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ESG
REGULATIONS
Global Outlook

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1 EUROPEAN UNION (EU):

Corporate Sustainability Reporting Directive (CSRD): This recently adopted directive (November 2022) requires comprehensive ESG reporting from a
wide range of companies operating in the EU. It sets stricter and broader standards than previous regulations.
Sustainable Finance Disclosure Regulation (SFDR): This regulation, introduced in 2019, influences how financial products in the EU consider ESG
factors. It requires transparency from financial institutions about how they integrate sustainability considerations into their investment decisions.
EU Taxonomy for Sustainable Activities: This classification system helps define which economic activities can be considered environmentally
sustainable. It plays a crucial role in directing investments towards truly sustainable projects.

2 UNITED STATES (US):

Securities and Exchange Commission (SEC) Climate Disclosure Rules: These recently adopted rules (2022) require certain publicly traded companies
in the US to disclose climate-related risks and opportunities in their filings. While not as comprehensive as the CSRD, they mark a significant step
towards ESG transparency in the US.
California's Climate Disclosure Laws (SB 253) require large companies to disclose greenhouse gas emissions, promoting environmental transparency,
a key aspect of ESG. This pushes businesses to focus on sustainability and paves the way for potentially broader ESG reporting in the future.

3 ASIA:
China: China has a strong focus on environmental regulations and is
developing a national ESG rating system.
Japan: Japan's Corporate Governance Code encourages ESG
considerations, and the Stewardship Code promotes responsible
investment by institutional investors.
India: India has issued guidelines for responsible business conduct and is
working on a business responsibility reporting framework.
4 CANADA:
Canadian Securities Administrators (CSA) Guidance on ESG
Disclosure: The CSA provides non-mandatory guidance for issuers
on ESG disclosure, encouraging best practices in transparency for
investors.
Supplier ESG Disclosure for Large Federal Contractors: Since
April 2023, large federal contractors must disclose greenhouse gas
emissions and set reduction targets. This promotes environmental
responsibility within government supply chains.

5 LATIN AMERICA 6 AFRICA:

Brazil: A frontrunner in the region, Brazil requires certain financial
institutions to manage ESG risks and establish environmental and social
responsibility policies. The Central Bank of Brazil also recently mandated
that banks consider ESG risks alongside traditional ones.
Chile: The Chilean Financial Market Commission (CMF) requires targeted
issuers to disclose their sustainability and corporate governance
performances in line with specific frameworks. This enhances transparency
for investors.
Other Countries: Countries like Argentina, Colombia, and Mexico are also
developing ESG-focused initiatives or incorporating ESG considerations
into existing regulations.
Egypt: In 2021, the FRA introduced resolutions requiring listed
companies and large non-banking financial institutions (with a
certain capital threshold) to submit annual ESG disclosure reports.
This likely applies to many banks in Egypt, promoting transparency
on their ESG performance.
South Africa: Listed companies on the JSE must report on ESG
risks and opportunities, following the JSE's ESG Reporting
Guidelines. The JSE is developing additional sustainability
disclosure guidance, including specific climate change disclosure
guidance, to further enhance transparency.

7 UNITED KINGDOM (UK):

Sustainability Disclosure Requirements (SDR) and investment labels (effective from July 2024): These upcoming rules will significantly impact the
financial sector. Asset managers and firms offering investment products will need to disclose their ESG approach and considerations. It also introduces a
voluntary labelling regime for sustainable investment products.
Sustainability Disclosure Standards (SDS): The UK is ramping up transparency on corporate sustainability with the introduction of the Sustainability
Disclosure Standards (SDS), expected to be published in July 2024 and take effect in January 2025. These standards are based on the International
Financial Reporting Standards (IFRS) Sustainability Disclosure Standards, ensuring global consistency in sustainability reporting.