Carbon news roundup for May 2024
The CSDDD is approved; the UK combats greenwashing; the EU and US tackle methane emissions
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.
The CSDDD gets final approval after four months of delays
The EU Council granted final approval to the Corporate Sustainability Due Diligence Directive (CSDDD) on May 24, 2024, concluding a prolonged political process that almost jeopardized its outcome.
The approved CSDDD establishes legal obligations for businesses regarding environmental and human rights violations, and covers organizations based in the EU and those that do significant business in the EU. It expands the scope of due diligence beyond a company’s direct operations to encompass its subsidiaries and value chain – meaning that companies will be held accountable for their suppliers’ activities and environmental impacts.
The implementation of the CSDDD will occur gradually over a five-year period, covering larger companies first and expanding annually to include smaller companies:
- 2027 – companies with 5,000 employees and €1,500 million turnover.
- 2028 – companies with 3,000 employees and €900 million turnover.
- 2029 – companies with 1,000 employees and €450 million turnover.
These companies will be mandated to embed due diligence into their policies and devise strategies for reaching net zero by 2050.
What does this mean for my business?
The adoption of the CSDDD is yet another reason to ramp up ESG and net-zero efforts throughout your organization and value chain. Even if your business does not fall under the current scope of the CSDDD, legislation is continually being developed and expanded – the trend is clear, and the companies that stay ahead of the curve will fare best for the long term.
The CSDDD, explained
Normative’s experts have created an explainer for the CSDDD, what it could mean for your business, and how to prepare for compliance.
UK introduces anti-greenwashing rules for asset managers
On May 31, the UK’s Financial Conduct Authority implemented a new set of anti-greenwashing rules targeting asset managers. These rules are designed to protect investors from being misled by inaccurate or exaggerated claims about the environmental and social impacts of investment funds.
Asset managers are now required to comply with the Sustainability Disclosure Requirements (SDR), which prohibit the vague use of terms like ‘ESG’ or ‘sustainability’ in fund promotion.
Instead, asset managers must provide clear and detailed information to investors and categorize their funds under one of the four designated labels:
- Sustainability Focus
- Sustainability Improver
- Sustainability Impact
- Sustainability Mixed Goal
To qualify for a specific label, at least 70% of the fund’s assets must be in alignment with that label’s definition.
In addition, companies must:
- Disclose information to consumers about the sustainability practices of a fund.
- Offer detailed disclosures for products that are marketed as sustainable.
- Adhere to marketing and naming guidelines to ensure that sustainability claims are accurate.
- Comply with additional rules set for UK distributors.
What does this mean for my business?
This is part of a larger trend of legislators requiring businesses to prove their sustainability claims – such as the EU’s anti-greenwashing directive from earlier this year. Even if the UK’s new rules don’t apply to your business, it would benefit you to ensure that you have proof points to back up your sustainability messaging – for example, making use of carbon accounting to validate statements about climate impact.
Prevent your business from unintentionally greenwashing
Pairing good intentions with bad math can lead to unintentional greenwashing – and its consequences. Our article explains how to identify and avoid these pitfalls.
The EU and US take steps to reduce methane emissions
Both the European Union and the United States have taken significant steps towards reducing methane emissions in May.
On May 27th, the EU Council adopted a regulation that tightens the monitoring, reporting, and verification of methane emissions within the energy sector. This regulation is a part of the broader Fit for 55 legislative initiative aimed at achieving climate neutrality by 2050. It includes the implementation of global monitoring tools for tracking emissions from coal, gas, and oil imports while introducing measures to prevent and mitigate methane leaks, as well as to limit venting and flaring – both of which are significant sources of greenhouse gas emissions. The regulation will be enforced 20 days following its publication in the EU’s Official Journal and will undergo a review in 2028.
Meanwhile, on May 6th the Biden-Harris Administration in the United States, through the Environmental Protection Agency (EPA), announced a final rule to strengthen and update methane emissions reporting for the oil and gas sector. This rule enhances the accuracy of emissions data and the accountability of facilities that are the leading source of methane pollution in the country. It updates the EPA’s Greenhouse Gas Reporting Program and supports the Methane Emissions Reduction Program, which works in tandem with recently finalized Clean Air Act methane standards.
What does this mean for my business?
The developing regulations on both sides of the Atlantic underscore the increasing urgency for your business to address its emissions – including, but not limited to, methane.
Use carbon accounting to manage your emissions
Normative’s platform empowers you to map your business activities, calculate their climate footprint, reveal emissions hotspots, and discover the quickest path to impactful reductions.
That’s it for May 2024! Stay tuned for next month’s roundup. To have insights like these delivered straight to your inbox, join the Normative newsletter list:
