Recent Developments in Global Green Sector Regulations


In this insight, we will delve into the latest developments in global regulations within the green sector. Given the aim of achieving a green transition, nations worldwide frequently implement regulatory changes. Therefore, we will analyze the changes that have occurred in the past month.

UK Finance Ministry Proposes Regulations for ESG Ratings Amidst Global Investment Landscape

Britain’s finance ministry has announced plans to introduce regulations for providers of Environmental, Social, and Governance (ESG) ratings on companies, aiming to enhance clarity and trust in widely used benchmarks guiding investments. However, no specific timeline was provided. Globally, trillions of dollars have been invested in company shares, with asset managers relying on ESG ratings to inform their stock selections. Notably, the compilation of ESG ratings, a sector comprising entities like MSCI, S&P, Morningstar, London Stock Exchange Group, among others, currently operates without regulation. The ministry’s statement follows a public consultation held last year, with the introduction of a voluntary industry code of conduct in the interim. The ministry has indicated that a comprehensive consultation response and legislative actions will ensue later this year. Contrastingly, the European Union recently approved mandatory rules to regulate ESG ratings, surpassing Britain’s voluntary industry code. Nonetheless, both sets of regulations draw from guidance provided by IOSCO, a global securities regulatory body. Industry experts express disappointment over the delay in clarifying regulations, stressing the need for clear definitions of ESG ratings and the entities falling under regulation. Ratifiers anticipate regulations mandating formalized governance structures and transparent methodologies to enhance rating comparability. The timing of legislative action in Britain could be influenced by an upcoming general election expected later this year.

SEC Implements New Rules for Enhanced Climate Disclosure in Public Companies

On March 6, 2024, the US Securities and Exchange Commission (SEC) enacted rules through which climate-related disclosures are improved and standardized in public companies and offerings. They are a result of a two-year process that led to the publishing of proposed rules in March 2022 that aim to establish guidelines for public firms when reporting climate-related information to investors.

On implementation of the new SEC regulations, companies have to disclose not only the financial cost but also climate-related risks and mitigation efforts. This includes:

  • Identifying climate-related risks and their impact on business strategy, financial condition, and operations.
  • Reporting on costs incurred due to severe weather events and natural conditions, like hurricanes and wildfires.
  • Describing mitigation efforts, including expenditures and impacts on financial estimates.
  • Disclosing oversight by the board of directors and management’s role in assessing and managing climate-related risks.
  • Providing information on climate-related targets or goals and associated financial impacts.
  • Reporting Scope 1 and/or Scope 2 emissions for large accelerated filers, along with assurance reports.

It must be possible to find this disclosure in companies’ filings with the SEC, such as registration statements and annual reports.

The compliance will come 60 days after the passage of the act has been published in the federal register. While the implementation period and timelines will be gradual, the biggest firms will be required to reveal climate-related risks in their 2025 fiscal year and emissions disclosure in 2026. Smaller companies will be phased in, with compliance deadlines ranging from 2026 to 2028 depending on their registrant type.

RBI Drafts Framework for Disclosure of Climate-Related Financial Risks by Regulated Entities

The RBI (Reserve Bank of India) has come out with a draft framework that requires regulated entities to effectively disclose climate-related financial risks. This measure is critical in the proper diagnosis of both financial risks and opportunities within the industry while, ensuring the existence of a market discipline. The system is based on the fundamental concepts of strong governance, strategic planning, and risk management structures to meet the diversified problems that first of all caused by greenhouse gas emissions and lead to the climate crisis.

Regulated entities are called upon to provide comprehensive disclosures across four key thematic pillars: governance, strategy, risk management, and metrics/targets. These disclosures are intended to shed light on the oversight of climate-related risks and opportunities by the Board, the involvement of senior management in risk assessment and management, as well as the entity’s strategy for managing climate-related financial risks and opportunities. Furthermore, companies are obligated to state their measures to appraise and catalog climate-related financial risks, showing the metrics and the number of targets as external criteria for measuring performance in this context.

The RBI will keep working to fine-tune its approach to managing climate risks for its securities market, thereby inviting the public to share their thoughts on this matter. The consultation process is available until April 30, 2024, thus, facilitating a collaborative and inclusive conversation on how existing regulations can be developed or improved to address the challenges posed by climate change in the financial sector.

RBNZ Bulletin Explores Credit Risk Weights for Climate Risk Management

The RBNZ in New Zealand has produced a Bulletin article that expositions the application of credit risk weights in the management of climate risk-related hazards. One of RBNZ’s objectives is to make sure that banks’ minimum capital requirement is higher and that when it comes to weighing financial risks associated with climate change, risk weights have a central role. The piece sums up the RBNZ approach to the charged credit risk weights, considers the risks from the climate-change point of view, and provides other tools to secure them. RBNZ emphasizes data-driven decision-making for any future changes to risk weight settings.

Singapore’s SGX RegCo Moves Forward with Climate Reporting Mandates

The SGX RegCo in Singapore is pushing ahead with climate reporting regulations and is expected to require all listed issuers to report from FY2025, as well as the large non-listed issuers from FY2027. Its reporting will be structured in a phased manner and will aim for observations according to International Sustainability Standards Board (ISSB) guidelines.


  • From FY2025, listed issuers must report annual climate-related disclosures (CRD) based on ISSB standards.
  • From FY2027, large non-listed companies will also be required to report CRD.
  • Certain aspects of reporting, such as Scope 3 GHG emissions and external limited assurance on Scope 1 and 2 GHG emissions, will have delayed implementation dates, with Scope 3 GHG emissions reporting expected no earlier than FY2029.

The consultation by SGX RegCo is intended to specify the requirements to be followed including referencing ISSB’s IFRS S1 and IFRS S2 for CRD preparation and presenting Scope 1 and 2 GHG emissions and their estimation methods from FY2025, and Scope 3 GHG emissions from FY2026 by applying the relevant categories. Also, standardized sectoral metrics and sustainability reports will be published in accordance with the current timetable as of the fiscal year of 2025.

Indonesia’s OJK Releases CRMS Manual to Aid Financial Institutions in Climate Risk Management

The Indonesian Financial Services Authority (OJK) has published the CRMS (Climate Risk Management & Scenario Analysis) Manual for the purpose of aiding financial institutions manage the climate-related risks.

The CRMS guide is aimed at analyzing the adaptation level of bank business models and strategies in combating the climate crisis within several time frames that comprise from the non-financial to the financial indicators.

It comprises six main pillars:

  1. Climate risk management
  2. Technical guidance for climate risk measurement
  3. Methodology for calculating carbon emissions
  4. Data on potential physical risks in Indonesia
  5. Data supporting Indonesia’s macroeconomic projections
  6. Reporting framework for the impact of climate risks and carbon emissions from the banking sector to the OJK

The CRMS guide is anticipated to assist banks in evaluating the impact of climate change on their business performance and sustainability. It will undergo regular updates to align with global developments, best practices, and stakeholder requirements.

Bank Negara Malaysia Sets Expectations for 2024 Climate Risk Stress Test

Bank Negara Malaysia (BNM) has released a new methodology paper outlining its expectations for financial institutions (FIs) undertaking the 2024 Climate Risk Stress Test (CRST).

The primary objectives of the 2024 CRST exercise are to:

  1. Enhance understanding and awareness among FIs’ board members, senior management, and staff regarding the potential impacts of climate-related risks on their business and operations.
  2. Explore innovative approaches to better identify and measure FIs’ exposures to climate change risks.
  3. Identify existing gaps, particularly in data, measurement, methodology, technology, and capabilities, and propose solutions to address these challenges.

The CRST exercise will involve the utilization of three long-term adverse climate scenarios to assess the impact of various combinations of physical and transition risks:

  1. Net Zero 2050 (“orderly”)
  2. Divergent Net Zero 2050 (“disorderly”)
  3. Nationally Determined Contributions (“hot house world”)

This information is based on the article analyzed and reported by ThePlatform’s analysts team:

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