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Goods imported into the UK from countries with a lower or no carbon price will face a levy by 2027.

By Paul A. Davies, Michael D. Green, and James Bee

On 18 December 2023, the UK government announced a proposal for a new carbon border adjustment mechanism (UK CBAM). The announcement follows extensive consultation earlier this year on possible measures to mitigate carbon leakage risks and aims to support the UK’s decarbonisation efforts.

The UK has made a number of decarbonisation commitments including reaching net zero by 2050. These commitments to decarbonise can be undermined by “carbon leakage”, in which production of goods and associated emissions move from a jurisdiction with more ambitious climate policies (which add costs to carbon-intensive processes) to another jurisdiction with less ambitious policies, resulting in an overall negative impact on the carbon intensity of the processes/goods themselves. The UK CBAM (or other form of carbon tax) seeks to address this issue by aiming to put a fair price on the carbon emitted during the production of certain carbon-intensive goods entering the UK.

Green Leaf - defocused background

The Private Members Bill, if passed, would establish the UK’s first law mandating business due diligence on human rights and the environment.

By Paul A. Davies, Michael D. Green, and James Bee

On 28 November 2023, Baroness Young of Hornsey (Baroness Young) introduced the Commercial Organisations and Public Authorities Duty (Human Rights and Environment) Bill (the Bill) to the UK House of Lords. The Bill seeks to establish the UK’s first law mandating certain companies to conduct human rights and environmental due diligence, and would also introduce an overarching duty for companies to prevent environmental and human rights abuses within their operations and value chains.

The Bill aims to level the playing field among businesses, provide clarity on legal obligations, and enable a greater level of access to justice. It also aims to align UK law with voluntary international standards, such as the United Nations (UN) Guiding Principles on Business and Human Rights, the Organisation for Economic Co-operation and Development (OECD) Guidelines, and the International Labour Organization (ILO) Multinational Enterprises Guidelines.

The government published a new document outlining its existing and proposed objectives to develop the UK’s sustainable economy.

By Paul A. Davies, Michael D. Green, and James Bee

On 30 March 2023, the UK government published an updated version of its Green Finance Strategy (the Strategy), titled “Mobilising Green Investment”. The Strategy is part of the UK government’s series of announcements for its Green Day (see this blog post for more on the broader Green Day announcements).

The UK government has unveiled a number of measures with the overall purpose of reaching net zero by 2050 and meeting the UK’s climate targets.

By Paul A. Davies, Beatrice Lo, JP Sweny, Simon Tysoe, Michael D. Green, and James Bee

On 30 March 2023, on what has been called the UK’s “green day”, the UK government announced a series of policies and proposals that it hopes will form the backbone of its strategy to drive investment into green energy with a view to achieving energy security and meeting the target of net zero greenhouse gas emissions by 2050.

The UFLPA aims to clamp down on the import of items produced by alleged forced labor in and relating to the XUAR.

By Erin Brown Jones, Les P. Carnegie, Paul A. Davies, Nathan H. Seltzer, James Bee, and Allison Hugi

On 16 December 2021, the US Senate unanimously passed the Uyghur Forced Labor Prevention Act (UFLPA), following its approval in the US House of Representatives earlier the same week. The UFLPA is one of several measures that the US hopes to use to prevent what it views as forced labor and human rights abuses in the Xinjiang Uyghur Autonomous Region (the XUAR) of China. The UFLPA is the culmination of bipartisan attempts over a number of months to introduce a bill that would restrict imports from the XUAR.

Businesses must review the Green Claims Code and accompanying guidance to determine whether their environmental claims are in compliance.

By David Little and Anuj Ghai

Background: The need for a Green Claims Code

The Competition and Markets Authority’s (CMA’s) recent publication of the Green Claims Code (the Code) and its final guidance (the Guidance) in respect of environmental claims represents the culmination of extensive consultation and investigation into claims about “green” goods and services.

In recent years, consumers have paid greater attention to the environmental footprint of the products and services that they buy and consume. In 2019, UK consumers spent £41 billion on ethical goods and services — almost four times the amount spent two decades previously. In light of increasing demand for green goods and services, in 2020 the CMA launched an investigation under its consumer protection powers into the impact of green marketing on consumers and carried out inquiries into potentially misleading environmental claims. At the end of its investigation, the CMA found that up to 40% of online green claims could be misleading. As a result of these findings, the CMA published draft guidance on environmental claims on 21 May 2021, and the final Guidance on 20 September 2021.

The strategy sets out plans to reduce emissions from key sectors of the UK economy to ensure that the UK remains on track for net zero by 2050.

By Conrad Andersen, John Balsdon, David Berman, Paul A. Davies, Nicola Higgs, Sam Newhouse, Simon J. Tysoe, Michael D. Green, James Bee, and Anne Mainwaring

On 19 October 2021, the UK government published its climate change strategy, “Net Zero Strategy: Build Back Greener” (the Strategy), which outlines plans to support the UK economy’s transition to a greener and more sustainable future. On 31 October, the UK will host the 2021 United Nations Climate Change Conference, COP26, in Glasgow.

Last year, Prime Minister Boris Johnson set out a 10-point plan for a “green industrial revolution”, which laid the foundation for a green economic recovery from the impact of COVID-19. The Strategy builds on that approach to align the UK with its carbon budget and nationally determined contribution to the Paris Agreement, both of which aim to reduce economy-wide greenhouse gas (GHG) emissions by at least 68% by 2030 and 78% by 2035, compared to 1990 levels. Further, the Strategy details the UK’s vision for a decarbonised economy by 2050.

By Paul A. Davies, Tom Evans, Nicola Higgs, Farah O’Brien, David Walker, Michael Green, Hannah Berdal, Anne Mainwaring, and Catherine Campbell

Green shoots emerge as PE firms consider new ways to incorporate ESG into dealmaking.

Market sentiment and the increasing importance of environmental, social, and governance (ESG) to firms’ competitiveness across the market, combined with wide-ranging and rapidly developing ESG regulatory reforms, are driving increased focus on ESG at both LP and GP levels across Europe. As a result, the market is showing demand for enhanced diligence, and a wider range of deal provisions are being considered in light of their potential to enhance the ESG outlook of PE investments.

The European Commission continues to explore how competition policy can support the bloc’s increased focus on sustainability and progression towards climate neutrality by 2050.

By David Little and Anuj Ghai

On 10 September 2021, Inge Bernaerts, Director of DG Competition, delivered a keynote speech at the 25th IBA Competition Conference on behalf of Executive Vice-President and Commissioner for Competition, Margrethe Vestager. (The speech was complemented by a concurrent Policy Brief.) The European Commission (the EC) has often used the annual conference as a platform to announce new policy initiatives. This year, the Commissioner’s speech focused on how competition policy could be used to support the European Green Deal — a set of policy and regulatory initiatives intended to enable the bloc to achieve climate-neutrality by 2050. For more information, see Latham’s previous posts here, here, and here.

A class action by 202,600 claimants arising from the collapse of the Fundão dam in Brazil was struck out as abuse of process.

By Sophie Lamb QC, Oliver Middleton, and Tom Watret

Background

In Município De Mariana & Ors v. BHP Group Plc & Anor (Rev 1),[1] the largest group action in English legal history (by number of claimants) was struck out as an abuse of process by Turner J in the High Court. The case is the latest in a series brought by groups of overseas claimants against the UK-listed parent company of a large multinational in respect of alleged misconduct by a subsidiary in a foreign jurisdiction.[2] The uptick in these large international class actions is likely to continue given the ever-increasing focus on environmental, social, and governance (ESG) fundamentals.

The Court’s decision in this case illustrates some of the important practical implications of attempting class action litigation of this scale and complexity, and highlights the importance of taking prompt remediation steps at a local level following major incidents. Where that includes establishing comprehensive compensation schemes, the decision makes clear that the English courts will be reluctant to allow litigation to proceed in England if such action would cut across the local remediation scheme, particularly if the claimants are entitled to and may already have obtained compensation through a local scheme or local litigation.