Environmental Law

On May 24, 2023, EPA released a guidance memorandum addressing the hazardous waste status of lithium ion batteries under the Resource Conservation and Recovery Act (“RCRA”).  EPA released the guidance to “both remove uncertainties for the states and industry about the regulatory status of these materials,” and to ensure that lithium ion batteries are properly…

Various national competition authorities (“NCAs”) are continuing to consider sustainability arguments in competition cases. However, NCAs are increasingly diverging in their approach as to whether, and to what extent, they are willing to allow sustainability considerations in the competition law framework. This blogpost highlights a few recent developments in jurisdictions on both sides of the Atlantic.

Belgian approval of an initiative in the banana sector

On 30 March 2023, the Belgian Competition Authority (“BCA”) approved a sustainability initiative concerning living wages in the banana industry. This marks the first initiative based on sustainability grounds  approved by the Belgian NCA.

The IDH Sustainable Trade Initiative, a social enterprise working with various entities towards facilitating sustainable trade in global supply chains, and five Belgian supermarkets proposed a collaboration scheme aimed at closing the gap between actual wages and living wages in the banana sector. The collaboration will consist of meetings and discussions where the companies’ internal conduct will be assessed and further developed with the aim to better support living wages for workers in the participants’ banana supply chains.

The collaboration will involve the exchange of certain data and information which the BCA did not consider anticompetitive. The participants have committed to not set mandatory or recommended minimum prices and to not communicate any changes in costs relating to their supply chains. IDH will supervise the collaboration and any data shared will be verified by an independent third party.

Similar initiatives concerning the banana sector  have been proposed in Germany, the Netherlands and the UK. The German NCA has already approved the proposed initiative. Neither the Belgian nor the German NCA considered the initiatives in question to infringe competition law. There is, however, a fine line between such agreements falling in or outside the scope of competition law, and potentially amounting to an infringement. For example, clauses which lead to non-negligible price increases for end-consumers could raise questions and potentially be considered to have anticompetitive effect. It can therefore be expected that that NCAs will periodically monitor the implementation of such initiatives.…

Continue Reading Sustainability Agreements: Potential Divergence between Authorities

2022 and 2023 may be remembered as pivotal years for efforts against so-called “greenwashing.”  In this article, we look at some recent developments in the regulation of “green claims” in the UK, the US, and the EU that corporates should be aware of.  We provide a broad summary and comparison snapshot of the UK, US and EU regimes to help companies navigate these rules.  Now is a critical time for companies to get up to speed: authorities in all three jurisdictions are focusing more and more intently on this issue; company reputations will increasingly rise and fall with the strength of their green claims, and national regulators are set to get new powers (including the power to levy significant fines) to tackle companies found in breach.

I.  Summary of recent developments: What’s new in greenwashing?

In January 2022, the UK’s Competition & Markets Authority (“CMA”) launched a sector‑by‑sector review of misleading environmental claims.  The CMA started with the fashion sector, and called out a number of high‑profile, fast‑fashion companies for their practices.  Twelve months later, the CMA announced that it was expanding the investigation to greenwashing around “household essentials”, including food, drink, toiletries and cleaning products.  The CMA’s review is the first concerted application of the CMA’s new Green Claims Code, published in September 2021, which gives guidance for any business (wherever based) making environmental claims in the UK.

Meanwhile, in December 2022, the US Federal Trade Commission’s (“FTC”) launched a review of the “Guides for the Use of Environmental Claims” (“Green Guides”), which was last updated in 2012.  The initial comment period closed on April 24, 2023.  The FTC plans to update the Green Guides to reflect developments in consumers’ perception of environmental marketing claims.  As a part of its ongoing review, the FTC also announced a workshop to examine recyclable claims.  The workshop is scheduled for May 23, 2023 and the public can submit comments on the subject of recyclable claims through June 13, 2023.  For more detail on the review, please see our dedicated blog post, here.

Finally, the EU has proposed two Directives to modernize and harmonize the rules on green claims across the bloc (together, the “EU Green Claims Proposals”).  Currently, EU law does not specifically regulate environmental claims.  Instead, environmental claims are subject only to general consumer protection and advertising rules (set out in Directive 2005/29 on Unfair Business-to-Consumer Practices and Directive 2006/114 on Comparative Advertising).  Admittedly, the EU has published guidance on interpreting and applying the general rules in the context of green claims (see the guidance here, and see our previous blog post discussing the guidance here).  However, in practice, EU Member States approach interpretation and enforcement in a variety of different ways.  On March 3, 2022, the European Commission published a Proposal for a Directive Empowering Consumers for the Green Transition, also known as the “Greenwashing Directive.”  The Greenwashing Directive amends the EU’s existing consumer protection rules, and bans a number of general green claims, such as “climate neutral” or “eco-friendly.”  It also imposes some rules on the use of non-environmental sustainability claims or “social impact” claims, such as “locally produced” or “fair labour.”  One year later, on March 22, 2023, the European Commission presented a Proposal for a Directive on Green Claims (“Green Claims Directive”), which we discussed here.  The Green Claims Directive proposes a new and strict framework, applicable to all companies operating in the EU/EEA, to harmonize the rules on the substantiation of voluntary green claims. 

Below, we outline the key aspects of the different legislative frameworks.…

Continue Reading The Green Claims Global Drive: Developments in the UK, US and EU

Those in the business of fast‑moving consumer goods (“FMCGs”) are likely aware of the plethora of environmental and product stewardship regulations applicable to the FMCG sector.  These laws are set to increase and expand in application.  What FMCG companies also need to get to grips with are a range of broader (and also fast‑moving!) environmental, social and governance (“ESG”) developments and consequent risks and opportunities.  Companies need to understand how the new world of ESG impacts their supply chains, key ingredients and components, consumer choice and confidence, competitive advantage, market accessibility, and marketing. 

Designed as a ‘primer’ for FMCG companies, in this piece, we cover a range of key trends in the emerging UK and EU ESG legal landscape as relevant for the FMCG sector, from farmers to Food Business Operators (“FBOs”) and from manufacturers to retailers.  We also discuss some key legal and reputational risks; as well as pointers to help companies decipher and prepare for the ESG storm.

We focus on the UK and the EU (first movers on many ESG issues), but the landscape in other jurisdictions (including, for example, the US) is also evolving and becoming more complex.

Key ESG Issues for FMCGs

We think there are four categories of key ESG developments for FMCGs to watch: (I) corporate reporting and disclosure regimes; (II) green/sustainability claims and labelling; (III) supply chain obligations; and (IV) product packaging and presentation.

Many emerging ESG frameworks cut across sectors.  This may be efficient for regulators, but can make identifying sector-specific risks and opportunities more challenging.  We have sought to do that below.…

Continue Reading Green Groceries: Key ESG Issues for the FMCG Industry (including FBOs)

Bottom Line

Mexican President Andrés Manuel López Obrador submitted bills to Congress intended to further curtail the rights of private investors in the mining sector and beyond.  As part of his resource nationalism agenda, on display in the energy sector at first, López Obrador has also nationalized lithium reserves and created a state‑owned company to lead development of those reserves.  The new bills, which target other minerals and concessions in the country, have been met with shock and disappointment.  If passed as drafted, and to the extent the proposed amendments are implemented to restrict vested rights arising from pre-existing mining and potentially other concessions, these bills may result in the expropriation of foreign investments and other breaches of Mexico’s obligations under applicable international investment agreements.

Legislative Process

On Tuesday March 28th, López Obrador sent to the Chamber of Deputies a bill seeking to reform the Mining Law, the National Water Law, the General Law of Ecological Equilibrium and Environmental Protection, and the General Law for Prevention and Integral Management of Waste Residues (the “Mining Bill”).  

The Mining Bill will be discussed and reviewed by four Committees in the lower house – three of them presided over by López Obrador’s party, MORENA, or allied parties – giving it a relatively easy path forward.  The Mining Bill requires a simple majority to be approved, and MORENA and its allied parties have the required votes to pass it.  Considering that the current legislative session ends on April 30th, it is possible that the bill will move fast through the Chamber of Deputies.  

In the Senate, the Mining Bill might face some opposition but probably not enough to make substantial changes as most of the commissions where it will be discussed are also presided over by MORENA or its allies.

Around the same time, López Obrador also sent to the Chamber of Deputies a bill that includes sweeping changes to administrative regulations, including rules for concessions, permits and other authorizations, which could impact the mining, infrastructure and energy sectors, among others (the “Administrative Law Bill”).  While MORENA has enough votes to pass the Administrative Law Bill as well, it may face more resistance, particularly in the Senate.…

Continue Reading Mexico: Proposed Changes to Mining, Environmental, and Administrative Laws Increase Regulatory Risk, Impact Private Participation in Regulated Sectors, and Could Lead to Investment Claims

The United Nations annual climate change conference—officially known as the 27th Conference of the Parties to the UN Framework Convention on Climate Change (“UNFCCC”), or COP27 for short—held in Sharm el Sheik, Egypt, finally concluded early Sunday morning, more than 24 hours late.

COP27 was held amidst the ongoing Russian war in Ukraine and the consequent economic turmoil, including Europe’s scramble to secure non-Russian gas. It was previewed by a UNFCCC report which concluded that on its current trajectory the world faced warming of between 2.5 and 2.9 degrees Celsius by the end of the century, and accompanied by a new report from the International Energy Agency’s 2022 World Energy Outlook which concluded that the world needed to spend at least $4 trillion annually to tackle climate change from now until 2030.

Against this challenging backdrop, COP27 was never going to be straightforward. But those difficulties were compounded by divisions between developing and developed world over the priorities that should form the focus for COP27. Those divisions manifested themselves most clearly in tensions before, during, and at the conclusion of the Conference over the issue of “loss and damage.” This acrimony overshadowed almost all other aspects of the COP, which will nonetheless be viewed as historic for being the first COP to not only place the loss and damage issue on the official agenda, but for its creation of a separate fund to compensate countries most impacted by climate change. But loss and damage aside, the broader picture that emerged from COP27 was one of lost opportunities to adopt more ambitious and accelerated climate mitigation commitments in response to the dire scientific warnings about the impact of rapid global warming on the planet. In particular, efforts calling for a phase down of all fossil fuels were ultimately unsuccessful in the Summit’s final agreement and highlighted the mismatch between the pace of global emissions reduction commitments and that which is needed to avoid the most disruptive climate impacts.…

Continue Reading COP27: A Flawed though still Consequential Climate Summit

On 30 May 2022, the European Union (“EU”) adopted the revised Regulation on guidelines for trans-European energy infrastructure (No. 2022/869) (the “TEN-E Regulation 2022”), which replaces the previous rules laid down in Regulation No. 347/2013 (the “TEN-E Regulation 2013”) that aimed to improve security of supply, market integration, competition and sustainability in the energy sector. The TEN-E Regulation 2022 seeks to better support the modernisation of Europe’s cross-border energy infrastructures and the EU Green Deal objectives.

The three most important things you need to know about the TEN-E Regulation 2022:

  • Projects may qualify as Projects of Common Interest (“PCI”) and be selected on an EU list if (i) they fall within the identified priority corridors and (ii) help achieve EU’s overall energy and climate policy objectives in terms of security of supply and decarbonisation. The TEN-E Regulation 2022 updates its priority corridors to address the EU Green Deal objectives, while extending their scope to include projects connecting the EU with third countries, namely Projects of Mutual Interest (“PMI”).
  • PCIs and PMIs on the EU list must be given priority status to ensure rapid administrative and judicial treatment.
  • PCIs and PMIs will be eligible for EU financial assistance. Member States will also be able to grant financial support subject to State aid rules.

…
Continue Reading The European Union adopted new rules for the Trans-European Networks for Energy

On 19 October, alongside a number of other important strategy documents (over 2,000 pages in total), the UK Government published its ‘Net-Zero Strategy’ (NZS) which will help achieve the UK’s interim five yearly carbon targets leading up to net-zero by 2050.

The NZS focuses on eight key areas with priorities and policies set out under each area:

1) The Power Sector

The NZS sets out the UK Government’s ambition that the power sector will be fully decarbonised by 2035 (with the caveat that this will be subject to security of supply). The focus is on domestically-generated renewable electricity to create a power system based on a mix of renewables, new nuclear power stations, flexible storage, gas with CCS and hydrogen.

Specifically, the NZS undertakes to:

  • Secure FID on a large-scale nuclear plant by the end of this Parliament;
  • Launch a new £120 million Future Nuclear Enabling Fund.
  • Create 40GW of offshore wind by 2030.
  • Create up to one of floating offshore wind by 2030 .
  • Deploy new measures to help smooth out future price spikes.

2) Fuel Supply & Hydrogen

The NZS re-states the ambition that the UK will deliver 5 GW of hydrogen production capacity by 2030.  The UK will at the same time halve emissions from oil and gas and increase the production of biofuels.

Specifically, the NZS undertakes to:

  • Provide up to £140 million to establish the Industrial Decarbonisation and Hydrogen Revenue Support (IDHRS) scheme, with a target of creating up to 250MW of green hydrogen production capacity in 2023.
  • Introduce a climate compatibility checkpoint for future licensing on the UK Continental Shelf.
  • Regulate the oil and gas sector in a way that minimises greenhouse gases through the revised Oil and Gas Authority Strategy.

3) Industry

The NZS commits the UK to creating four carbon capture usage and storage (CCUS) clusters by 2030.  The UK will support a ‘deep decarbonisation of industry’ through carbon pricing and the creation of low carbon industry clusters, which would have access to Government support under the CCS Infrastructure Fund and revenue support mechanisms.

Specifically, the NZS undertakes to:

  • Accelerate the development of the Hynet and East Coast Clusters to capture 20-30 MtCO2 per year by 2030.
  • Create a ‘reserve cluster’ of Teesside and the Humber, Merseyside, North Wales and the North East of Scotland.
  • Use the Industrial Energy Transformation Fund to future-proof industrial sectors.
  • Consult on a net zero consistent UK ETS cap to incentivise cost-effective abatement in industry.

4) Heat and Buildings

The NZS creates a pathway to ensuring that from 2035 all new heating appliances in homes and workplaces are low carbon and sets 2026 as the date for a decision on the role of Hydrogen in heating. The Government will seek to reduce electricity costs and to rebalance energy levies (such as RO and FiTs) and obligations (such ECO) away from electricity to gas.

Specifically, the NZS undertakes to:

  • Prevent the sale of new gas boilers beyond 2035.
  • A Boiler Upgrade Scheme will incentivize the swap-out of domestic gas boilers.
  • Create a new Heat Pump Ready programme to provide funding for heat pump technologies with a target of 600,000 installations a year by 2028.
  • Rebalance policy costs from electricity bills to gas bills.
  • Fund the Social Housing Decarbonisation Scheme and Home Upgrade Grants and decarbonise public sector buildings by 75% by 2037.
  • Launch a Hydrogen Village trial to inform a decision on the role of hydrogen in the heating system by 2026.
  • Consider mandatory disclosure requirements for mortgage lenders on the energy performance of homes in their portfolios (UK housing stock generates a 20% of carbon dioxide emissions).
    Continue Reading The UK’s Net Zero Strategy

Energy, climate, and environment are areas where the policy differences resulting from the final outcome of the election also will be particularly stark. On November 4, 2020, President Trump took the final step consummating his pledge to withdraw the United States from the Paris Climate Agreement. This reflects his early and consistent perspective, embodied in…