The European Commission (the Commission) is expected to table a recently leaked proposal for a Directive of the European Parliament and of the Council on green claims (the Directive) that will require European Union (EU) member states to impose “dissuasive” penalties on organizations that make false environmental claims. The objectives of the Directive are to (i) set out detailed EU rules on the substantiation of voluntary green claims; (ii) enable consumers to act on reliable information about the sustainability of products and traders; and (iii) provide for members states to set up a system of penalties. This bulletin briefly summarizes the leaked Directive. General provisions (Chapter I): Sets out the scope of the Directive and provides that it will apply to environmental claims made on products available on the EU market and environmental claims on traders that provide activities on the EU market; and Clarifies that the Directive only applies to voluntary environmental claims and does not amend any other EU legislation that already establishes requirements in terms of information provided to consumers and does not apply to sustainability information involving messages or representations that may be either mandatory or voluntary pursuant to the EU or national rules for financial services, such as banking, credit, insurance and re-insurance, occupational or personal pensions, securities, investment funds, payment and investment advice. Substantiation and communication of environmental claims (Chapter II): Establishes harmonised requirements for the substantiation and communication of all types of environmental claims, including labels. Establishes the detailed requirements which methodologies, used by traders to collect evidence to substantiate the environmental claim, must be compliant with, and incentivises the use of the Environmental Footprint methods; Establishes the detailed requirements to be complied with by traders when communicating a claim that is substantiated according to the Directive; Requires that environmental labelling schemes must comply with certain requirements with regards to their governance and transparency; and Requires regular review of and updates to…

The Principles for Responsible Investment (PRI) recently published its 2023 Reporting Framework (the Framework) and updates to its minimum requirements for PRI memberships for investors.   PRI noted the following key changes to the Framework: Improved clarity. Terminology of all indicators has been revised to ensure that terms are neither too prescriptive nor too generic. PRI also revised questions and response options to reduce ambiguity. Improved consistency and applicability. PRI performed a systematic applicability check of all indicators in the Framework and adjusted logic paths and/or assessment criteria where practices are no longer applicable. PRI also restructured sections for a clearer and better alignment with other recognised frameworks such as the Task Force on Climate-Related Financial Disclosures, the Taskforce on Nature-related Financial Disclosures, and the International Sustainability Standards Board. Further, PRI removed asset class module reporting for asset owners. Reducing reporting effort. PRI noted that it (i) reduced the granularity of data requested, (ii) decreased the overall number of indicators, and (iii) implemented simpler indicator structures. Minimum requirements. PRI indicated that it is continuing its review of the Framework’s minimum requirements and that the existing minimum requirements for the 2023 reporting cycle will remain the same as in previous years. Interested stakeholders and signatories to PRI are encouraged to register for a webinar providing an overview of the Framework that will be hosted by the PRI on 15 March 2023.   For further information or to discuss the contents of this bulletin, please contact Lisa DeMarco at lisa@resilientllp.com.