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This month in ESG: COP15 and EU gender balance laws

11 January 2023 at 11:51 am
Terence Jeyaretnam
Nothing slowed down in ESG during the last month of the year, with events, new laws and a raft of government announcements, write Terence Jeyaretnam.

Terence Jeyaretnam | 11 January 2023 at 11:51 am


This month in ESG: COP15 and EU gender balance laws
11 January 2023 at 11:51 am

Nothing slowed down in ESG during the last month of the year, with events, new laws and a raft of government announcements, writes Terence Jeyaretnam.

The month of December had outcomes of the Biodiversity COP15, gender balance laws for EU corporate boards and a number of announcements by the Australian government, the US and the EU. 

Again, if I happen to miss some key markers in a particular month. Just drop me some comments, and I will pick them up next month!  

*‘ESG Markers’ – like biomarkers that tell us how healthy our body may be, ESG Markers showing us the big movements in the field of ESG in Oceania and globally.  

So, here are my Top 10 for December 2022, again in no particular order.

Calls for value chain emissions to halve by 2030

A collective platform for large business called the 1.5C Supply Chain Leaders who launched the Exponential Roadmap Initiative as part of the Race to Zero campaign have made a call to cut supply chain emissions by 50 per cent by 2030 at COP27 (and launched a 1.5C supplier engagement guide).  Some of the members of the coalition include BT, Unilever, Ikea, Ericsson, Telia, Telefonica, Nestle and Ragn-Sells, representing $440 billion in annual turnover.

For most large businesses, indirect emissions from the supply chain and/or consumer use of products and services will account for a far larger portion (estimating over 10 times) of overall emissions than those from direct operations. Interestingly, the number of companies calling for their suppliers to disclose environmental data to CDP increased by 24 per cent between 2019 and 2020. 

The World Economic Forum (WEF) is urging businesses to do more to tackle their supply chain emissions and has published new advice on how to do so.

Gender balance law for corporate boards adopted by EU

The European Parliament has recently formally adopted new legislation mandating gender balance rules for corporate boards aimed at ensuring that gender balance is established in the corporate boards of large, listed companies across the EU with board position appointments being transparent, and candidates being assessed objectively. Under the new proposed law, listed companies will be required to have the under-represented gender holding 40 per cent of non-executive director positions or 33 per cent of all director positions (both non-executive and executive directors) by mid-2026. The mandate also rules will also require companies to report annually on the gender representation on their boards, as well as on the measures they have in place to reach the targets.

In the EU, while women account for approximately 60 per cent of university graduates, they account for only 31.5 per cent of total board members and 8 per cent of board chairs, according to a recent survey by the European Institute for Gender Equality (EIGE).

Climate & energy transition to be considered in inflation response, RBA Governor

Climate change and the transition to renewable energy are two of four longer-term changes to the global economy that are “likely to affect the dynamics of inflation, central bank policy and the way business operates in Australia”, according to the RBA Governor.   The other two being the reversal of globalisation and the emergence of trading blocs causing barriers to trade and investment inevitably affecting pricing, and secondly, demographics.  On climate, extreme weather events leading to supply chain disruptions causing inflationary price pressures and finally, transition to renewables impacting energy pricing, in turn impacting the cost of living.

Mandatory climate reporting adopted by Switzerland

Large Swiss companies and financial institutions will be required to publicly disclose information on their climate-related risks, impacts and plans based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)., impacts and plans, according to new legislation titled “Ordinance on Climate Disclosures”.  The legislation will apply to companies with 500 or more employees, at least USD$21 million in total assets or more than USD$42 million in revenue.  Enforcement will begin in January 2024, with reporting beginning in 2025.

Australia and the US sign pact to measure the economic value of nature

A joint pact by the Australia and the United Stated announced at the COP15 Biodiversity Summit is going to look to measure the economic value of nature – given both countries consider environmental and impact on nature as a top priority for business and government.  The US has already set a goal of including natural capital in its national accounts by 2030.

The two countries will work together to ensure that “natural capital” – which measures the amount, condition and economic contribution of nature to jobs and wellbeing – is applied to business decisions. The pact will also ensure that data is collected to inform decision-making and understand how the economy and nature interact, as well as increase so-called nature-based solutions, which will include looking to better understand how this may combat climate change and improve human health.

ISSB to focus on the concept of sustainability as it relates to value creation, and advance work on biodiversity and just transition

To evolve from the currently fragmented ESG disclosure landscape, that lacks connectivity and has conflicting concepts, to a truly global common language of sustainability-related financial disclosures, the ISSB agreed during its October 2022 meeting that it would be beneficial to ground its standard-setting work by clearly articulating the relationship between sustainability matters and financial value creation – that a company’s ability to deliver value for its investors is inextricably linked to the stakeholders it works with and serves, the society it operates in, and the natural resources it draws on.

The decision builds on concepts from the Integrated Reporting Framework, which helps companies articulate how they use and effect resources and relationships for creating, preserving and eroding value over time.

The ISSB will also research incremental enhancements that complement the Climate-related Disclosures Standard (S2), including relating to natural ecosystems and the human capital aspects of the climate resilience transition (just transition). The ISSB will consider the work of the Taskforce for Nature-related Financial Disclosure (TNFD) and other existing nature-related standards and disclosures where they relate to the information needs of investors. This will include considering the TNFD’s recent work on the intersection of climate and biodiversity disclosures in scoping the ISSB’s research on complementing its climate-related disclosures to address disclosures related to natural ecosystems.

Biodiversity COP15: 30’ by 30’ target reached

The Biodiversity COP15, co-hosted by Canada and China, reached a historic agreement, which saw nearly 200 countries (but not the US or the Vatican) sign an agreement that includes targets to protect 30 per cent of the planet for nature by the end of the decade (known as 30 by 30), reform $500 billion (£410 billion) of environmentally damaging subsidies, restore 30 per cent of the planet’s degraded terrestrial, inland water, coastal and marine ecosystems and create a new fund, the global environment facility.  Governments also agreed urgent actions to halt human-caused extinctions of species known to be under threat and to promote their recovery. If implemented, the goals could see significant changes to farming, business supply chains and the role of indigenous communities in looking after land. However, it is noteworthy that the world has never met any of the prior targets set for nature and conservation.  Although the Montreal-Kunming agreement is not legally binding, governments will be tasked with showing their progress on meeting the targets with national biodiversity plans, akin to nationally determined contributions, which countries use to show progress on meeting the Paris climate agreement.

The deal follows scientific warnings that humans are causing the start of Earth’s sixth mass extinction event, the largest loss of life since the time of the dinosaurs.

Australian government confirms new EPA to enforce conservation laws

The Albanese government has committed to establishing a new environment protection agency with powers to decide whether or not developments proceed and to enforce laws designed to protect and restore nature.  The government would also introduce new national environmental standards against which conservation protection and major development applications will be measured.  This is a response to the scathing Samuel Review of federal environmental laws delivered to the former government.

The government has also proposed applying the new national standards to regional forest agreements, which have been exempt from the current laws, and expanding the water trigger – which assesses the impacts of coal and coal seam gas developments on water resources – to include all forms of unconventional gas.

However, the government will not establish a long-called-for climate trigger and its response did not provide any detail of additional government funding to meet its aims of environmental restoration and zero new extinctions.

The EPA would also have responsibility for enforcing and ensuring compliance with the law, however state and territory governments would be allowed to make decisions under national laws, with the federal EPA in an assurance role.

The government will begin by developing national standards for five priority areas: matters of national environmental significance, First Nations engagement and participation in decision-making, community engagement and consultation, regional planning and environmental offsetting.

Australian government to consider mandatory climate disclosures and take aim at greenwashing

Banks and other big businesses will be forced to come clean with the public about what they are doing to cut emissions under plans put forward by the Albanese government.  The government is also looking for ways to crack down on “greenwashing” – or when businesses try to win over consumers by overhyping their environmental practices.  

These measures are part of a consultation paper released by Treasury (Climate-related financial disclosure – Consultation paper (, with responses sought by February 2023. Currently, around half of ASX200 companies provided some form of climate disclosure last year, and around 70 per cent included a net-zero commitment.

In a push to stamp out greenwashing, the Australian Prudential Regulation Authority, Australian Securities and investments Commission and Reserve Bank will likely be recruited to consider additional penalties for companies that mislead investors over their mandatory environmental, social and governance pledges.  

Treasury will also lead development of a new sustainable finance strategy to improve transparency and create a uniform taxonomy terms, as well as reforming regulators to manage climate disclosures, and crack down on greenwashing.

EU laws introduced to prevent import of goods linked to deforestation and requiring all packaging to be recyclable by 2030

The European Union (EU) has agreed a new law preventing companies selling products linked to deforestation in EU member states. Companies must now prove imported soy, beef, palm oil, wood, cocoa, coffee and some derived products including leather, chocolate, some palm oil derivatives and furniture is not linked to deforestation or face fines of 4 per cent of their EU revenue.  Importers must also prove rights of indigenous people were respected during production.EU member states will be required to carry out compliance checks covering 9 per cent of companies exporting from countries with a high risk of deforestation, 3 per cent from standard-risk and 1 per cent for low-risk.

Furthermore, all packaging in the EU market will be required to be fully recyclable by 2030, according to new proposed rules unveiled today by the European Commission, aimed at tackling growing packaging waste.  The new proposals set a target to reduce packaging waste by 15 per cent by 2040 per member state per capita through reuse and recycling. The rules also aim to eliminate unnecessary packaging with bans on some packaging forms such as single-use packaging for food and beverages when consumed inside restaurants and cafes, single-use packaging for fruits and vegetables, miniature shampoo bottles and other miniature packaging in hotels. Additional measures include setting design criteria for packaging, creating mandatory deposit return systems for plastic bottles and aluminium cans, and introducing mandatory rates of recycled content that producers will be required to include in new plastic packaging.

Terence Jeyaretnam  |  @ProBonoNews

Terence is the APAC leader and partner with EY’s Climate Change and Sustainability team based in Melbourne. An environmental engineer and an environmental and sustainability advisory and assurance specialist, he is a member of the Auditing and Assurance Standards Board (, one the Technical Readiness Working Group of the International Sustainability Standards Board (ISSB) and is a non-executive director of Amnesty International Australia, Fairtrade Australia/New Zealand, Food Frontier, Legal Sector Alliance and Global Citizen Australia. He is also an advisor to SAARI Collective, a media start-up connecting South Asians Australians write their own stories.

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