Skip to main content
ESG ResourcesNewsInsightsESGServices ESGHome Featured

Vital and Extensive ESG Regulatory Updates Reshaping the Industry

By June 21, 2024June 24th, 2024No Comments

First Half of 2024 Filled with Push for More ESG Transparency Worldwide

As highlighted in our year-end report, 2023 featured a plethora of new rules and regulations in the United States aimed at environmental, social and governance (ESG) and responsible investing practices. In contrast, the first half of 2024 has showcased the ongoing global focus on ESG from regulators and the industry alike, as advancements in responsible investment and sustainability continue to abound.

This article will dig deeper into various global regulatory updates that Silver is closely monitoring to ensure that we stay ahead of key issues and legislation affecting private fund managers within the ESG space, both now and into the future.

North America (U.S. & Canada)

We will kick things off with a look at important regulatory updates coming from North America over the last six months. The largest scale development is, of course, the SEC’s March 6th approval of a weakened climate disclosure rule that requires listed companies to disclose their greenhouse gas emissions (Scopes 1 and 2) while providing details on how climate-related risks have affected or are likely to affect the registrant’s business strategy, operations results or financial condition. Specific disclosures required by each company are to be determined by what they consider material to investors. Silver included this in our last installment of quarterly updates, which can be found here

Overall, the rule was created to ensure that investors can properly assess how climate change could affect companies, as well as to inform consumers about the environmental impact of the businesses they support. Additionally, it should enhance the comparability of data across companies.

The rule represents a major step in terms of what public companies are required to tell potential investors, including private fund managers, about their vulnerability and contribution to climate change. But it is significantly scaled back from what the agency originally proposed in 2022, which would have required all U.S.-listed public companies to disclose their direct emissions, and also mandated certain companies to report on their Scope 3 emissions (i.e., emissions from their supply chains and the use of their products). Instead, as part of an effort to lighten the burden for companies, the SEC will mandate Scope 1 and Scope 2 emissions disclosure, alongside other qualitative disclosures, for large and mid-sized companies. 

However, less than three weeks after announcing the final rule, the SEC stayed the climate disclosure rule following a litany of legal challenges. The Eighth Circuit Court of Appeals (Iowa, Missouri, Arkansas, Nebraska and the Dakotas) will decide on these legal challenges and Silver will provide updates as soon as a ruling is delivered, which is expected before the end of 2024.

State-Level ESG Highlights

Texas: The Texas attorney general barred Barclays from the state’s bond market due to ESG non-compliance. Specifically, Barclays failed to respond to requests for information about its “net zero” carbon emissions commitments and, due to being identified as a Net Zero Alliance member or affiliate, raised concerns of being classified as a “fossil fuel boycotter” under Texas law. Despite having the opportunity to provide more information about its ESG commitments, Barclays chose not to respond, thus resulting in the disbarment.

Arkansas: An “ESG Oversight Committee,” which was established by Arkansas state statute last year, identified six financial services companies that discriminated against companies on the basis of ESG considerations. Facing possible divestment by the Arkansas Teacher Retirement System are Credit Suisse, Goldman Sachs, Nomura, Royal Bank of Canada, TD Bank Group and UBS Group.

Illinois: A proposed bill Silver will be closely monitoring is the Illinois Climate Corporate Accountability Act, which would require U.S. entities (with revenues totaling more than $1 billion) doing business in Illinois to annually disclose and verify their Scopes 1, 2 and 3 greenhouse gas emissions. If passed, reporting would begin January 1, 2025, for this year, with 180 additional days added to calculate Scope 3 data. Disclosures would need to be independently verified by the emissions registry or a third-party auditor approved by the Secretary of State.

New Hampshire: The New Hampshire State House Committee on Executive Departments and Administration unanimously rejected a bill proposed by state Republican representatives that would have criminalized ESG investing by state funds by making it a felony punishable by up to 20 years in prison.

Oregon: The Oregon Pension Fund will dump coal stocks after Governor Tina Kotek signed a Divestment Bill that directs the State Treasury to end new investments in thermal coal and phase out existing holdings (estimated at ~$1 billion) in coal stocks, making Oregon the third state to pass a fossil fuel divestment policy (joining Maine and California).

California: A lawsuit challenging California’s new laws requiring greenhouse gas emissions and climate risk disclosures has been filed by the U.S. Chamber of Commerce, along with various other business and agricultural trade groups. The laws in question are:

  • The Climate Corporate Data Accountability Act (SB 253) requires annual public disclosure of Scopes 1, 2 and 3 greenhouse gas emissions by U.S.-organized entities doing business in California with total annual revenues exceeding $1 billion.
  • The Climate‐Related Financial Risk Act (SB 261) requires biennial disclosure of climate-related financial risks in accordance with the recommended framework and disclosures published by the Task Force on Climate-related Financial Disclosures (TCFD) or an equivalent framework, as well as the measures adopted to reduce and adapt to the disclosed climate-related financial risks. 

The lawsuit contends that the laws violate First Amendment protections against compelled speech and that California is acting as a national emissions regulator. It also contends that the federal Clean Air Act preempts California’s ability to regulate emissions in other states as the new Acts mandate reporting out-of-state emissions. The plaintiffs are asking the court to declare SB 253 and 261 null, void and with no force or effect and that California be enjoined from implementing or enforcing the Acts.

In associated news, California Governor Gavin Newsom recently revised his 2024-2025 budget proposal to include $22 million to fund Senate Bills 253 and 261, which were previously unfunded. Additionally, over the next five years, his proposed revised budget will shift a total of $3.6 billion from the California General Fund to a newly created Greenhouse Gas Reduction Fund that will not only help implement the climate disclosure laws, but also fund transit, clean energy and zero-emission vehicle projects. 


As for Canada, one key item from the first half of 2024 was the Canadian Sustainability Board (CSSB) releasing new proposed standards for companies to report sustainability related information. Based around IFRS S1 and S2, the new standards, CSDS 1 and CSDS 2, introduce Canadian-specific modifications that include greater flexibility regarding Scope 3 emissions disclosure. The new proposals are currently in a consultation period and it is not yet clear if the standards will be mandated for Canadian companies. 

Silver’s North America Take: The combination of the SEC climate rule and two climate-related Acts passed in California represent a historic milestone for efforts to standardize corporate climate disclosures, with the ultimate goal of providing investors with more consistent and reliable information on companies’ climate-related risks. While the various delays and legal challenges may hinder immediate change, there are now clear expectations for U.S. companies above a certain size to take their climate-related disclosures more seriously, especially with many of their peers in other markets around the world moving in a similar direction.  On the anti-ESG front, we saw more punitive action on behalf of red states aimed at major players in the financial industry, although this lacks the widespread pushback that many anti-ESG leaders have promised. 

United Kingdom

In one of the most ambitious plans centered around improving the environment, Biodiversity Net Gain (BNG) is now mandatory under Schedule 7A of the Town and Country Planning Act 1990 (as inserted by Schedule 14 of the Environment Act 2021). As a way to create and improve natural habitats, BNG ensures development has a measurably positive impact (“net gain”) on biodiversity, compared to what was there before development, and specific to this Act, developers must deliver a BNG of 10 percent. This rule impacts small and major site land developers, land managers wanting to sell in the BNG market, local planning authorities, and nationally significant infrastructure projects (starting in November 2025). 

Meanwhile, the Financial Conduct Authority’s (FCA) Anti-Greenwashing Rule went into effect on May 31 for all FCA-regulated firms, including those providing financial products or services to clients in the UK, or approving overseas promotion within the UK. The rule requires firms to ensure that any sustainability claims relating to their products or services are accurate, transparent and not deceptive; the rule was established to prevent misleading information targeted at consumers and to promote fair competition among firms with genuinely sustainable offerings. This includes financial promotions that authorized firms communicate or approve for unauthorized persons. Failure to comply could lead to a wide range of regulatory actions.

Silver’s UK Take: The SEC attempted a version of the FCAs Anti-Greenwashing Rule with the launch of a Climate and ESG Task Force in 2023 with the stated aim of “identifying ESG-related misconduct consistent with increased investor reliance on climate and ESG-related disclosure and investment.” This effort led to several high-profile enforcement actions for greenwashing, including cases against Goldman Sachs Asset Management and BNY Mellon. While the FCA has taken a broader scope to its definition of greenwashing, there is clearly a growing appetite among regulators to crack down on the prevalence of misleading claims among fund managers. It may only be a matter of time before the FCA brings forth its first case, and we will be watching to see how the market reacts. Additionally, Silver covered a significant amount of UK developments, such as Sustainable Disclosure Requirements (SDR), in its 2023 ESG Regulatory Landscape update.

European Union

A flurry of activity in the EU marks a busy first half of 2024, with the biggest news coming from the European Parliament, which passed the Corporate Sustainability Due Diligence Directive (CSDDD), also referred to as the “EU Supply Chain Law.” This directive requires larger companies operating in the EU to conduct due diligence on their supply chains, checking for forced labor or environmental damage and taking action if violations are found. Affecting companies with more than 1,000 employees and a worldwide turnover of greater than EUR450M, the law also requires these companies to audit “upstream” partners (in design or manufacture) and “downstream” partners (who transport, store and distribute products). Financial companies will only have to consider upstream partners. Lastly, the law requires companies to prevent and end or mitigate potential or actual harm to human rights and the environment, such as child labor and biodiversity loss. Member states will have two years to transpose this into domestic law. 

Corporate Sustainability Reporting Directive (CSRD): Lawmakers in the European Parliament and Council also reached a provisional agreement to delay the adoption of standards for companies to provide sector-specific sustainability disclosures and for sustainability reporting from companies outside of the EU under the Corporate Sustainability Reporting Directive (CSRD) by two years to 2026. Initially proposed by the EU Commission as part of its 2024 Commission Work Programme, the delay is intended to reduce reporting burdens for companies, allowing them to focus on implementing the first set of European Sustainability Reporting Standards (ESRS) and to limit reporting requirements, as well as to provide the European Financial Reporting Advisory Group (EFRAG) with more time to develop new sector-specific standards. 

European Securities and Markets Authority (ESMA): Another major EU item, specific to addressing greenwashing risk, was the European Securities and Markets Authority (ESMA) announcing finalized guidelines on the use of “ESG” and “sustainability-related” terms in investment fund names. After finding that the proportion of funds using ESG terms increased four-fold in the past 10 years, the ESMA guidelines now require a minimum of 80 percent of investments in a fund to meet environmental, social characteristics or sustainable investment objectives. While there are exclusions for different terms applicable to the Paris-aligned Benchmarks and Climate Transition Benchmarks, the rules will begin applying three months after the guidelines are translated into all EU languages and published on ESMAs website.

Lastly, EU Council and Parliament reached a provisional agreement stipulating that ESG rating providers now need to be authorized and supervised by ESMA and must comply with transparency requirements regarding methodology and sources of information. ESG rating providers established in the EU need to be authorized, and ratings providers outside the EU wishing to operate in the EU need to be endorsed by an EU authorized rating provider. With a goal of boosting investor confidence in sustainable products, the new rules aim to strengthen the reliability and comparability of ESG ratings by improving the transparency and integrity of the operations of ESG ratings providers, while also preventing potential conflicts of interests. 

Silver’s EU Take: The EU once again shows why it is considered at the forefront of sustainable finance regulation and activity. While the debate over CSDDD turned ugly at times – and there continues to be strong opposition to both SFDR (among investors) and CSRD (among companies) – the overall direction for market participants is defined by increased transparency and accountability. These regulations and directives also provide a model for other jurisdictions interested in sustainability issues, so they are important for fund managers to consider whether or not they are planning to operate in the EU. Additionally, Silver covered a significant amount of EU developments, such as Sustainable Finance Disclosure Regulation (SFDR), in its 2023 ESG Regulatory Landscape update.

APAC (Asia-Pacific)


In a major move on the sustainability front, China’s three major stock markets, the Shanghai Stock Exchange (SSE), Shenzhen Stock Exchange (SZSE) and Beijing Stock Exchange (BSE), published new sustainability reporting guidelines for listed companies, including a new requirement for hundreds of larger cap and dual-listed issuers to begin mandatory disclosure on a broad range of ESG topics in 2026.

Reporting requirements for companies will encompass four “core content” topics, including governance, strategy, impact, and risk and opportunity management, as well as indicators and goals. More specifically, some of the outlined topics in reporting requirements include climate (including reporting Scope 3 emissions), ecosystem and biodiversity protection, circular economy, energy use, supply chain security, anti-corruption and anti-bribery. The listed topics indicate that the exchanges are adopting a “double materiality” approach to sustainability reporting, which includes reporting both on the risks and impact of sustainability issues on an enterprise, as well as on the enterprises’ impacts on environment and society.

With reporting set to begin in 2026 for the 2025 period, mandatory reporting is required for companies on the Shenzhen 100, SSE 180 and Technology Innovation 50 index, as well as dual-listed companies with securities on both domestic and foreign markets. In total, this encompasses more than 450 companies (around half of the listed market value). One caveat is the BSE primarily houses small and medium-sized companies, so reporting will be voluntary. 


In Australia, the government introduced a proposed bill that would establish an ISSB-aligned framework for mandatory climate disclosure reporting that will also closely align with IFRS S2. Affected organizations include listed and unlisted companies, National Greenhouse and Energy Reporting Scheme Reporters, registrable superannuation entities and registered investment schemes. The earliest phase-in date is January 1, 2025, and there are three affected groups consisting of all entities required to report under Chapter 2M of the Corporations Act and that meet a broad range of various conditions related to revenue, gross assets and number of employees. Most small- and mid-sized enterprises would be excluded from the proposed rules if the entity is already except from reporting under Chapter 2M of the Corporations Act, and if the entity is registered with the Australian Charities and Not-for-profits Commission. 


Another country proposing sustainability reporting standards is Japan, where the Sustainability Standards Board of Japan (SSBJ) announced new exposure drafts for IFRS-based sustainability reporting. Very closely aligned with ISSB standards and developed under the assumption that they will eventually become mandatory, the IFRS proposed standards were split into two: “Application of the Sustainability Disclosure Standards” and “General Standards.” The SSBJ published the differences between the proposed standards and the ISSB standards here. Both of the standards are currently in a consultation period that end July 31st and will likely be finalized by March 2025. 


We’ll wrap up our look at the Asia-Pacific region by discussing Singapore, like many others in the region, mandating climate disclosures for listed and large non-listed companies starting in 2025. The Accounting and Corporate Regulatory Authority (ACRA) and the Singapore Exchange Regulation (SGX RegCo) provided details on these requirements, which will be aligned with ISSB framework. 

Requirements will be phased in during FY2025 to FY2027, with filers being expected to report and circulate climate-related disclosures at the same time as financial statements. Disclosure requirements will include Scope 1 and 2 emissions, climate risk, strategies to mitigate risks, opportunities that arise from the transition to a low-carbon economy, and the governance structure overseeing climate related issues. The Singapore government also announced a sustainability reporting grant covering up to 30 percent of the cost of producing the first sustainability reports for certain companies. 

Here is a more detailed scope and timeline for the new requirements:

  • FY2025 – All listed companies in Singapore must begin reporting Scope 1 and 2 emissions
  • FY2026 – Listed companies will need to disclose Scope 3 emissions alongside existing requirements
  • FY2027 – Large non-listed companies (annual revenue more than $1B, and greater than $500M total assets) must begin reporting Scope 1 and 2 emissions; External assurance on emissions data will be required for listed companies beginning this year
  • FY2029 – Large non-listed companies will need to report Scope 3 emissions and undergo assurance on Scope 1 and 2 emissions

Silver’s APAC Take: For those investors hoping for climate-related disclosures to be standardized across geographies – which is to say, all of them – the recent news coming out of the APAC region offers a sign of relief. The biggest players in the region are all looking to align themselves with the ISSB Standards, which themselves were designed to align with the recommendations of the TCFD. The question is whether the flurry of rules and regulations will cover a sufficiently large share of these markets to satisfy investor demands for information, particularly those investors that are focused on identifying early-stage and growth companies. 


As one can clearly see from the first half of 2024, this global wave of ESG regulatory activity signifies a new era for transparency wherein ESG and responsible investing practices are gaining increased, widespread importance and acceptance. As these regulations come into effect, corporations and financial services firms, including private fund managers, around the world will be faced with the challenge of adapting to a landscape where transparency is not just expected but demanded and required.

While we do not have a crystal ball to determine exactly when some of these proposed regulations will become finalized and enacted, Silver’s ESG team continues to monitor all of the relevant regulatory updates coming down from global regulatory bodies on behalf of our clients to help ensure they are well prepared for any changes and can remain out of the crosshairs of regulators. Please feel free to contact us at [email protected] with any questions or concerns you might have regarding anything mentioned above and how these changes might impact your firm’s ESG program.