<p>Filter Knowledge</p>

A regular briefing for the alternative asset management industry. 

On 5 April 2023, the Commission launched a consultation on its draft of the long-awaited technical screening criteria ("TSC") for the four remaining Taxonomy objectives, sometimes known as "TAXO4"¹.  The TAXO4 TSC were initially intended to be in place by 1 January 2023, a year after the TSC for the first two environmental objectives, but have been significantly delayed. Therefore, the draft's publication finally provides a fuller picture of the Taxonomy and gives those with ambition to align to the remaining environmental objectives an idea of the scale of that task.

Travers Smith Senior Consultant, Simon Witney, has contributed to a report by the World Economic Forum – read the full White Paper 'Private Market Impact Investing: A Turning Point'.

Our regular round-up of recent and forthcoming developments in law and practice for in-house counsel.

As the world moves towards net zero, the development of new environmentally friendly technology is increasing in importance. The introduction of green tax incentives in the United States is beginning to impact where green tech developers locate their businesses and where investors spend their capital.

In 2020, the UK outlined its roadmap to implementing the recommendations of the Taskforce on Climate-related Financial Disclosures ("TCFD"). With the first wave of premium listed companies already having prepared reports, the second wave will see standard listed companies, the largest asset managers and very large companies issuing TCFD reports or TCFD-aligned reports under the Companies Act this year. Smaller asset managers with over £5bn of assets under management will already be thinking about how to make their first firm-level reports next year.

A regular briefing for the alternative asset management industry. 

The European Commission (Commission) has issued further guidance on the interpretation of the Sustainable Finance Disclosure Regulation (SFDR).  This is in the form of responses to questions put to it in September 2022 by the European Supervisory Authorities (ESAs).  The responses include guidance on the definition of sustainable investment, disclosures around the reduction of carbon emissions and principal adverse impact disclosures.

Businesses with overseas operations, and firms that provide social audit support services to those businesses, need to be cognisant of attempts by claimant law firms to extend the existing boundaries of tort law and bring novel and ambitious value chain liability claims against them. Several claimant law firms (and litigation funders) have explicitly pivoted towards bringing these claims in the ESG space.

The European Supervisory Authorities (ESAs) have published a Joint Consultation Paper on proposed amendments to the Sustainable Finance Disclosure Regulation Delegated Regulation Regulatory Technical Standards (SFDR RTS).  The Consultation Paper focuses on the principal adverse impact (PAI) indicators, financial product disclosures, as well as addressing some technical issues. 

The UK government has published its 2023 Green Finance Strategy (Strategy) which sets out its proposals for mobilising green finance and investment in the UK. This supports the UK commitment at COP26 to become the world's first Net Zero-aligned Financial Centre.

ClientEarth v Shell plc

In this week's issue of Alternative Insights, we are looking at the impact of the EU's new foreign subsidies regulation on private equity deals.

In line with its public commitment to promote environmental sustainability and help accelerate the transition to a net zero economy, the Competition and Markets Authority ("CMA") has recently published its draft guidance on the application of the Chapter 1 prohibition to environmental sustainability agreements ("Guidance"). If implemented, the Guidance will provide business with greater comfort in assessing the legality and risk profile of their environmentally focussed agreements – at least in the UK.

The recent announcement of the UK Government's Payment and Cash Flow Review has once again put the spotlight on late payment clauses and other payment practices. Larger businesses in particular may be criticised for failure to comply with legal requirements or "best practices" in relation to their purchasing activity.

In this week's Alternative Insights, we are looking forward to the key themes for 2023, following an event we held in London on Wednesday and the launch of our new annual Insights publication.

Value chains are under the spotlight with the increase in so-called value chain liability claims in the UK: businesses operating in high-risk sectors need to carefully take stock of their potential exposure to this type of litigation risk. The retail sector (most notably larger retailers and supermarkets) needs to pay particular attention to these developments, given the size of their value chains and public profiles (and therefore the breadth of their potential legal and reputational exposure).  

The British Government has defended a claim brought by the World Uyghur Congress ("WUC") and the Global Legal Action Network ("GLUN") (together, the "Claimants") over the alleged failure to tackle imports of Uyghur forced-labour cotton into the UK. Findings from the case create important milestones that have the potential to impact international trade and the use and import of forced labour goods across a wide variety of sectors.

There are various ways in which a landlord might wish to ensure the alignment of its tenant with social and good governance principles, in line with the landlord's own ESG strategy and wider market requirements.

The principal aim behind many climate change claims may not be to "win" but to draw attention to activities that cause and contribute to climate change, litigation being just one tool in an activist's toolbox.