CMA launches Green Agreements Guidance

In our monthly Sustainable Finance Policy and Regulation round-up we explore the latest developments shaping the market.

Table of Contents

Recent UK, EU and globally significant policy and regulatory developments and implications for investors, lenders, issuers, and borrowers

  • The UK Competition and Markets Authority (CMA) launched ‘Green Agreements Guidance’ to help businesses co-operate on environmental goals.

Other announcements and publications


  • UK government published ‘call for evidence’ on Scope 3 emissions reporting, with a deadline for feedback of 14 December.
  • The UK Energy Act becomes law, helping to unlock £100bn in private investment in energy infrastructure.


  • The European Banking Authority (EBA) has recommended enhancements to the Pillar 1 Capital Requirements framework, to capture environmental and social risks.
  • EU policymakers have fully adopted the European Sustainability Reporting Standards (ESRS).
  • The European Commission (EC) published its work programme for 2024, reflecting on sustainability policy priorities.
  • The Platform on Sustainable Finance (PSF) launched a new stakeholder request process on the EU Taxonomy.
  • The European Parliament wants to have carbon removals added to the Net-Zero Industry Act (NZIA), and voted on a Carbon Removal Certification Framework (CRCF).


  • SEC 2024 examination priorities left out ESG but monitoring will continue.

Recent policy developments and implications for investors, lenders, issuers, and borrowers

UK CMA launches Green Agreements Guidance to help businesses co-operate on environmental goals

The new Green Agreements Guidance (‘Guidance on the application of the Competition Act 1998 to environmental sustainability agreements’), published [1] by the UK CMA, explains how competition law relates to environmental sustainability agreements. This applies to collaboration between firms operating at the same level of the supply chain, to help them act on climate change and environmental sustainability. The Guidance was published in response to findings suggesting that businesses wanted more clarity about what is, and what is not, lawful when working together towards environmental sustainability goals.

The Guidance sets out the key principles that apply, along with practical examples that businesses can use to inform and shape their own decisions when working with other companies on environmental sustainability initiatives.

The CMA’s Guidance is applicable in the UK but regulators in other countries may adopt similar frameworks.

Key considerations for sustainable finance market participants

Issuers / Borrowers

Given the scale needed to combat climate change and uncertainty around what is acceptable for collaboration, issuers should appreciate having a set of rules for working together with peers or engaging with trade associations or non-governmental organisations (NGOs). While the CMA is specific that these collaborations should prevent or reduce negative impacts on the environment, this contrasts with what is happening in the US, where some politicians have warned businesses that they might breach antitrust laws related to their involvement in collaborative climate-related initiatives.

This guidance provides businesses more comfort when joining such initiatives, and they can use the specific examples provided on where such co-operation can help businesses mitigate some risks that may occur when trying to achieve their climate and sustainability targets. 

Investors / Lenders

The guidance provides much-needed clarity, reducing the risks associated with investing in businesses that may otherwise be perceived as breaching competition law, while trying to collaborate on developing sustainable technologies or trying to accelerate the adoption of sustainable business practice.

The guidance may help build partnerships aimed at promoting sustainability goals. Investors could benefit from the rise in collaborative, innovative projects that might have been previously hindered by legal uncertainties. These could range from shared technological developments in the renewable energy space to supply chain initiatives aimed at tackling carbon emissions or other environmental issues.

Furthermore, this guidance likely covers investor activities around collaborative engagement and voting on corporate policies that pursue environmental sustainability.

Other announcements and publications


The UK government publish a ‘call for evidence’ on Scope 3 emissions reporting, with a deadline for feedback of 14 December

The Department for Energy Security and Net Zero has launched a call for evidence [2] on scope 3 emissions reporting. While disclosure of most scope 3 emissions remains voluntary, the International Sustainability Standards Board’s (ISSB) first two standards – International Financial Reporting Standard (IFRS) S1 and IFRS S2 – require entities to report their material scope 1, 2 and 3 emissions. The government’s call for evidence seeks views on the costs, benefits, and practicalities of scope 3 emissions reporting to inform its decision to endorse the ISSB’s sustainability standards for application in the UK. The deadline for feedback is the 14 December 2023.

UK Energy Act becomes law

The UK Energy Act has been entered into law, representing a significant overhaul of the UK's energy legislation, designed to secure energy supply and reduce dependence on external entities, such as fossil fuel providers. The Act sets up a new independent body, the Future System Operator, to ensure an efficient transition to a decarbonised and secure energy supply.

By introducing competition in electricity networks and a specific merger regime, the Act aims to lower operational costs. Additionally, it includes consumer protections and frameworks to encourage investment in low-carbon technology like heat pumps and the rollout of smart meters, projecting bill savings of £5.6bn.
The Act lays the groundwork for achieving net zero emissions by 2050 through various measures, including the expansion of Ofgem’s [3] remit to heat networks to prevent excessive pricing, and establishing frameworks for hydrogen and carbon capture utilisation and storage (CCUS) technologies, which are crucial for reducing greenhouse gas (GHG) emissions.
It includes provisions that are expected to support the creation of skilled jobs in the clean energy sector, including regulations for fusion energy and the establishment of the UK’s first carbon capture sites, which could support up to 50,000 jobs by 2030.


EBA recommends enhancements to the Pillar 1 Capital Requirements framework to capture environmental and social risks

The European Banking Authority published a report [4] on the role of environmental and social risks in the prudential framework. The report proposes recommendations for short-term and long-term actions that can be taken as part of the implementation of the revised EU Capital Requirements Regulation and Capital Requirements Directive, such as to:

  • Incorporate environmental risk as part of stress testing programmes.
  • Promote credit rating agencies to include social and environmental risk factors as part of their credit assessments.
  • Promote the consideration for inclusion of environmental and social factors as part of due diligence obligations for the appraisal of unmovable real estate collateral.
  • Require institutions to monitor social and environmental risk factors that could lead to operational risk losses.
  • Build environmental concentration risk metrics, as part of supervisory reporting.

However, the report notes that data gaps make implementation of these recommendations difficult and that initiatives like the Network for Greening the Financial System (NGFS) are trying to bridge those gaps. The report also explains why the EBA does not support “a green supporting factor” or “brown penalising factors” at this stage.

EU policymakers fully adopt the ESRS

EU co-legislators fully approved the first set of sector-agnostic ESRS under the Corporate Sustainability Reporting Directive (CSRD). Large, listed companies will be required to start reporting against these Standards in 2024 for the first time. 

European Financial Reporting Advisory Group (EFRAG) published its ‘(Draft) list of ESRS datapoints - Implementation Guidance’ [5]. The publication presents in an Excel format the complete list of all disclosure requirements in sector-agnostic standards.

In October, the Commission published a proposal to delay the adoption of the sector-specific ESRS to 2026, to allow more resources to be dedicated to their development.

European Commission publishes its work programme for 2024, reflecting on sustainability policy priorities

The 2024 Work Programme sets out the initiatives the Commission will focus on leading up to the 2024 European Parliament elections [6]. The focus is on simplifying rules for citizens and businesses across the EU while delivering any new initiatives required to meet the Commission’s 2019 headline commitments.

The Commission has delivered on 90% of commitments made in 2019 but will continue to focus on delivering the European Green Deal. Initiatives include setting a 2040 climate target, increased focus on the future of food and agriculture, circular economy initiatives and laws focused on nature restoration and tackling pollution.

The PSF launch a new stakeholder request process on the EU Taxonomy

A new mechanism that allows stakeholders to submit suggestions on new activities or revisions of technical screening criteria of current activities has been launched by the Platform on Sustainable Finance (PSF) and the EU Commission [7], to bring a wider range of views, beyond the specialists already on the PSF.

The stakeholder request mechanism will run continuously with the first review date being the 15 December 2023. Submissions can be made thereafter but will be picked up by the following unaccounted review date. Stakeholders will be able to share scientific and / or technical evidence in order to support their suggestions or proposed revisions.

The European Parliament wants to have carbon removals added to NZIA

Amendments to the NZIA and CRCF have both been approved by the responsible European Parliament Committees. The change to the NZIA adds carbon dioxide removal (CDR) to the list of net zero technologies in scope, and recognises CO2 capture and storage projects and related infrastructure as net zero strategic projects. The amendments to the CRCF clarify language around carbon removal and storage to address potential issues tied to double counting of carbon credits and distinguish between permanent removals and short-term sequestration activities.


SEC 2024 exam priorities leave out ESG but monitoring will continue

The US SEC has outlined its 2024 examinations priorities, which leave out ESG investing, after including it for the past three years. However, an SEC spokesperson suggested that while ESG isn’t included on the list of top priorities, the exams office will continue to monitor the market for compliance (primarily to prevent greenwashing) over the upcoming fiscal year.

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