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 a new guide issued by the International Sustainability Standards Board (ISSB) to help companies implement its standards, a new climate reporting law in Australia and Hong Kong’s proposals for its sustainability reporting framework.
INTERNATIONAL ASIA-PACIFIC EUROPE LATIN AMERICA AND THE CARIBEAN MIDDLE EAST AND AFRICA UNITED STATES AND CANADA
INTERNATIONAL
ISSB issues guide for companies on implementing sustainability standards
The ISSB published a guide on Sept. 25 to support companies in implementing its standards, particularly in jurisdictions without regulatory requirements. The board said the guide can help companies explain to investors and other stakeholders what sustainability-related financial information they can provide throughout their path to compliance with the ISSB’s two standards, published in June 2023. IFRS S1 requires companies to disclose sustainability-related risks and opportunities, and IFRS S2 is the board’s climate-related disclosures standard. Companies can take a transitional approach to reporting and phase in the requirements over time, using temporary exemptions offered in the standards such as disclosing only climate-related risks in the first annual reporting period of applying IFRS S1.
ASIA-PACIFIC
Australia opens consultation on creation of biodiversity credits market
The Australian government on Sept. 2 opened a consultation on rules that would serve as the foundation for its Nature Repair Market, a voluntary biodiversity credits market expected to launch in 2025. The market is designed to reinforce government goals to protect nature, such as protecting 30% of Australia’s land and seas by 2030 and investing A$500 million to protect endangered species. The proposed rules include registration requirements for biodiversity projects, delivery of biodiversity certificates and their content, the creation of a biodiversity market register with information about specific projects and certificates, as well as assurance requirements.
Australian legislators pass bill on mandatory climate reporting
Australia’s House of Representatives on Sept. 9 passed a bill that introduces mandatory climate disclosures for large businesses and asset owners that will apply as of Jan. 1, 2025, for companies with annual revenues of more than A$500 million; as of July 1, 2026, for companies with annual revenues of more than A$200 million; and as of July 1, 2027, for companies with annual revenues of more than A$50 million. The Senate voted to approve the legislation on Aug. 22. The bill forms the foundation for Australia’s Sustainability Reporting Standards approved by the Australian Accounting Standards Board on Sept. 20 and based on the ISSB’s two sustainability-related standards.
Hong Kong launches consultation on sustainability disclosure standards
The Hong Kong Institute of Certified Public Accountants launched on Sept. 16 a consultation on the adoption of sustainability-related disclosure standards, aligned with the ISSB’s first two sustainability standards. The first proposed standard, HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information, is based on IFRS S1. The second proposed standard, HKFRS S2 Climate-related Disclosures, is based on IFRS S2. The Hong Kong standards would be effective from Aug. 1, 2025. Listed companies and regulated financial institutions would be subject to the disclosure requirements.
Singapore updates climate-related reporting disclosures based on ISSB standards
Singapore Exchange Regulation announced on Sept. 23 updates to its sustainability reporting regime following a public consultation. Listed companies will be required to start reporting Scope 1 emissions, which come from direct operations, and Scope 2 emissions, which are indirect emissions primarily derived from purchased energy, at the beginning of the 2025 financial year and will have to incorporate the ISSB’s climate-related standards in their disclosures, the exchange said. With regards to Scope 3 emissions, the indirect emissions that occur up and down a company's value chain, the exchange said it would “review issuers’ experience and readiness before establishing the implementation roadmap” for disclosure. The results from the consultation had “highlighted challenges,” especially for smaller issuers, of reporting on Scope 3 emissions, the exchange said. Large issuers will still be expected to report on Scope 3 emissions from financial year 2026.
Malaysia’s stock exchange proposes amendments to sustainability reporting regime
Bursa Malaysia, the Malaysian stock exchange, proposed on Sept. 29 amendments to its sustainability reporting requirements that would bring sustainability-related disclosures by listed Malaysian companies into line with those set out by the ISSB. Under the proposals, large, listed companies would have to start reporting from Dec. 31, 2024, and would have a three-year transitional period for applying the standards. Initially, they would only be required to disclose climate-related risks related to their main business and Scope 3 emissions related to business travel and employee commuting. They would fully comply with the ISSB standards from Dec. 31, 2027. Smaller listed companies would benefit from a transition period until Dec. 31, 2028, and fully comply from Dec. 31, 2028.
EUROPE
UK introduces bill to strengthen water regulation
The UK Parliament introduced on Sept. 4 a bill aimed at strengthening the power of water regulators and introducing measures to protect the environment from water pollution. The proposed law would introduce a new statutory requirement for water companies in England to publish annual, publicly available plans on the steps they are taking to reduce pollution, including specific actions and timelines, the UK Department for Environment Food & Rural Affairs said in a policy statement. From Jan. 1, 2025, water companies would be required to publish information on storm and emergency overflows. The bill would also strengthen regulators’ oversight over the water industry and provide Ofwat, the UK Water Services Regulation Authority, with the power to set rules for water companies, including blocking bonuses for executives who do not meet specified standards.
UK financial regulator delays start to certain sustainability disclosure rules
The UK Financial Conduct Authority (FCA) on Sept. 9 announced it would delay implementation of its “naming and marketing” rules under its Sustainable Disclosure Requirements regime to April 2, 2025, from Dec. 2, 2024. The regulator said feedback from market participants had demonstrated that some firms required more time to meet the standards. Companies that currently use terms such as “sustainable,” “sustainability” or “impact” and that wish to use a label or change the name of a fund, or that have applied for approval of amended disclosures in line with the new rules by Oct. 1, 2024, are eligible for the delay. The FCA encouraged firms that were ready to comply with the rules to do so before April 2, 2025.
European Commission adopts measures to restrict use of certain chemicals
The European Commission on Sept. 19 adopted new measures to restrict the use of compounds that form some “forever chemicals” that can contaminate soil and water. The restrictions apply to undecafluorohexanoic acid, or PFHxA, and PFHxA ‑related substances. The measures will ban the sale and use of PFHxA in consumer textiles, such as rain jackets; food packaging, such as pizza boxes; and cosmetics, including skin care products, the Commission said. The restrictions will enter into force 20 days after publication in the EU’s Official Journal. There will be a transition phase of between 18 months and five years for implementation of the restrictions, depending on what the chemicals are used for, to allow time to replace them with safer alternatives, the Commission said.
LATIN AMERICA AND THE CARIBBEAN
Mexico issues proposals on adoption of global sustainability standards
Mexico’s Banking and Securities Commission on Sept. 13 published proposals on amendments to its rules for issuers that would require them to include sustainability information in their financial statements in accordance with the ISSB’s two standards, IFRS S1 and IFRS S2. Issuers other than financial entities, federal entities or municipalities would have to include this information in their financial statements and annual reports, the regulator said. Issuers would start reporting from 2026 based on financial year 2025, according to the proposed amendments.
MIDDLE EAST AND AFRICA
Kenya’s central bank issues draft climate risk disclosure framework
Kenya’s central bank published a climate risk disclosure framework on Sept. 18, 2024, designed to guide banks in disclosing climate-related information and inform investors about the potential impact of climate-related risks. The framework is based on the ISSB’s climate-related disclosures standard, IFRS S2, and the Basel Committee on Banking Supervision principles on climate-related financial risks. It requires banks to disclose their exposure to physical climate risks, transition risks, corporate governance practices on climate-related issues and the impact of climate-related risks on their loan books, among other things.
UNITED STATES AND CANADA
California governor approves amendments to climate-related legislation
California Governor Gavin Newsom approved amendments to two California laws enacted in 2023 that require certain public and private US companies doing business in the state to disclose their climate-related financial risks and their Scope 1, Scope 2 and Scope 3 emissions. The amendments delay the requirement for the California Air Resources Board (CARB) to adopt the regulations to July 1, 2025, from Jan. 1, 2025. They also shift the timeline for Scope 3 reporting to a date scheduled by CARB rather than 180 days after Scope 1 and Scope 2 reporting. They also allow disclosure reports to be consolidated at the parent company level and remove the requirement that an annual fee be paid upon filing the disclosure.