Recent ESG news flashes

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The following selected topics from the area of Environmental, Social and Governance might also be of interest to you as an entrepreneur...

 Second UN Plastics Conference in Paris in May 2023

​16.6.2023: The goal is to cause no environmental pollution from plastic waste by 2040.

To achieve this, the production of plastic must be reduced, environmentally harmful products must be banned, plastic must be fully recyclable, and the export of plastic waste must be stopped. A ban on single-use plastic products and the application of the polluter pays principle were discussed.

Countries agreed to present a binding agreement to reduce the amount of plastic waste and improve recycling by November 2023 in Kenya. The agreement will be discussed in Kenya, continued in Canada, and finalized in South Korea by the end of 2024.

For more detailed information, please read the article “EU Plastic Tax as tax measure of the EU Green Deal – A new (indirect) tax or levy?”.
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 The expansion of wind energy in Germany is decided

​1.2.2023: To accelerate the expansion of onshore wind energy in Germany, the “Windenergie-an-Land-Gesetz” is intended to speed up the planning and approval procedures and to ensure that necessary areas are available. 

On 1 February 2023, the “Windenergie-an-Land-Gesetz” came into force. The law aims to significantly accelerate the expansion of wind energy in Germany and thus support the German government's goal of doubling electricity from renewable energies by 2030. 

By 2027, the law aims to designate 1.4 % of the federal land for wind energy. By 2032, a total of 2 % of the land area is to be available for wind energy. So far, around 0.8 % of the national land area had been allocated for wind power plants, but of this only around 0.5 % is actually available. 

For more detailed information please this article » this article about the German climate protection immediate action program (in German only)  
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 ESMA and DRSC publish statements on ESRS drafts

1.2.2023: At the end of January, the European Securities and Markets Authority (ESMA) published a statement on the current draft ESRS. 
 
Along with a press release, the statement includes a 42-page document in which ESMA issues its opinion on the draft ESRS. Based on the assessment carried out, ESMA considers the ESRS Set 1 to be broadly in line with its set out objective. However, the statement also contains several recommendations on improvements for the standard. 

The published statement is an inherent component of the standard-setting process, which stipulates ESMA to submit a statement on each set of ESRS to the European Commission. 

Only a few days later, the German Accounting Standards Committee (DRSC) also submitted a statement on the ESRS drafts to the EU Commission. Within the six-page long document, the DRSC outlines a series of issues identified as problematic within the current drafts of the standard.  
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 The German Supply Chain Law (LkSG) entered into force on 1.1.2023!

2.1.2023: The German Supply Chain Law (LkSG) entered into force on 1 January 2023. The LkSG is an important step towards a sustainable and more responsible economy and promotes human rights enhancement worldwide. 

The law obliges companies with more than 3,000 employees in Germany (later on companies with more than 1,000 employees in GER) to monitor and disclose their corporate due diligence obligations. However, the law goes beyond mere disclosure obligations and requires enterprises also to implement certain actions, such as the implementation of a risk management system. 

The due diligence obligations laid down by the law cover not only the companies' business activities, but to a certain extent also those of their supply chain. Thereby, it is intended that organisations take on more responsibility within their supply chain. 

Although the disclosures required by the LkSG can be challenging for businesses, it also provides an opportunity to improve business practices and enhance reputation. By having a sustainable and responsible supply chain, companies can take social and environmental responsibility and improve their business performance. 

For more detailed information please see our » International Supply Chain Law Special.
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 New regulations concerning the EU Emissions Trading System

19.12.2022: In December 2022, the EU Parliament and Council agreed on a reform of the EU emissions trading system (ETS) to reduce industrial emissions and promote environment-friendly technologies. 
 
In this context, the ambition level for the reduction of greenhouse gas emissions was increased.  Thus, emissions in the ETS sectors must be reduced by 62 % by 2030 compared to 2005 levels. To achieve this reduction, certificates will be withdrawn from the market in the upcoming years and fewer certificates will be issued. Additionally, the free ETS certificates for the industry will be phased out. 

For CO2 emissions from certain sectors, including buildings or transport, a new additional emissions trading system (ETS II) is planned to be introduced in 2027.   
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 CBD COP 15 – Fifteenth meeting of the Conference of the Parties to the Convention on Biological Diversity

19.12.2022: In December 2022, the UN Biodiversity Conference CBD COP 15 took place in Montreal, where about 190 countries agreed on a new list of targets to combat the loss of biodiversity by 2030. 

The targets set out during the conference are widely acclaimed as ambitious in the general public debate. Among others, the following objectives were set: 
  • a significant reduction of the extinction risk by 2030
  • 30 % of the land masses and 30 % of the sea areas shall be put under conservation by 2030 (currently about 17 % of the land masses and 10 % of the sea areas are under conservation)
  • a reduction of environmentally harmful subsidies (currently approximately 1.8 trillion dollars are globally subsidised to environmental damaging activities – these subventions are supposed to be reduced by at least 500 billion dollars annually until 2030)
  • 200 billion dollars per year are to be spent on conservation measures 
     
As the established targets are neither legally binding nor has it been determined how they should be achieved, their implementation remains the key challenge. 
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 EU agrees on CO2 Carbon Border Adjustment Mechanism CBAM

13.12.2022: The introduction of a CO2 border adjustment mechanism for imported goods has been agreed upon by the EU in December 2022. The mechanism is intended to secure competitive conditions for manufacturers in the EU as well as to contribute to climate protection.  
 
The underlying mechanism is the obligation for companies importing into the EU to purchase CBAM certificates. These are meant to compensate for the difference in the carbon price paid in the country of production and the higher price of carbon certificates in the EU emissions trading system. 

The new border adjustment mechanism will initially only apply to certain, particularly energy-intensive sectors. However, a gradual extension of the mechanism for other goods is planned. 
 
The border adjustment system will come into force as early as October 2023, but with a transition period during which there will only be a reporting obligation for importers.
 

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