Herbert Smith Freehills ESG Tracker (SADC Edition)
There are so many ESG-related publications and developments that it is hard to keep abreast of them all. For this reason, HSF publishes a monthly tracker of ESG-related publications and developments, with a primary focus on developments that may be of most interest to or impact our clients in the Southern African Development Community, be they corporates, asset managers or asset owners.
If you have any ESG-related questions, please get in touch with your usual contact at HSF who will be able to direct you as appropriate.
This issue covers the period from 1 to 30 April 2023.
13 April 2023
The Angolan finance minister recently remarked that Angola's next sovereign debt issuance will be an ESG bond of up to US$1 billion but that the government will not tap into the market this year. Finance Minister Vera Daves de Sousa said the government had now approved a framework for issuing so called environment, social and governance debt and the framework will likely be published in late April 2023.
DEMOCRATIC REPUBLIC OF CONGO
12 April 2023
It has been reported that a commission established by the government of the Democratic Republic of Congo (DRC) has recommended the termination of 30 forest concessions, citing violations of environmental regulations and unsustainable exploitation of natural resources.
The commission, which was set up by President Félix Tshisekedi in 2019 to review the country's forestry sector, found that the companies holding the concessions had failed to comply with regulations on issues such as forest conservation, community consultation, and the protection of wildlife.
The commission's recommendations are seen as a positive step towards addressing these issues and promoting sustainable forest management practices in the DRC.
However, there are concerns that the companies affected by the termination of their concessions may challenge the decision or attempt to continue their operations illegally, highlighting the need for continued vigilance and enforcement efforts by the government and civil society.
11 April 2023
It has been reported that the Northern Region Water Board intends to prequalify contractors for rehabilitation, upgrading and expansion works for Rumphi Town water supply system. Application for prequalification should be submitted by 16 May 2023.
11 April 2023
The Financial Services Commission of Mauritius ("FSC") released a communiqué on 11 April 2023 regarding its participation in the Global Financial Innovation Network's (GFIN)'s first ever Greenwashing TechSprint, along with 13 other international regulators. GFIN is a group of over 80 international organizations, committed to supporting financial innovation in the interest of consumers. As a participating member, the FSC is asking businesses from Mauritius and other African nations to take part in the Greenwashing TechSprint. This will enable international regulators, firms and innovators to address sustainable finance as a top priority. The aim of the TechSprint will be to develop a tool or solution that can help regulators and the market effectively tackle the risks of greenwashing in financial services. The application window opened on 17th April 2023 and remains open for 4 weeks.
28 April 2023
The President recently published the proclamation of the commencement of section 6 of the National Energy Act, 2008.
Section 6 focuses on integrated energy planning. It calls on the Mineral Resources and Energy Minister to develop and on an annual basis, review and publish the Integrated Energy Plan (IEP) in the Government Gazette. The IEP must deal with issues relating to the supply, transformation, transport, storage of and demand for energy in a way that accounts for security of supply; economically available energy resources: affordability; universal accessibility and free basic electricity; social equity; employment; the environment; international commitments; consumer protection; and contribution of energy supply to socio-economic development. Section 6 came into effect on 1 April 2024
28 April 2023
The Department of Water and Sanitation published a statement calling on mining houses that have not registered their dams as required to submit their information in order to be classified as Dams with the Safety Risk and ensure that they are regulated under the National Water Act, 1998 and the Dam Safety Regulations published in Government Notice R. 139 of 24 February 2012.
Dams with Safety Risk are those dams with minimum height of five metres (5m) and able to store more than fifty thousand cubic metres (50 000 m3) of water or water containing substance.
26 April 2023
The Minister of Forestry, Fisheries and the Environment published South Africa's 8th National Greenhouse Gas Inventory Report. The Report contains a detailed inventory of South Africa's annual greenhouse gas emissions from 2000 to 2020. The GHG inventory is central to tracking the implementation of South Africa's Nationally Determined Contribution (NDC). We are proud of the robust format of our monitoring which has been developed over the past 15 years and includes both public comment and independent verification and is designed to support domestic and international reporting obligations.
20 April 2023
The National Treasury and the South African Revenue Service (SARS) has published, for public comment, the draft legislative amendments to give effect to the two renewable energy tax incentives, announced in the 2023 Budget, namely the enhanced renewable energy tax incentive and the rooftop solar tax incentive.
Under the enhanced renewable energy tax incentive, taxpayers who are conducting businesses will be able to claim a 125 per cent tax deduction (in the first year) for qualifying capital expenditure in respect of all renewable energy projects, with no threshold on generation capacity. The enhanced incentive will be available for a period of two years and apply to investments in renewable energy projects brought into use for the first time on or after 1 March 2023 and before 1 March 2025.
With respect to the rooftop solar tax incentive, individuals will be able to receive a tax rebate to the value of 25 per cent of the cost of any new and unused solar PV panels, up to a maximum of R15 000. The rooftop solar tax incentive will be available for a period of one year and will apply to new and unused solar PV panels that are acquired by the individual and brought into use for the first time on or after 1 March 2023 and before 1 March 2024.
The public has until 15 May 2023 to submit comments on the draft legislation.
17 April 2023
Amendments to the Compensation for Occupational Injuries and Diseases Act, 2022 (2022 COID Act) were published. The amendments seek to the amend, substitute, insert, delete and repeal certain definitions and sections; to provide for matters pertaining to the Board and its members; to provide for the Commissioner to perform certain functions that were previously performed by the Director-General; to further provide for matters pertaining to the rehabilitation, re-integration and return to work of occupationally injured and diseased employees; to regulate the use of health care services; to provide for the Commissioner to review pension claims or awards; to provide for administrative penalties; to regulate compliance and enforcement and to provide for matters connected therewith.
The 2022 COID Act is not yet in force and will come into effect on a date to be determined by the President.
14 April 2023
The Minister of Forestry, Fisheries and the Environment has launched the public consultation on the intention to exclude the development and expansion of solar photovoltaic (PV) and battery storage facilities from the requirement to obtain environmental authorisation. The exclusions apply when the facilities are developed in areas confirmed to be of "low" or "medium" environmental sensitivity and will be subject to a site sensitivity verification, compliance with a site-specific environmental management programme and a registration process.
The intention of the proposed exclusions is aimed at improving the efficiency of the environmental assessment process. In addition, these exclusions intend to simplify the deployment of solar PV and battery storage facilities, to expedite the generation of electricity from renewable energy resources, facilitate the distribution of this generation capacity and contribute to addressing the existing electricity shortages currently being experienced by the country.
The public has until 15 May 2023 to submit comments on the Notice and associated documents.
12 April 2023
The President signed the Employment Equity Amendment Bill, 2020. The Bill, once enacted, will amend the Employment Equity Act with a view to promoting diversity and equality in the workplace and empower the government to set specific equity targets by sector and region, where transformation initiatives have lagged.
The law requires companies with more than 50 employees to submit employment equity plans for their companies on how to meet these targets, and then submit annual reports to the Department of Employment and Labour.
Companies seeking to do business with the state will be required to submit a certificate from the Department confirming that they are in compliance with the Employment Equity Act and its objectives, and that they do not pay their employees less than the national minimum wage.
06 April 2023
The Department of Mineral Resources and Energy published a Determination under section 34(1) of the Electricity Regulation Act, 2006 (the Determination). The Determination provides that (among other things) new generation capacity is needed to be procured to contribute towards energy security. Accordingly, 14711MW should be procured from renewable energy (3940 MW solar and 9600MW wind) and energy storage (1231MW battery) sources.
UNITED REPUBLIC OF TANZANIA
17 April 2023
It has been reported that the government of Tanzania, the African Development Bank (AfDB) and the French Development Agency (AFD) have signed agreements for two development project loans worth US$300-million to finance the construction of the 87.8 MW Kakono hydropower plant in Tanzania.
The Kakono project, which will be implemented by Tanzania's Electric Supply Company (Tanesco), will reduce greenhouse-gas emissions by 216 065 t/y, and comply with the best international environmental and social standards.
25 April 2023
It has been reported that in ensuring sustainable environmental management in the country, the Tanzanian government plans in the 2023/2024 financial year to implement five key priorities, among them, supervision of the implementation of a robust 10-year National Environmental Master Plan for Strategic Interventions (2022-2032) as well as taking measures to protect the environment.
Presenting the budget, the Minister of State in the Vice-President's Office Union and Environment (the Minister) said that in the next financial year, his ministry would also coordinate the implementation of the Policy and Chapter 191 of the National Environment Management Act, strengthening supervision of environmental management and protection in the Local Government Authorities.
Regarding the implementation of a robust 10-year National Environmental Master Plan for Strategic Interventions (2022-2032), the minister said that in the towns and cities the government would continue with its tree planting campaign including making the capital city, Dodoma green as well as controlling solid waste.
17 April 2023
It has been reported that Special Economic Zones
(SEZ) are to be established in Zambia and the
Democratic Republic of Congo for the production of electric
vehicles. Afreximbank and the UN Economic Commission for Africa
have signed a project framework agreement with the two
04 April 2023
It has been reported that the Japanese government has decided to include a clause requiring efforts to respect human rights in the bidding instructions and contracts used when the government purchases products and services from businesses. The principle agreed upon in the meeting is expected to be stipulated in the basic policy on economic and fiscal management and reform, which will be adopted by the Cabinet in June 2023.
13 April 2023
The three European Supervisory Authorities (EBA, EIOPA and ESMA – ESA) published a Consultation Paper with amendments to the Delegated Regulation of the Sustainable Finance Disclosure Regulation (SFDR). The proposed amendments aim at extending and simplifying the SFDR.
12 April 2023
The United States Environmental Protection Agency announced a proposal to revise the existing standards to reduce gas emissions from heavy-duty vehicles in model year 2027 and set new, more stringent standards for model years 2028 through 2032.
19 April 2023
It has been reported that the EU Parliament has overwhelmingly voted to adopt a new law to fight global deforestation. Under the new law, companies will only be allowed to sell products in the EU if the supplier of the product has issued a so-called "due diligence" statement confirming that the product does not come from deforested land or has led to forest degradation, including of irreplaceable primary forests, after 31 December 2020.
19 April 2023
The Government of Canada has announced a new series of measures aimed at preventing plastic pollution and improving how plastics are made, used and managed, including the launch of consultations into proposed new labelling rules for products, requirements for recycled content in plastic packaging, and for reporting requirements for a planned plastics registry.
17 April 2023
It has been reported that the Hong Kong Stock Exchange plans to make its listed companies quantify and reveal more about their climate-related risks, starting in January 2024.
19 April 2023
The European Council announced that it adopted a series of new laws aimed at enabling the EU to hit its climate targets, including the establishment of a carbon tax on imported goods, and an update to the EU emissions trading system aimed at helping to reduce emissions from several sectors of the economy. The reform of the emissions trading system, which covers about 40% of the EU's greenhouse gas emissions, stipulates that European industries and energy companies should cut emissions by 62% by 2030 compared to 2005 levels, compared to a target of 43% under the previous rules.
25 April 2023
It has been reported that lawmakers at the European Parliament and members of the EU Council announced an agreement on a package of new proposed rules, dubbed ReFuelEU Aviation. Once in place, the new rules will help decarbonise the aviation sector by requiring fuel suppliers to blend sustainable aviation fuels (SAF) with kerosene in increasing amounts from 2025. For aviation fuel suppliers, the new rules would require a minimum share of SAF at EU airports, starting a 2% in 2025, and increasing over time to reach 70% by 2050, as well as a minimum share of synthetic fuels starting in 2030 and also increasing through 2050 while for aircraft operators include a requirement for flights departing EU airports to refuel only with the fuel necessary for the flight, and to ensure that the yearly amount of aviation fuel uplifted at EU airports is equal to at least 90% of the yearly aviation fuel required."
10 April 2023
It has been reported that South Korea has broken ground as the first country in Asia to seek to hand out fines for false environmental claims in advertising. Under a draft law, a financial penalty of 3 million won ($2,270) will be handed out to companies by South Korea's Ministry of Environment that are deemed to have misled the public about their environmental impacts and green credentials. The law falls under a series of proposed environmental reforms to be made this year.
While the law is currently in draft form and its prospects for passage remain unclear, the Ministry of Environment has told domestic media it is actively pursuing greenwashing prevention and monitoring and that a joint working group of experts, industries and civic groups will prepare guidelines for greenwashing by October.
Recent and upcoming HSF ESG-related publications, webinars and events
- Navigating the Complexities of Regulating the Gig
Economy in South Africa
- ESG Tracker SADC Region March 2023
- Keeping up with ESG in Australia – April
- The Third Wheel Podcast (ESG In Australia):
Episode 28 – Black letter law goes blurry
- Delay to FCA's anticipated rules on
sustainable disclosures and investment labels
- The European Corporate Sustainability Due
Diligence Directive: it's a marathon, not a sprint
- UK government's turbocharged Green Finance Strategy
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.