Carbon news roundup for June 2024
The CSRD is finalized; Canada and the EU combat greenwashing; an update to science-based climate targets for finance
Our monthly carbon news roundup summarizes the latest updates in sustainability legislation, net-zero news, and decarbonization success stories – and explains what they mean for your business.
EU’s Corporate Sustainability Reporting Directive (CSRD) is finalized
The European Commission has completed the guidance for the Corporate Sustainability Reporting Directive (CSRD), a crucial element of the EU’s broader strategy to enhance corporate responsibility and transparency regarding environmental, social, and governance (ESG) matters.
Under the CSRD, companies are mandated to conduct a materiality analysis to identify and disclose significant ESG issues that affect their operations and value chains. The new guidance specifies in detail how companies should evaluate their value chains, requiring them to consider the full spectrum of ESG impacts, extending beyond direct operations to include their entire value chain of suppliers, transportation, and other upstream and downstream activities.
The directive also aims to harmonize ESG reporting globally by incorporating reporting standards that align with international frameworks, such as those established by the Global Reporting Initiative (GRI) and the Task Force on Climate-related Financial Disclosures (TCFD).
What does this mean for my business?
If your business operates within the EU, you must now adapt your reporting practices to comply with the CSRD’s stringent requirements. This likely means seeking tools and partnerships to support compliance.
Normative helps you comply with CSRD
By combining Normative’s science-backed carbon accounting with support from our team of experts, you can set your business on a path to CSRD compliance.
Canada and the EU take steps to combat greenwashing
In separate efforts to curb greenwashing, the European Union and Canada have both introduced measures to ensure that businesses’ environmental claims are scientifically substantiated and clearly communicated. These follow similar anti-greenwashing rules implemented by the UK in May, which were covered in our May carbon news roundup.
In Europe, the EU Council has adopted a position on the green claims directive. This directive aims to set minimum standards for environmental claims, requiring that all assertions regarding sustainability – such as recyclability, durability, or impact on biodiversity – be backed by scientific evidence and explained in a manner that consumers can easily understand. Moreover, companies will need to provide detailed information on carbon credits and show measurable progress toward net-zero and decarbonization goals. These claims must also be verified by third-party experts before they are advertised. The Council’s stance will be the basis for negotiations with the European Parliament to finalize the directive.
Simultaneously, the Canadian federal government has made revisions to the Competition Act to tackle greenwashing, which took effect on June 20, 2024. Similar to the EU legislation, the updated Canadian law mandates that any environmental claims related to a product be supported by adequate and appropriate testing, placing the burden of proof on the claimants. Additionally, claims about a company’s environmental footprint must be justified using globally recognized methodologies. Significant penalties are in place for non-compliance, including private lawsuits and substantial administrative financial penalties, which could reach up to C$10 million or 3% of a company’s global gross revenue.
What does this mean for my business?
These developments highlight the increasing regulatory focus on preventing unsubstantiated sustainability claims – and the increasing consequences for businesses that get it wrong. Ensure that your company is accounting for its sustainability work in a science-backed, comprehensive way.
Gain expert insight on avoiding greenwashing
In this on-demand webinar, Normative’s sustainability experts and practitioners explain how to deter greenwashing accusations by backing your sustainability claims with accurate data.
SBTi introduces updated near-term target-setting criteria for financial institutions
The Science Based Targets initiative (SBTi) has released updated criteria and resources aimed at assisting financial institutions in setting near-term targets to reduce carbon emissions.
The newly introduced Financial Institutions’ Near-Term Criteria Version 2.0 (FINT Criteria V2) includes several key changes:
- It raises the minimum required ambition for scope 1 and 2 emissions reductions from “below 2°C” to “below 1.5°C,” aligning it with the SBTi Corporate Net-Zero Standard.
- The updated criteria streamline coverage requirements and enhance the clarity and practicality of the existing guidelines.
- It introduces a method for financial institutions to disclose and gradually eliminate activities related to fossil fuel financing, known as the Fossil Fuel Finance Targets.
The FINT Criteria V2 will become effective on November 30, 2024. Financial institutions with targets already validated by SBTi will be expected to update their targets to conform to the new criteria within five years of their original validation date.
In addition, SBTi is developing a Financial Institutions Net-Zero Standard to support financial institutions in creating targets that are in line with a net-zero future. Further updates on this initiative are anticipated in the near future.
What does this mean for my business?
If you work at a financial institution that has set science-based targets through SBTi, you have five years to update your targets to meet the new criteria.
If you work at a financial institution that is working to set targets, your targets need to meet the new criteria to be approved.
If you have not set targets and don’t plan to – we strongly recommend that you get started. Our on-demand target-setting webinar can jumpstart your journey.
That’s it for June 2024! Stay tuned for next month’s roundup. To have insights like these delivered straight to your inbox, join the Normative newsletter list:
