Sustainable Fitch: Supply chains emerging as a focus area of ESG regulations globally

Supply chains have emerged as a new area of focus across the global ESG related regulation in 2Q24, Sustainable Fitch says in a new report, especially given the adoption of the Corporate Sustainability Due Diligence Directive in the EU. This will have significant implications for those within sustainable finance.

This is one of the key ESG regulatory trend that Sustainable Fitch highlights in the latest quarterly ESG Regulations and Reporting Standards Tracker. Aside from supply chain-related regulations, the most relevant updates over the past three months include the progress made on taxonomies in Australia, Hong Kong and Kenya.

The EU saw the introduction of new methane specific regulation, which will impose new monitoring, verification and reporting obligations on companies across certain sectors. ISSB adoption has continued to be a significant driver of new ESG disclosure mandates globally, with 10 jurisdictions having made progress on adoption the standards this year.

In terms of upcoming developments most relevant to market participants, we expect climate-related disclosure changes in North America, with state-level regulation progressing in New York and Illinois, or in the case of California, coming into force. We also anticipate new momentum for Mexico in the coming months, with the recently amended Mexican Securities Law opening the way for new local ESG requirements to be developed.

The UK will publish details of the Sustainability Reporting Standards by 1Q25. Indian banks will start disclosing climate-related financial risks from 2025, the same year mandatory climate reporting will start in Australia.