digital platforms, such as those of ESG and sustainability data aggregators, and digital tools, such as GHG emissions calculators, to understand the existing landscape of voluntary SME sustainability reporting; EFRAG will compare this data with its own voluntary reporting standards for SMEs to ensure its standards are consistent with, and complementary to, existing practices.
UK
Financial Reporting Council Publishes Study on the Sustainability Assurance Market
The Financial Reporting Council (FRC) published its market study on the assurance of corporate sustainability reporting on February 5. The FRC report aims to inform investors, companies, and assurance providers by providing insights on the availability and quality of sustainability assurance in the United Kingdom. The FRC report includes three policy recommendations to support improved functioning in the market: the United Kingdom should consolidate “standard setting, oversight, enforcement, and market monitoring” for sustainability assurance into a “unified regulatory regime”; regulators should enhance public insight into “the quality of sustainability assurance”; and the Government should “establish a clear UK policy framework for sustainability assurance that provides medium-term certainty for providers and reporters, supports investment, and aligns with international frameworks where appropriate.”
US
US Treasury Withdraws from Network for Greening the Financial System
The U.S. Department of the Treasury’s Federal Insurance Office (FIO) announced on January 30 that it is withdrawing its membership from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS). According to the statement, the FIO withdrew its membership because NGFS’s platform is “inconsistent with [the U.S.] Administration’s priorities” and the NGFS’s scope exceeds the “FIO’s core duties.” The announcement follows similar withdrawals of NGFS membership by the U.S. Federal Reserve Board (FRB) and Federal Deposit Insurance Corporation (FDIC) (for more information on the FRB and FDIC’s withdrawal from NGFS, see February’s Newsletter).
Republican Congressional Leaders Pen Letter to US Treasury on EU’s CSDDD
The Chairs of the House Committee on Financial Services and the Senate Committee on Banking Housing, and Urban Affairs, as well as three Republican members of the committees, penned a joint letter to the U.S. Secretary of the Treasury and the Director of the National Economic Council on February 26 urging diplomatic engagement with the EU to “challenge and halt” the implementation of CSDDD.
The Congressional letter criticizes the “extraterritorial reach” of CSDDD, which would “threaten [US] economic productivity, corporate governance principles, and jurisdictional sovereignty.” The members of Congress particularly criticized the scope of CSDDD, which would in-scope “at least 300 U.S. companies listed in the S&P 1500” and “small businesses that supply larger companies… even if their operations are solely within the U.S.” The letter also stated that CSDDD “disregards” U.S. corporate governance law’s distinctions between private and public businesses, as well as “U.S. directors’ fiduciary duty to act in the best interest of their shareholders.”
The Congressional letter urges “immediate diplomatic engagement” by the Treasury and the NEC with the EU to “support European calls to indefinitely pause CSDDD”; assert the extraterritorial overreach of the EU legislation as “untenable”; remove CSDDD’s civil liability provisions and not replicate similar provisions in future legislation; and clarify that U.S. companies are not mandated to have Net Zero Transition Plans akin to those of EU firms.
The Congressional letter was sent a day after the EC published its Omnibus proposal narrowing the scope, and delaying the implementation, of CSDDD and removing the civil liability measures. Some Senate Republicans expressed similar concerns over CSDDD in their “questions for the record” in connection with Howard Lutnick’s January 29 nomination hearing for Secretary of Commerce. The questions include how the Commerce Secretary would respond to the EU “attempting to harm the competitive advantages of U.S. Companies” through the “extraterritorial” CSDDD legislation.
US Securities and Exchange Commission Publishes New Staff Legal Bulletin Providing Companies Additional Leeway to Exclude Shareholder Proposals
The U.S. Securities and Exchange Commission (SEC) Division of Corporate Finance (“Staff”) released Staff Legal Bulletin No. 14M (SLB 14M) on February 12 clarifying the Staff’s views on the scope of “economic relevance” and “ordinary business” bases for excluding shareholder proposals under Rule 14a-8 of the Securities Exchange Act of 1934. SLB 14M rescinds Staff Legal Bulletin No.14L (SLB 14L), issued in November 2021, which was widely viewed as making it more difficult for companies to exclude social policy and environmental shareholder proposals from their proxy materials.
SLB 14M provides guidance that the excludability of proposals will be made on a “case-by-case” basis and that analysis of a company’s particular facts and circumstances is a key consideration in assessing shareholder proposals that raise significant policy issues. SLB 14M reinstates previous guidance on exclusions of proposals using the “economic relevance” and “ordinary business” tests, including consideration of the degree to which a proposal “micromanages” the company by “probing too deeply” by suggesting prescriptive timelines, solutions, or policies for complex issues where shareholders may “not be in a position to make an informed judgment.”
Under SLB 14M, the SEC states that while shareholder proposals on substantive governance issues may relate to “almost all companies,” shareholder proposals on social and ethical issues can still be raised but must demonstrate a significant effect on the business of the company.
SEC Chair Asks Court to Delay Pending Litigation on SEC Climate Rules
SEC Acting Chair Mark Uyeda announced on February 11 that he had directed SEC staff to notify the Eighth Circuit (where the climate rule litigation is consolidated) of changed circumstances, including “the recent change in the composition of the Commission” and to request that the Court not schedule the pending case for argument while the SEC deliberates and decides its next steps (for more information on the SEC climate rules, see the ISS-Corporate post, “SEC Adopts Climate Disclosure Rule: Key Takeaways for Corporates”). Acting Chair Uyeda emphasized his view that “the Rule is deeply flawed and could inflict significant harm on the capital markets” in the announcement.
Brazil
Brazil’s Finance Ministry Concludes First Consultation on the Brazilian Sustainable Taxonomy
Brazil’s Finance Ministry (Ministério da Fazenda) announced the completion of the first consultation phase on the Brazilian Sustainable Taxonomy (TSB) on February 19. The TSB, part of the Finance Ministry’s Ecological Transformation Plan, lists classifying criteria for activities and sector investments aligned with decarbonization transition goals. The Finance Ministry had engaged in workshops, engagements, and public outreach to seek input on the framework of the proposed TSB. The Finance Ministry has now opened a second consultation seeking input on “fundamental technical issues,” particularly in setting quantitative limits for climate mitigation and adaption issues and discussing sector-specific safeguard and adaption adjustments.
Brazilian Bioeconomy Commission Announces Progress on National Bioeconomy Plan
The National Bioeconomy Commission (CSBio), an organization consisting of Brazilian governmental and civil society organizations, held its first meeting on February 13 to prepare a National Bioeconomy Development Plan (PNDBio). At the meeting CSBio participants set an action plan and a calendar of activities, as well as thematic working groups to address the biomass; bioindustry and manufacturing; and terrestrial and aquatic ecosystems and sociobioeconomy sectors. Relevant Brazilian ministries have been charged with leading the work of the different sectoral working groups, which will jointly collaborate to create the PNDBio.
By:
Noam Cherki, Associate, Regulatory Affairs & Public Policy, ISS STOXX
Hugo Gallagher, Senior Associate, Regulatory Affairs & Public Policy, ISS STOXX
Karina Karakulova, Director of Regulatory Affairs & Public Policy, ISS STOXX
