Regulation is shaping the sustainability agenda and changing the way companies do business in different jurisdictions but keeping pace with constant regulatory updates has become a mammoth task for businesses and investors. In this recurring series, S&P Global Sustainable1 presents key environmental, social and governance regulatory developments and disclosure standards from around the world.

In this month's update, we look at Chile’s proposals to adopt global sustainability disclosure standards, Singapore’s energy transition bill and China’s plan to standardize carbon emission calculations, among other developments.

ASIA-PACIFIC    EUROPE    LATIN AMERICA AND THE CARIBBEAN    MIDDLE EAST AND AFRICA   

ASIA-PACIFIC

Thai market regulator approves investment trust to support sustainable goals

Thailand’s Securities and Exchange Commission gave its approval on Aug. 1 to the creation of a Green Investment Trust (GIT) to encourage investment in environmental projects to help it reduce emissions and protect biodiversity in the country. The GIT would invest in environmental projects designed to reduce carbon emissions in the forestry and agriculture sectors, the regulator said. The trust would invest in land ownership or land leasing rights for activities in forestry and agricultural sectors that comply with the criteria of the Thailand Greenhouse Gas Management Organization. The land must be located in Thailand and be registered by the Verified Carbon Standard Program or comply with other recognized international carbon credit standards. The regulator said it would draft relevant regulations to establish and manage GIT and would seek stakeholder comment on the plan.

China to establish mechanism to control carbon emissions and emission intensity

China’s General Office of the State Council on Aug. 2 announced plans to establish a new mechanism to control both carbon emissions and emission intensity. The country plans to implement between 2026 and 2030 a dual control system that will focus on emission intensity and be accompanied by controls of total emissions. Emission intensity compares the greenhouse gas (GHG) emissions of an activity or economic sector to the economic value it generates. China also intends to include emissions quotas in its national economic and social development planning and introduce laws and regulations to ensure it reaches its goal of peak carbon emissions by 2030, according to the statement. China also plans to expand coverage of its national carbon emission trading market, the statement said.

China announces plan to standardize carbon emission calculations

China published a plan on Aug. 8 to standardize carbon emission calculations for key sectors and companies to help the country meet its carbon reduction targets. Under the plan, China will issue 70 national standards on carbon accounting, footprint, reduction, capture, utilization and storage by the end of 2024 for sectors such as new energy vehicles, photovoltaic products and lithium batteries, as well as electronics, plastics and construction materials. The plan was issued by the National Development and Reform Commission, the State Administration for Market Regulation and the Ministry of Emergency Management.

Singapore introduces bill on energy transition

Singapore’s Ministry of Trade and Industry introduced a bill to parliament on Aug. 8 setting out measures for the island state’s energy transition. The bill seeks to amend the Energy Market Authority (EMA) of Singapore Act, Electricity Act and Gas Act to help Singapore decarbonize the power sector and meet its 2050 net-zero goal, the ministry said in a statement. It would create a S$5 billion Future Energy Fund to support investments for Singapore’s energy transition. It would also establish a Central Gas Entity to centralize gas procurement for the power sector. It would also allow the EMA to recover costs for providing energy security, market development and decarbonization-related initiatives, facilitate shared access to critical energy infrastructure and require owners of key electricity and gas assets to seek approval when repurposing assets. The bill also aims to grant the EMA the authority to ration power during emergencies.

Hong Kong financial regulator publishes climate-related risk governance observations

The Hong Kong Monetary Authority (HKMA) published on Aug. 22 a set of good practices and observations on financial institutions’ governance of climate-related risks based on findings from its climate stress tests of the financial sector. The good practices are designed to serve as a reference to help financial institutions improve their climate-risk governance frameworks and processes, the regulator said. The practices include establishing dedicated committees to support the oversight of climate-related issues and ensuring adequate discussions of climate-related matters at the board and senior management level. Other good practices include developing climate-related risk quantitative metrics for credit risk assessments and embedding climate-related criteria in performance evaluations, among others.

EUROPE

European Commission presents guidance on implementing CSRD

The European Commission published on Aug. 7 answers to frequently asked questions from companies on the implementation of the Corporate Sustainability Reporting Directive (CSRD), applicable from Jan. 1, 2024. The answers take into account feedback received from companies and cover issues such as scope, application dates and exemptions, the Commission said. They clarify, for example, when companies can use estimates rather than collecting information throughout its supply chain, it said. The document also provides guidance on publishing sustainability reports for non-EU companies. It sets out the requirements for the assurance of sustainability reports and on disclosures under the EU taxonomy , a classification system of sustainable activities. Certain companies will start reporting on the new rules from 2025 for the financial year 2024.

EFRAG publishes digital taxonomies for sustainability reporting

The European Financial Reporting Advisory Group (EFRAG), which serves as technical advisor to the European Commission, published on Aug. 30 digital taxonomies for the first set of the European Sustainability Reporting Standards (ESRS) for companies subject to the CSRD and for Article 8 disclosures under the EU taxonomy. Under Article 8, companies must disclose taxonomy-eligible revenues, capital and operating expenditure. The ESRS taxonomy will form the basis for the European Securities and Market Authority (ESMA) to develop Regulatory Technical Standards for tagging the ESRS sustainability statement, EFRAG said. Digital tagging will not be mandatory for companies until the European Commission adopts the standards that ESMA is to develop, EFRAG said, but it encouraged companies to begin tagging their sustainability standards on a voluntary basis.

LATIN AMERICA AND THE CARIBBEAN

Chile’s financial regulator launches consultation on global sustainability standards

Chile's financial regulator, la Comisión para el Mercado Financiero, launched on Aug. 20 a consultation on adopting the first two sustainability-related standards from the International Sustainability Standards Board (ISSB), which came into effect Jan. 1, 2024. The proposal would amend existing regulation requiring companies under the regulator’s supervision to disclose sustainability and corporate governance information in annual reports. The regulator said the current regulation was closely aligned with the ISSB standards but  the ISSB standards give greater clarity to the requirements, which should facilitate compliance. The regulator is also proposing a new requirement that would oblige companies to disclose what gender quota policies boards and nominating committees have in place to support shareholder votes of both men and women directors. Some of the proposed modifications are related to corporate governance codes, and workplace and sexual harassment, the regulator said. Companies would have to start reporting according to the ISSB standards as of 2027, based on the 2026 financial year, the regulator said.

MIDDLE EAST AND AFRICA

South Africa proposes guidance on climate-related disclosures for banks and insurers

The South African Reserve Bank’s Prudential Authority launched on Aug. 3 two consultations for banks and insurers on its proposals for climate-related disclosures based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and the ISSB. The proposed guidance uses the TCFD’s four main pillars — governance, strategy, risk management, and metrics and targets — to help banks and insurers manage their climate-related risks. Banks and insurers would have to disclose on an annual basis how they conduct oversight of climate risk, including senior management’s role. They would also be required to describe the impact of climate-related risks and opportunities on business and strategy. They would also have to report on their risk management policies, processes and controls for identifying and assessing climate-related risks. The guidance would also require banks and insurers to disclose the metrics they use to assess their climate-related risks and opportunities, including carbon emissions throughout their value chain, and specific targets like GHG emissions.

Botswana Stock Exchange publishes sustainability disclosure guidance

The Botswana Stock Exchange launched on Aug. 8 a sustainability disclosure guide based on global developments in disclosure standards including the GRI’s Sustainability Reporting Standards, the ESRS and the ISSB’s IFRS S1 general requirements standard. The guidance is designed to help improve listed companies’ sustainability disclosures and align with international standards, the stock exchange said in a document. The exchange recommends companies disclose on governance, strategy, risk and impact management as well as metrics, targets and performance. It also suggests companies report on social metrics like labor standards and human rights as well as environmental metrics like climate change and energy, water security, and biodiversity and land use.