Sustainability/ESG

The Corporate Sustainability Due Diligence Directive (CSDDD) has been formally adopted and will, on a staggered basis between 2027 and 2029, introduce mandatory human rights and environmental due diligence requirements for large EU companies, and non-EU companies operating in the EU. In-scope companies must take various steps to manage actual and potential adverse impacts of their/their supply chain partners’ activities. A key requirement will be implementation of a climate transition plan. Explore our briefings on the CSDDD and climate transition planning for further information and practical advice.

The European Commission has published an FAQ document on the CSDDD.

• A recent Court of Appeal case (World Uyghur Congress, R (on the application of) v National Crime Agency [2024] EWCA Civ 715) suggests companies would be well advised to take responsibility for their supply chains on an holistic level, or face the possibility of an investigation by regulators if there is any suggestion that criminal property, money laundering or labour/human rights abuses may have been involved at any stage of the chain.
• A group of institutional investors are suing Boohoo following share price decline over ESG disclosures relating to factory workers.
• The forthcoming EU Deforestation Regulation will requires importers of a range of products to ensure deforestation or forest degradation has not occurred at any point.
• A recent report by the House of Lords Select Committee on the Modern Slavery Act 2015 makes recommendations which, if introduced, will impact businesses. Key recommendations include amendments to the regime underpinning slavery and human trafficking statements and the introduction of mandatory modern slavery due diligence in supply chains.
• The European Parliament has given its final approval to a new regulation, known as the Forced Labour Regulation, enabling the EU to prohibit the sale, import, and export of goods made using forced labour. Member state authorities and the European Commission will be able to investigate suspicious goods, supply chains, and manufacturers. If a product is deemed to have been made using forced labour, it will no longer be possible to sell it on the EU market (including online) and shipments will be intercepted at the EU’s borders.

The Pensions Regulator has launched a new ESG resource to help pensions trustees go beyond minimum compliance with ESG duties and seek continuous improvement. It’s also stated it will, through its Market Oversight directorate, look more broadly at investment governance practice and decision-making, including around ESG.

The Climate Change Commission (CCC) has published its latest report on the UK’s progress towards cutting emissions. Key findings include: territorial emissions have fallen by more than half since 1990, the UK has overachieved its third Carbon Budget, the UK isn’t on track to hit its 2030 emissions reductions target, and the UK’s adaptation plans need to be strengthened. The CCC’s recommendations for the UK government for the coming year are set out at Annex 1.

The UK Business Climate Hub has published its UK Net Zero Census 2024 to assess net zero measures and initiatives being implemented by UK organisations and to provide a benchmark for progress. The report aims to aid decarbonisation efforts by identifying critical challenges and areas where additional support is required.

A new technical standard has been launched to help UK construction achieve net zero carbon buildings. The free-to-access UK Net Zero Carbon Buildings (NZC Buildings) Standard specifies the criteria a building must meet to be verified as net zero. The requirements encompass construction quality and building performance metrics, and cater to all significant building sectors, including new constructions and existing structures.

The Department for Energy Security and Net Zero has announced a pilot scheme for England’s first heat network zones. Six towns and cities (Leeds, Plymouth, Bristol, Stockport, Sheffield, London) have been selected. See our article on heat network zones and what businesses need to know.

The Network for Greening the Financial System has published a report on emerging trends and lessons learned from climate-related litigation. It anticipates a growth in the number of nature-related cases.

The Supreme Court’s decision in Manchester Ship Canal v United Utilities Water is a recent example of the courts finding flexibility within the law to facilitate environmental protection. Against a backdrop of increased focus on the state of the UK’s waterways, and in finding that the canal owner can pursue a private nuisance claim against the statutory undertaker, the Supreme Court’s decision could prompt claims against water companies and investment in improved water infrastructure. See our briefing.

Following on from the Manchester Ship Canal case, businesses and residents in south Devon have launched the first community-led legal claim of its kind, against South West Water. (Also of relevance/interest is the Supreme Court’s decision in the Davies v Bridgend Japanese Knotweed nuisance case.) The South West Water claim alleges that operations by the water company responsible for sewage pollution in Exmouth have led to a fall in tourism and other activities in the area. It seeks to hold the water company accountable for pollution and seeks compensation for businesses and individuals.

The Supreme Court of New Zealand has allowed claims in negligence, public nuisance and a novel ‘climate system damage’ tort, to proceed to trial against seven corporate defendants. The claims are made on the basis that the businesses are each involved either in an industry which releases greenhouses gases into the atmosphere or manufactures and supplies products which release greenhouse gases. The Supreme Court noted that the industrial revolution forced the common law to adapt to deal with new, widespread risk and damage caused by air and water pollution, and that current environmental challenges engage comparable complexities. The New Zealand case could catalyse private and regulatory action, and may even prompt a new, environmental damage-specific tort.

The Court of Appeal’s October ruling against Shell in the Bille and Ogale litigation (judgment not yet available) centred on what people taking legal action are expected to prove at the start of an environmental claim. The decision will make it much easier for claimants to bring complex environmental claims arising from multiple and repeated polluting events.

There’s also the recent Irish case in which wind turbine noise has been found to constitute nuisance for the first time.

The Supreme Court has recently handed down an interesting judgment (In the matter of an application by Noeleen McAleenon for Judicial Review) concerning alleged nuisance odour, toxic emissions, breach of statutory duties, regulatory failings, human rights impacts, and what’s the appropriate cause of action and legal procedure. The judgment is likely to have significant implications for the formulation and process of nuisance and environmental impact claims. It could potentially open the floodgates to a spate of judicial review applications against authorities and regulators.

Vanuatu, Fiji and Samoa have formally proposed that the international criminal court recognise ecocide – unlawful or wanton acts committed with knowledge that there is a substantial likelihood of severe and either widespread or long-term damage to the environment being caused by those acts – as a crime. The change could allow for the prosecution of individuals responsible for environmental destruction, such as the heads of polluting companies, or heads of state.

Wildlife and Countryside Link has published an assessment of how the UK government is delivering on its pledges under the Global Biodiversity Framework (GBF). In short, the conclusion is ‘nowhere close’. Out of 26 rankings, England is judged to be ‘in the red’ on more than half, with policies currently expected to be ‘inadequate’ to meet targets in all areas. In related news, the UK has now more than quadrupled its contribution to the GBF, providing an additional £45.5 million.

The Task Force on Nature-related Financial Disclosures (TFND) published draft guidance on nature transition planning for companies and financial institutions. Feedback is invited by 1 February 2025.

The Glasgow Financial Alliance for Net Zero published both its consultation (open until 27 January 2025) on nature in net-zero transition plans, and its consultation (open until 9 January 2025) on index guidance to support real-economy decarbonisation.

To help drive the transition to electric vehicles (EVs) the government announced, in the Autumn 2024 budget, it’s widening the differentials in Vehicle Excise Duty First Year Rates between EVs and hybrids or internal combustion engine cars. It’s also maintaining EV incentives in the Company Car Tax regime and extending 100% First Year Allowances for zero emission cars and EV chargepoints for a further year.

Corporate/corporate reporting

The Institute of Directors has published a new, voluntary Code of Conduct which aims to be a practical tool to help directors make better decisions.

The TFND announced a 30% increase in adopters of their corporate reporting recommendations since January and released a suite of sector guidance, including recommended sector-specific disclosure metrics, to support reporting by companies and financial institutions. New sector guidance covers aquaculture, biotechnology and pharmaceuticals, chemicals, electric utilities and power generators, food and agriculture, forestry and paper, metals and mining, as well as oil and gas. The TNFD has also published guidance to help banks, re/insurance companies, asset managers and owners, and development finance institutions apply its recommended disclosures.

In response to market calls for greater streamlining of corporate reporting, the TNFD signalled its support for the use of cross-reference tables in corporate reporting to help simplify and streamline the presentation of TNFD-aligned recommended disclosures in existing voluntary or mandatory corporate reporting.

The International Sustainability Standards Board (ISSB) has published its feedback statement for 2024 on the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards. The plans aim to support the application of disclosure requirements under IFRS S2, Climate-related disclosures, and decrease fragmentation in the market. See this press release.

The government has published a policy paper on the framework and terms of reference for the development of UK Sustainability Reporting Standards, and an update on the government’s wider work to develop a Sustainability Disclosure Requirements regime in the UK.

On 13 November 2024, the European Commission published a set of frequently asked questions to provide guidance and clarification on sustainability reporting requirements introduced by the Corporate Sustainability Reporting Directive (CSRD). The CSRD aims to provide investors and other stakeholders with access to more decision-useful information about companies’ sustainability risks, opportunities, and impacts. It mandates reporting on a range of ESG topics in accordance with the European Sustainability Reporting Standards. The CSRD requires in-scope corporate entities (including EU companies and non-EU companies with EU activity) to commence first reporting on a phased basis between 2025 and 2029. The deadline for the EU Commission to publish certain reporting standards under the CSRD has been delayed from 30 June 2024 to 30 June 2026.

The Financial Conduct Authority’s (FCA) anti-greenwashing rule came into force in the UK earlier this year. It’s the first part of the FCA’s Sustainability Disclosure Requirements.

The FCA has updated its webpage on the sustainability disclosure and labelling regime, with information for firms on how to notify the regulator about their use of an investment label for a fund.

Companies House published an outline transition plan for reforming its role under the Economic Crime and Corporate Transparency Act 2023. The government published guidance on the information sharing measures in the Economic Crime and Corporate Transparency Act 2023.

Companies House published guidance on its approach to financial penalties.

The Financial Reporting Council published its annual review of corporate reporting, setting out the findings of its monitoring of UK companies’ annual report and accounts alongside its expectations for the upcoming reporting season.

The London Stock Exchange published Market Notice N06/24 confirming proposed changes to its Admission and Disclosure Standards. The changes align the standards to the new UK Listing Rules and reflect the closure of the High Growth Segment, the purpose of which is now redundant. The amended standards took effect on 29 July 2024.

Data protection/cyber security/tech and digital

Data reform is on the horizon. Publication of the new Data (Use and Access) Bill proposes changes to the UK’s data protection framework. However, businesses will be relieved to note that the Bill doesn’t suggest a major overhaul of the current regime.

The Information Commissioner’s Office (ICO) launched a new audit framework, including 9 toolkits, designed to help organisations assess data protection compliance. See our briefing.

The government recently announced that UK data centres will be given ‘Critical National Infrastructure’ status, opening up greater government support in preventing and recovering from critical incidents such as cyberattacks.

The government confirmed that the Cyber Security and Resilience Bill announced in the King’s Speech will be introduced to Parliament in 2025.

The National Cyber Security Centre (NCSC) has published new guidance to help Chief Information Security Officers communicate with boards to improve oversight of cyber risk, as well as guidance for organisations on implementing strong methods of multi-factor authentication for accessing corporate online services.

The NCSC has published a blog post on sharing lessons learned from cybersecurity incidents. It’s also published guidance to help organisations manage their communications strategy before, during and after an incident.

The FCA has published its insights, observations and key lessons from how firms responded to the CrowdStrike IT outage in July 2024 and their preparedness to respond to future incidents.

The UK has signed the first legally-binding international treaty governing safe use of AI.

Also on AI, The European Union AI Act was formally published. While most provisions will apply from 2 August 2026, the providers and deployers of all AI systems (as defined in the Act) will need to comply with the ‘AI literacy’ requirement from 2 February 2025. This means taking measures to ensure a sufficient level of AI literacy of staff and others dealing with the operation and use of AI systems on behalf of the provider or deployer, including implementing appropriate training, policies, and procedures. Our recent article sets out who’s in scope of the Act.

A Senior Associate in our Regulatory & Compliance team recently shared their insights on the growing trend of AI claims in advertising in this recent BBC article on ‘AI washing’.

The ICO has urged organisations to do more to help people affected by data breaches.

The ICO has also published a blog post, ‘Preparing for the quantum-enabled future’, which links to a new report exploring the emerging possibilities for quantum tech involving personal data. The government recently responded to recommendations made by the Regulatory Horizons Council on the regulation of quantum technology applications.

Commercial/general

The Home Office has published guidance on the corporate ‘failure to prevent fraud’ criminal offence, which is now scheduled to come into force on 1 September 2025.

The government is consulting on its 10 year plan industrial strategy, ‘Invest 2035‘, which aims to “ease the investor journey and create long-term, inclusive, secure and sustainable growth”. The government has said its strategy will channel support to advanced manufacturing, clean energy industries, creative industries, defence, digital and technologies, financial services, life sciences, and professional and business services.

An October 2024 report from the Global Commission on the Economics of Water states that more than half the world’s food production will be at risk of failure within the next 25 years due to the rapidly accelerating global water crisis. See our briefing on water stress and what businesses need to know.

The Terrorism Protection of Premises Bill (AKA Martyn’s Law) is expected to become law this year or early next. Proposed in the wake of the Manchester Arena bombing, it aims to strengthen security measures in public venues across the UK. As well as concert halls, stadiums, and other crowded spaces, the implications of Martyn’s Law will extend to other publicly accessible venues and events, including hospitals, large care homes, shops, leisure, education and transport facilities, and more.

The Department for Business and Trade (DBT) is considering consultation responses on de-regulating the Commercial Agents Regulations, with a view to simplifying the legislative framework, reducing court time spent interpreting the regulations, and enabling businesses to contract more freely.

The government has launched a new Regulatory Innovation Office, enabling existing functions across government to work together with the aim of speeding up public access to new technologies.

The Environment Agency, HM Revenue & Customs, Revenue Scotland, the Welsh Revenue Authority and the Joint Unit for Waste Crime are asking businesses to be wary of illegal waste management by “criminal gangs”.

On 16 July, the Competition and Markets Authority (CMA) published its final advice for businesses marketing green heating and insulation products. In August, the CMA closed its ‘greenwashing’ investigation into heating and hot water products company Worcester Bosch (WB) in August, following WB’s giving of some fairly significant undertakings in relation to its marketing of its boilers. But greenwashing isn’t just an issue for the heating products industry – it’s a concern for businesses in all sectors. This investigation, and those in other companies/industries, concluded with businesses formally committing to ensuring that green claims are lawful in future without the CMA having to prosecute. When relevant provisions of the Digital Markets, Competition and Consumers Act 2024 come into force (see below), the CMA will additionally be able to directly fine businesses up to 10% of their global turnover for breaches of consumer protection law. See our knowhow on greenwashing and our recent article on the wider washing phenomenon for legal and practical advice.

The Digital Markets, Competition and Consumers Act 2024 gives the CMA new enforcement ‘superpowers’ in respect of consumer law, including in relation to unfair trading and subscriptions traps. Enacted on 24 May 2024, the Act is to come into effect in phases via further secondary legislation to follow, with provisions relating to enforcement and unfair trading expected to take effect in 2025, and provisions relating to subscriptions in 2026.

The DBT has published the Assimilated EU Law Parliamentary Report for January 2024 to June 2024. It highlights progress to date and future plans on revoking and reforming assimilated law.

3D printing technology has been around for some time, but it could be the next big thing in construction and manufacturing. New research shows that the 3D printing in construction market is expected to grow at a CAGR of 90.1% during the forecast period of 2024 to 2032, propelled by technological advancements, cost efficiency, and sustainability. Precedence Research predicts that the 3D printing construction market will grow to $519.49 billion by 2032. In manufacturing, 3D printing can be used (non-exhaustively) for everything from multi-material, full-colour prototypes to production line tooling and final end-use parts. In real estate development, it’s being used for everything from pre-planning design and modelling to robotic arms and even ground-up concrete foundation and layer construction.

People

A new obligation for employers to proactively take reasonable steps to prevent sexual harassment of their workers came into force on 26 October 2024. Historic policies in employee handbooks won’t suffice. See our briefing for information and advice.

The government has published the Employment Rights Bill, along with supporting factsheets and policy document, Next Steps to Make Work Pay. The Bill covers a range of issues, promised in the ‘New Deal for Working People’ as part of Labour’s election manifesto, including zero hours contracts, flexible working, day one unfair dismissal rights, statutory sick pay, protection from dismissal during pregnancy, maternity leave and upon return, fire and rehire, single enforcement body, parental and other leave, equal pay, harassment, redundancy, TUPE, tips and trade union legislation.

The Equality and Human Rights Commission has published updated guidance for those placing or publishing advertisements, to help them make sure adverts are lawful and don’t discriminate.

The Workers Union has launched a major new 4-day working week trial with the hope of influencing the new government. The findings will be presented next summer.

After becoming the first retailer to publish a socioeconomic pay gap report, the Co-op is calling on government and businesses to take collective action to tackle inequality as it campaigns for changes to the Equality Act.

The Supreme Court has unanimously allowed the employees’ appeal in the high profile Tesco ‘fire and re-hire’ case.

The Court of Appeal has confirmed that there is no requirement for employers to carry out a general workforce consultation in relation to redundancies of less than 20 employees in non-unionised workforces.

In Orwin v East Riding of Yorkshire Council, an employee had been dismissed for refusing to remove an email signature using preferred pronouns that was intentionally provocative. The claimant’s views, including that sex is biologically immutable and binary, were protected under the Equality Act 2010. However, the email signature (“XYchromosomeGuy/AdultHumanMale”) was a deliberately provocative act to mock the idea of gender self-identification, rather than an expression of the claimant’s gender identity. The dismissal was in response to an inappropriate manifestation of the claimant’s beliefs, rather than because he held gender critical beliefs. It was therefore not discriminatory.

A recently-published Employment Tribunal decision (Ngole) demonstrates risks associated with informal pre-employment checks. Mr Ngole, a qualified social worker, was offered a job. The prospective employer ‘Googled’ Mr Ngole and discovered he’d been dismissed from a university course after expressing anti-gay views on Facebook. The employer became concerned that Mr Ngole’s values didn’t align with theirs. They were particularly concerned about the impact on LGBT+ service users, who statistically face much higher rates of serious mental health issues, due to stigma and discrimination. It withdrew the conditional job offer. An employment tribunal decided withdrawal of the job offer amounted to direct discrimination on the grounds of religious beliefs. The tribunal balanced Mr Ngole’s rights to freedom of expression against the employer’s objective of protecting others. It concluded that, although the objective of protecting staff and vulnerable service users was legitimate, withdrawal of the offer wasn’t proportionate.

The government has announced April 2025 increases to the national minimum wage.

The Investment Association has published updated executive pay guidelines.

The Office for National Statistics has published its annual gender pay gap analysis.

In a recent news story, the ICO highlighted that AI is increasingly being used in the recruitment process to save time and money, helping to source potential candidates, summarise CVs and score applicants. The ICO has issued a series of recommendations to AI developers and providers on the use of AI tools in recruitment and shared key questions organisations should ask when procuring AI tools to help with their employee recruitment.

Research (Digital Noise Impact Report) from employee experience platform, Unily, shows that nearly half of all employees are distracted at least once every 30 minutes, and almost a third report being distracted at least once every 15 minutes by a workplace notification. That means employees working 8-hour days could be experiencing over 160 distractions from their workplace digital tools each week. It’s impacting both employee wellbeing and productivity.

The International Chamber of Commerce is publishing a report series looking at the role of emotion, culture and behavioural tendencies and their impact on B2B relationships.

The Home Office has published updated guidance for employers on right to work checks.