ESG Corner- October 2024

31, October 2024

IN THE NEWS

This section focuses on key developments globally, in the US, India, and the Middle East. It dissects the most recent news and analyzes its potential to influence regional landscapes, businesses, and consumers. Uniqus provides insights into how these developments may shape current market dynamics and set the stage for future opportunities and challenges.

Global

1. IFRS Foundation publishes Voluntarily Applying ISSB Standards—A Guide for Preparers

On 25 September 2024, the IFRS Foundation published a guide for companies as investors call for the voluntary application of ISSB Standards. The guide, unveiled at Climate Week NYC 2024, is intended to serve as a valuable tool for companies, especially those in jurisdictions without regulatory disclosure regimes, to apply the ISSB standards. The proxy voting guidelines for several Institutional investors, including BlackRock, Neuberger Berman, Vanguard, and Capital Group, encourage companies to apply ISSB Standards.

The voluntary application guide seeks to help companies navigate a path to IFRS and IFRS S2 compliance and communicate progress with sustainability-related financial information to investors and other users. The guide covers the following topics:

Asserting compliance
Communicating partial application
Employing transition reliefs
Employing proportionality mechanisms
Starting from voluntary frameworks

1. EFRAG and TISFD sign cooperation agreement to align efforts under the ESRS and TISFD’s international, voluntary framework

On 27 September 2024, the European Financial Reporting Advisory Group (EFRAG) and the Taskforce on Inequality and Social-related Financial Disclosures (TISFD) signed an agreement to advance the development and adoption of social-related financial disclosures. This agreement will promote the harmonization of global frameworks for social-related financial disclosure. Among other objectives, these two organizations will cooperate on:

Technical alignment
Implementation support
Joint communications

Uniqus’ POV

The landscape of sustainability- related financial disclosure frameworks continues to mature, as standards-setters take action to increase awareness, provide guidance, and harmonize disparate reporting frameworks. The ISSB Standards, which represent the chief effort of various stakeholders to establish a global reporting baseline, have been applicable since the beginning of 2024, and the IFRS Foundation has taken steps to increase accessibility to the standards as well as provide implementation guidance. The IFRS Foundation’s most recent publication is one example of efforts to provide guidance to companies when applying IFRS S1 and S2, particularly within market jurisdictions where regulatory disclosure regimes (e.g., ESRS in the EU) may not exist. In doing so, investors may have increased access to standardized, comparable sustainability-related financial information from more companies, including voluntary disclosures.

US

1. Key takeaways from Climate Week NYC 2024

Policymakers, business sector representatives, and others met between 22 and 29 September 2024 at Climate Week NYC to discuss the realities of climate change and its impacts on economies, investments, and infrastructure, among others. Uniqus observed the following key takeaways:

Increasing role of the private sector
Bridging the investment gap
Technology opportunities
Climate attribution has improved

Uniqus’ POV

Climate Week NYC 2024 highlighted the crucial need for decisions and actions needed to be taken to collectively address the climate crisis. The various opinions of participating stakeholders highlighted the need to balance optimism around opportunities with the realities of sustainability-related risks, impacts, and work needed to be done quickly to address such effects or possibilities. Instead of debating climate and sustainability objectives, decisive operational action across economies and stakeholders (e.g., investors, companies, governments, civil society) is urgently needed – with priorities around decarbonization, transition finance, emerging technologies, and transparency.

India

1. India Secures USD 386 Billion for Renewable Energy Push Amid Global Call to Accelerate Wind and Solar Expansion

India’s renewable energy sector gained a significant boost with USD 386 billion in investment commitments from banks and financial institutions, announced at the RE-Invest conference in Gujarat. These funds will support India’s goal of reaching 500 GW of non-fossil energy capacity by 2030, though challenges like transmission bottlenecks and land acquisition delays persist. To meet this target, India must triple its clean energy expansion pace. On a global scale, a study highlights the need to grow wind and solar capacity five-fold by 2030 to align with the 1.5°C climate goal. While countries like China have surpassed their targets, others, including India, require more international climate finance to scale renewables and reduce coal dependence. Wind energy is expected to play a dominant role in the short term, with solar energy taking the lead by 2050.

Uniqus’ POV

The transition to renewable energy is essential for achieving sustainability and ensuring long-term economic resilience. The USD 386 billion investment commitments toward India’s clean energy goals signify a positive shift, yet overcoming infrastructure bottlenecks and regulatory delays is crucial. Globally, the need to scale wind and solar capacity aligns with efforts to meet the 1.5°C climate target and reduce reliance on fossil fuels, which is vital for enhancing ESG performance. For businesses and investors, integrating ESG principles involves reducing carbon footprints, improving energy efficiency, and demonstrating environmental leadership. Beyond emissions reductions, this transition brings economic benefits like job creation, energy security, and lower risks tied to fossil fuel volatility. Prioritizing renewables responds to stakeholder and regulatory pressures and positions companies and nations as leaders in the race toward carbon neutrality, opening doors to green financing and boosting global competitiveness.

2. Ecomark Scheme to Promote Sustainable Consumption and Eco-Friendly Production with Strict Environmental Standards

The Ministry of Environment, Forest and Climate Change has notified new Ecomark Rules under the Lifestyle for Environment (LiFE) initiative, replacing the previous 1991 scheme. This updated scheme promotes sustainable consumption and eco- friendly production by establishing strict environmental criteria for product accreditation. It aims to increase consumer awareness, reduce environmental impact, and prevent misleading product information. The Ecomark Scheme will be implemented by the Central Pollution Control Board (CPCB) in collaboration with the Bureau of Indian Standards (BIS), encouraging the transition to sustainable practices across industries.

Uniqus’ POV

Introducing the Ecomark Rules is vital to mainstreaming sustainable consumption and production in India. Similar initiatives in other countries, like Germany’s Blue Angel label and the EU’s Ecolabel, have effectively promoted green manufacturing and increased consumer trust in sustainable products. Such schemes have led to measurable reductions in energy consumption and waste, furthering circular economy goals. India’s Ecomark scheme aligns with these global sustainability standards and enhances transparency through clear labeling, empowering consumers and strengthening the credibility of eco-friendly products in the market.

3. Central Consumer Protection Authority Issues Guidelines for ‘Prevention and Regulation of Greenwashing and Misleading Environmental Claims

The Central Consumer Protection Authority (CCPA) has introduced the Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024, to curb unsubstantiated eco-friendly marketing claims. Building on 2022 advertising rules, these guidelines define greenwashing as any unsupported or exaggerated environmental assertion.

3. NEP published the Emissions Gap report for 2024, which calls for a 42% and 57% reduction in greenhouse gas emissions by 2030 and 2035, respectively, to limit global warming to 1.5°C

The Emissions Gap Report 2024 underscores the urgency of closing the gap between climate commitments and real action, with a deadline approaching for countries to submit updated NDCs targeting 2035. The report stresses that to meet the Paris Agreement’s goal of limiting global warming to below 2°C, ideally 1.5°C, global emissions in 2030 must fall far below current projections. This requires immediate, ambitious NDCs and accelerated action in the current decade. While progress has stagnated, emerging technologies like wind and solar offer affordable and viable pathways to cut emissions by leveraging the estimated potential to bridge the gap at less than $200 per ton of CO2e. However, achieving this will demand overcoming significant policy and technical challenges and redesigning the global financial support system to aid developing countries.

4. CDP reports a 43% increase in companies disclosing nature-related data, but many still lack a deep understanding of the financial impact

CDP’s latest data reveals a surge in corporate nature and biodiversity reporting following the Kunming- Montreal Global Biodiversity Framework. Biodiversity reporting has increased by 43%, water data disclosures by 23%, and forest data by 10%, showing an upward trend in transparency. However, only 10% of companies assess their dependency on biodiversity despite its critical economic implications.

Middle East

1. Oman’s National Event for Future Energy, Power, Water, Waste, Future Mobility, Environment & Society – Oman Sustainability Week Awards 2025

Oman Sustainability Week (OSW) Awards 2025 is set to recognize and celebrate organizations with exceptional sustainability practices during the highly anticipated Oman Sustainability Week on 11 May 2025. The OSW Awards utilizes the Oman Sustainability Index framework to assess organizations’ performance in ESG areas. The Index serves a dual purpose. Firstly, it will aim to provide an assessment platform, allowing organizations to measure their sustainability performance and integrate ethical practices into their strategies. Secondly, it emphasizes the enduring nature of economic, social, and environmental responsibility commitments.

Uniqus’ POV

The Oman Sustainability Week (OSW) Awards 2025 is the annual national awards that assess organizations operating in the Sultanate of Oman regarding sustainability and corporate responsibility. It aims to highlight the Sultanate of Oman’s commitment to sustainability leadership through innovative strategies aligned with Oman Vision 2040, the UN Sustainable Development Goals (SDGs), and Net Zero Emission by 2050.

2. Saudi Arabia to establish Global Water Organization to address supply challenges

His Royal Highness Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister, announced the establishment of a Global Water Organization headquartered in Riyadh. The organization aims to integrate and enhance the efforts made by governments and organizations to secure global water sustainably. It plans to exchange expertise, advance technology, foster innovation, and share research and development experiences. It will promote establishing and funding high-priority projects, ensuring the sustainability of water resources and their accessibility for all.

Uniqus’ POV

Around 1.1 billion people lack access to water across the world, while 2.7 billion people endure water scarcity for at least one month per year, and 2.4 billion people have inadequate sanitation, which leads to several diseases such as typhoid and cholera. Moreover, two-thirds of the global population is expected to face water shortages by 2025 – Worldwide Fund for Nature (WWF).

IN-DEPTH ANALYSIS

This section delves deep into a significant ESG development, offering comprehensive insights and a nuanced perspective. We break down the critical facets of this development, analyzing its implications for businesses, investors, and regulators. Our in-depth analysis clarifies the potential impact on global markets and how this change may influence strategic decisions across sectors. Join us as we explore this development, shedding light on the opportunities and challenges in the evolving ESG landscape.

An Overview of Global Power Sector Decarbonization

The global emissions landscape is rapidly evolving, driven by increased energy consumption in developing nations. While emissions continue to rise, many countries are making strides

in adopting renewable energy and climate mitigation strategies. This transition poses challenges and opportunities for businesses and policymakers as they work toward a low- carbon future.

Global greenhouse gas (GHG) emissions in 2023 totaled 53 gigatonnes of CO2 equivalent (Gt CO2eq), excluding emissions from Land Use, Land Use Change, and Forestry. Global energy- related CO2 emissions in 2023 rose by a modest 0.1% compared to 2022, reaching a total of

37.4 billion tonnes (Gt). This sector encompasses activities like transportation, electricity, heat generation, building operations, manufacturing, construction, fugitive emissions, and other fuel combustion processes. The global CO2 emissions from fossil fuels and industry have increased at ~1.6% Y-O-Y since the year 2000 and 2.4% Y-O-Y since 1900. As shown in Figure 1, in 2023, advanced economies still have per capita emissions approximately 70% above the global average. Meanwhile, India’s per capita emissions are significantly lower, at roughly 2 tonnes, less than half the global average.

IN CONVERSATION WITH ESG PIONEERS

Bangalore International Airport Limited (BIAL) operates Kempegowda International Airport Bengaluru (BLR Airport), a key gateway to India’s tech capital, managing a rapidly expanding facility that serves around 40 million passengers annually. With a focus on world-class infrastructure and sustainable practices, BIAL is committed to enhancing passenger experience and driving regional connectivity and economic growth.

We interviewed Mr. Sridhar L, an accomplished professional with nearly 30 years of experience in sustainability. Currently serving as the Head – ESG at BIAL, he is responsible for developing and implementing the organization’s 2030 Sustainability Strategy. He previously worked with Diageo India & Saint-Gobain groups. Sridhar’s expertise drives impactful initiatives that align with corporate sustainability goals.

REGULATORY WATCH

Regulation around ESG continues to evolve rapidly. This section summarizes some of the latest regulatory developments across critical global markets, including the US, EU, UK, India, and the Middle East. Our analysis captures the nature of the legislative changes or updates and our high-level assessment of broader implications on business practices and compliance strategies.

CSRD UPDATES

The Corporate Sustainability Reporting Directive (CSRD) is shaping to be a transformative framework for sustainability disclosures in the EU, with several vital updates emerging in recent months. These updates focus on implementation guidance, FAQs to clarify the directive, and auditing guidelines. Here’s a detailed look at the latest developments:

EFRAG’s Draft Guidance on Transition Plans

The European Financial Reporting Advisory Group (EFRAG) has released a draft implementation guide to support companies in developing and reporting transition plans in accordance with the CSRD. Transition plans are critical for demonstrating how businesses aim to reduce their carbon footprint and align with the EU’s climate goals. The draft guidance outlines specific components businesses should include, such as baseline emissions data, target-setting methodologies, and timelines for achieving net-zero emissions.

European Commission’s FAQs on CSRD Implementation

The European Commission has published a detailed set of frequently asked questions (FAQs) addressing common concerns around CSRD implementation to ease the transition to the new reporting requirements. This document is precious for companies navigating the initial phases of compliance.

CEAOB’s Guidelines on Limited Assurance for Sustainability Reporting

The Committee of European Auditing Oversight Bodies (CEAOB) recently issued guidance to help auditors navigate the auditing requirements for sustainability reporting under the CSRD. These guidelines focus on limited assurance engagements, the initial standard for verifying sustainability reports during the transition phase. The guidance emphasizes a consistent approach to evaluating the accuracy and reliability of ESG data and provides a framework for assessing disclosures, methodologies, and compliance with CSRD standards. The guidelines are intended to build trust in the quality of sustainability information provided to investors and stakeholders.

UPDATES

The CSRD has seen several significant developments in the past month, impacting businesses’ sustainability reporting obligations. Key updates include:

1. European Commission’s FAQs on CSRD and SFDR Implementation: On November 13, 2024, the European Commission published 90 frequently asked questions (FAQs) to enhance stakeholders’ understanding and compliance with the CSRD and the Sustainable Finance Disclosure Regulation (SFDR). These FAQs aim to clarify reporting requirements and facilitate effective implementation.

2. SGS Launches Services for CSRD Compliance: On November 25, 2024, SGS introduced three services to support organizations in meeting CSRD compliance and enhancing Environmental, Social, and Governance (ESG) disclosures. These services include CSRD Pre-Assurance, ESG Disclosures & Sustainability Report Assurance, and ESG KPI Verification & Assurance, designed to ensure accurate and consistent sustainability reporting.

3. CSRD Implementation Delays for Certain Sectors: On November 7, 2024, the European Council and Parliament agreed to postpone the adoption deadlines for sector-specific European Sustainability Reporting Standards (ESRS) and standards for certain non-EU companies by two years. This extension allows companies additional time to adapt to the new reporting requirements.

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