Recent ESG news flashes

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. 

For more detailed information please this article » this article about the German climate protection immediate action program (in German only)  

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.  

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.

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.   

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: 

As the established targets are neither legally binding nor has it been determined how they should be achieved, their implementation remains the key challenge. 

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.