Companies are facing increased climate litigation, according to new research, with at least 230 new cases filed in 2023 and a more consolidated focus on strategic efforts in areas anticipated to have high impact. Led by the Grantham Research Institute (GRI) on Climate Change and the Environment at the London School of Economics and Political Science (LSE), the research highlighted ‘climate-washing’ cases, which it said have not only grown in number but become more successful. A total 47 such cases were filed in 2023, bringing the total to more than 140, and more than 70% of completed cases were decided in favour of the claimants. LSE GRI’s sixth annual report also underlined “significant successes” in ‘government framework’ cases last year, which challenge the ambition or implementation of a government’s overall climate policy response. The dataset was drawn primarily from the Sabin Center for Climate Change Law’s climate litigation databases, which recorded 2,666 climate litigation cases and around 70% of them filed since 2015. This is up from 2,341 climate change litigation cases filed at the time of LSE GRI’s fifth annual report last year. The US saw the most new cases filed in 2023 (129), followed by the UK (24), Brazil (10), and Germany (7). The US also remains the country with the highest number of documented climate cases, with 1,745 cases in total. Cases were filed in Panama and Portugal for the first time in 2023, as climate litigation continues to spread to new countries. The report predicted future trends in climate litigation could include post-disaster cases, ecocide and criminal law, and environmental and climate litigation synergies.

Our 2024 report on global trends in climate change litigation by @JoanaSetzer and @CatherineHigha3 is out now. It features an overview of the latest global developments and insights into recent cases. https://t.co/pLwhniBt0K pic.twitter.com/WZv1awseU0

— Grantham LSE (@GRI_LSE) June 27, 2024

Fewer than a quarter of financial services and investment companies worldwide have a net zero transition plan that looks beyond 12 months, according to a new survey by law firm Mayer Brown. The survey covered 635 business leaders across Europe, Asia, the Americas and the Middle East, finding widespread lack of preparedness for the energy transition – even though the majority considered decarbonisation a priority. Just 19% of financial institutions – which included banks and insurance companies – had net-zero transformation strategies that looks beyond the next 12 months, the survey found. The figure went up to 27% for investment firms – a class that included asset managers, investment banks and private equity houses. That unpreparedness contrasted with broad agreement that the issue was important, as 77% of investment firms and 69% of financial institution leaders believed companies must embrace sustainability if they are to thrive. Around two thirds of respondents also acknowledged they were not transforming fast enough. Still, climate and ESG did not figure in financial services companies’ top-three concerns, which were: lack of growth opportunities in difficult market conditions; cybersecurity and other tech-related threats; and burdensome tax environment. For investment firms, the cost of the net-zero transition was the number two concern, behind burdensome taxes and ahead of lack of growth opportunities.

The Green Building Council has published a new guide on using green bonds to fund sustainable building projects. The group – a global alliance of green building ratings providers across North America, Europe and Asia – said the guide had been designed to attract more green finance to real estate, which currently suffers from “limited understanding and uptake” of green debt instruments. The document also aims to clarify the connections between global green building practices and current sustainable finance practices, with a specific focus on green bonds and loans. It reviews a range of building certifications commonly used by international investors, exploring their characteristics and explaining their application. The report’s release coincides with the launch by the World Economic Forum (WEF) of a roadmap for “transforming the global building sector to combat climate change and protect biodiversity”, with a focus on China. The WEF said 37% of global emissions could be traced back to buildings, and improving energy efficiency and sustainability of the sector would have a major impact on rising global temperatures. The report was written in collaboration with the Boston Consulting Group (BCG), and focuses on minimising emissions from buildings, improving their impact on nature, increasing their resilience to climate-related weather conditions, and boosting the physical and mental wellbeing of their occupants. “The sheer complexity of the building value chain requires upstream and downstream players to work together on enabling actions such as standard alignment and technology breakthrough,” said Yvonne Zhou, Managing Director and Senior Partner at the BCG.

The International Capital Market Association (ICMA) has released new materials to better support its Green, Social, Sustainability and Sustainability-linked Bond Principles. These include guidance for green-enabling projects, which identifies the role these projects play in catalysing and scaling the climate transition. It encompasses both induced and avoided emissions dimensions, as well as the management of related environmental and social risks. In addition, ICMA and the Loan Market Association have introduced Sustainability-linked Loans financing Bond (SLLB) guidelines to enhance the transparency and credibility of the market. SLLBs are bonds where the proceeds are used to either finance or re-finance a portfolio of new or existing sustainability-linked loans. Further materials published by ICMA included an update to the Sustainable-linked Bond Principles, an expansion of the SLB KPIs [key performance indicator] Registry, and an annex  to the impact reporting handbook. “Over the last ten years since the establishment of the Principles, [their] convening power and the body of work that has been produced under [their] auspices – including new innovative products and guidance – has served to support the role that capital markets can play in advancing the sustainability agenda and mobilising finance towards the goals of the Paris Agreement and the wider UN Sustainable Development Goals,” said Isabelle Laurent, Chair of the Executive Committee of the Principles at ICMA. 

Supply chains have been identified as an emerging area of focus across global ESG-related regulations this year in new research published by data provider Sustainable Fitch. The paper pointed to the recent passing of the EU’s Corporate Sustainability Due Diligence Directive, expected greenhouse gas target-setting requirements for US federal government contractors, and the recently enforced modern slavery legislation in Canada. In addition, the paper highlighted relevant developments across emerging market jurisdictions, such as India’s Business Responsibility and Sustainability Reporting Core Framework for Assurance and ESG Disclosures for Value Chains, which mandates the largest 1,000 companies in the country to report on key ESG metrics. “The expansion of ESG considerations and disclosure requirements across global supply chains has the potential for identifying impacts and risks that occur beyond the operational boundaries of individual companies,” the report noted. Across industries, environmental and social issues disproportionately occur along the supply chain. “Although local regulation can offer a degree of accountability over activities that occur abroad, low transparency into particularly long or complex supply chains is a significant barrier towards mitigation impacts, such as environmental degradation, resource depletion, and forced labour,” Sustainable Fitch added. More oversight of supply chain impacts will enable a significant expansion in the collection, measurement and reporting of ESG data, the paper suggested, which in turn will contribute to investor and company disclosures.

The Investor Group on Climate Change (IGCC) has highlighted the release of the Australian Treasury’s Sustainable Finance Roadmap as a “critical step” towards ensuring the country attracts investment that maximises on opportunities offered by its clean industries. Released last week, the roadmap sets out the country’s vision for the implementation of key sustainable finance reforms and related measures. The IGCC and its members advocate for mandatory climate disclosures, clear sustainable finance taxonomies, and standards for corporate climate transition plans to ensure Australia remains an “attractive” investment destination. Treasurer Jim Chalmers stressed that the roadmap would support investors, companies and the broader community in capitalising on the global net-zero transformation, as well as help mobilise “the significant private capital required for Australia to become a renewable energy superpower, modernise the country’s financial markets, and maximise the economic opportunities associated with net-zero and sustainability goals”. “A fair, fast and well-planned transition is required to protect the retirement savings of millions of Australians from climate change damages and maximise our economic opportunities as a renewable energy superpower,” said Erwin Jackson, Managing Director of Policy at the IGCC. “The Sustainable Finance Roadmap provides a foundation for appropriate sustainability information to be reported across the economy, which will help investors, regulators, and stakeholders form a comprehensive understanding of … climate risks and opportunities, fuelling investment in clean industry.”

Media release: @JEChalmers A Sustainable Finance Roadmap to unlock more private capital https://t.co/nPiIEon4pI pic.twitter.com/qkMaooj9AW

— Australian Treasury (@Treasury_AU) June 19, 2024