direct or indirect, so if there is any German customer within the supply chain, they will be impacted by the Act, and compliance with GCSA will need to be ensured.


United Kingdom (UK) While the UK has yet to adopt any specific ESG laws, legislation such as The UK Corporate Governance Code 2018, The Companies Act 2006, The Climate Change Act 2008, The Equality Act 2010 and The Modern Slavery Act 2015 provide some of the legal landscape for UK ESG directives. Company law in the UK is mainly set out in the Companies Act 2006, and in 2016, the EU’s NRFD was implemented as an amendment to this Act. The NRFD applies to all large public interest companies with more than 500 employees and mandates disclosure on environmental, social and employee, human rights, anti- corruption and bribery issues through annual reporting.


The Financial Conduct Authority (FCA) is forging ahead with its mission to build transparency and trust around sustainability via its Sustainability Disclosure Requirements (SDR) and investment labelling, which includes restrictions on the use of sustainability-related terms such as ‘ESG’, ‘green’ or ‘sustainable’ in product naming and marketing. Their policy statement is currently due for publication by the end of 2023.


United States of America (USA) The USA is also making headway in tightening ESG disclosure and standardisation regulations. The US Securities and Exchange Commission (SEC) announced the creation of a climate and ESG task force which will aim at ESG-related misconduct, particularly concerning greenwashing.


Other legislation in development by the SEC includes a rule on climate disclosure for publicly traded companies to report annually on how their businesses assess, measure and manage climate-related risks, including greenhouse gas emissions.


Rest of the world In China, ESG-related Amendments to the Disclosure Rules Applicable to Listed Companies remain the leading ESG legislation. Still, a growing number of Chinese companies are now issuing annual ESG reports voluntarily, representing around a 36% increase since 2009.


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Elsewhere, 2023 has seen the Australian government consult on developing a climate risk disclosure framework for companies and financial institutions, with plans to introduce mandatory sustainability and ESG reporting requirements for large companies in the next few years.


The UAE has also been proactive over recent years. Although their regulations presently focus on listed or financial services organisations, broader obligations on sustainability reporting look set to come into force on all publicly and privately listed companies. Investors and consumers increasingly question businesses across the Middle East about their ESG credentials, and tackling greenwashing has become a hot topic as one of the region's bigger challenges.


International efforts A comprehensive worldwide standard for assessing and disclosing the full spectrum of ESG issues does not yet exist, but there are a number of voluntary frameworks and guidelines. This includes the UN Guiding Principles on Business and Human Rights, the Global Reporting Initiative (GRI) and the International Sustainability Standards Board (ISSB), which issued its inaugural standards in June 2023.


Conclusion The pressure to maintain transparency and demonstrate a genuine commitment to ESG issues will only intensify for businesses and their supply chains operating in global markets. Being proactive is, therefore, essential for building resilience and mitigating risk. The more companies can do now to improve supply chain transparency and build ESG monitoring and management into their risk management processes, the better prepared they will be for the future. As a leading provider of supply chain risk management services, CHAS can help you manage your supply chain and achieve greater levels of sustainability.


www.chas.co.uk TOMORROW’S FM | 43


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