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The European Commission has presented a package of key enabling legislation on sustainable finance (the “Sustainable Finance Package”).  This includes the much-awaited first technical screening criteria under the Taxonomy Regulation — outlined in the Taxonomy Climate Delegated Act (“TCDA”) — and a proposal for a Corporate Sustainability Reporting Directive (“CSRD”), which significantly revises and expands on the existing Non-Financial Reporting Directive’s remit and disclosure rules for corporates. While the former is directly aimed at financial institutions and investors, and the latter at large and listed entities, the package has broader implications for all corporates.

Sustainable Finance Package: Context and CommentThe Commission’s intention with its Sustainable Finance Package is twofold: (1) in the short term, to set a clear regulatory framework to encourage investments that will contribute to a sustainable and inclusive economic recovery from the COVID-19 pandemic; and (2) in the long term, to ensure the transition to a carbon neutral EU economy by 2050, in accordance with the 2020 European Climate Law.  Following the adoption of the EU Taxonomy Regulation (explained further below), the Sustainable Finance Disclosure Regulation, and the Benchmark Regulation, which enhances the transparency of benchmark methodologies, the Commission has in this legislative package laid out the next building blocks for its envisioned sustainable finance ecosystem.

In addition to the impact on financial institutions and investors directly subject to the new laws, the Sustainable Finance Package may impact corporates in the following ways:

  • Corporates may be more likely to receive requests for data on their environmental and other sustainability practices as upstream capital markets participants grapple with new obligations to distinguish between green, “light green,” and other investments;
  • Corporates may be subject to direct requirements to report on activities relating to their environmental, social, and governance objectives;
  • Longer-term, the package may form the basis of a “blueprint” for wider stakeholders, meaning that corporates may need to improve performance against the standards, not just to attract capital, but also to remain competitive; and
  • On a global level, these EU sustainability measures have real potential to become gold standards and influence the investment market outside of the EU, a phenomenon known as the ‘Brussels Effect’.[1]

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Continue Reading The EU’s Green Capitalism Takes Shape: Taxonomy Screening Criteria and Corporate Sustainability Reporting

With the EU-UK Trade and Cooperation Agreement signed and Brexit now becoming an increasingly settled fact, the areas of potential divergence between the UK and the EU are becoming clearer.  The strategy appears to be to identify those areas in which the UK already enjoys a competitive edge over its rivals and then work out…

Given increasing public and investor focus on ESG disclosures and the growing recognition that managing ESG risks effectively can be effective in creating long-term value, there is significant and growing (internal and external) pressure on companies to make some form of ESG disclosure.  Some companies already view voluntary comprehensive ESG disclosure as a way of…

On January 1, 2021, the Senate voted to override President Trump’s veto of the National Defense Authorization Act (the “NDAA” or “Act”), which includes over 200 pages of significant reforms to the Bank Secrecy Act (“BSA”) and other anti-money laundering (“AML”) laws that have been working their way through Congress for several years.  The Senate’s

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On November 20, 2020, the Office of the Comptroller of the Currency (“OCC”) issued a proposed rule that would impose on large national banks and federal savings associations (collectively, “banks”) a requirement to provide “fair access” to the financial products and services those institutions offer. The proposal is intended to preclude the banks it covers

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On November 19, 2020, the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Financial Crimes Enforcement Network, National Credit Union Administration, and Office of the Comptroller of the Currency (collectively, the “Agencies”) issued a joint fact sheet clarifying how banks subject to the Bank Secrecy Act (“BSA”) should apply a risk-based

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Under the Biden administration, it is unlikely that major financial services legislation like a Dodd-Frank Act will pass in the next few years, especially if Republicans hold the Senate. The Biden Administration will nevertheless have significant opportunities to shape policy through the federal financial agencies. The adage that “personnel is policy” rings especially true for…

As we noted in a client alert late last week, the federal banking agencies released on August 13, 2020, a joint statement on enforcement of Bank Secrecy Act/Anti-Money Laundering (“BSA/AML”) requirements.  At the time, the Federal Deposit Insurance Corporation made reference to a possible separate “Statement on Enforcement of the Bank Secrecy Act” from FinCEN. 

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