Corporate Sustainability Reporting Directive (EU)

The EU Corporate Sustainability Reporting Directive (CSRD) will amend the 2014 EU non-financial reporting directive. It will introduce more detailed reporting requirements and ensure that large companies are required to report on sustainability issues such as environmental rights, social rights, human rights and governance factors.

The CSRD will also introduce a certification requirement for sustainability reporting as well as improved accessibility of information, by requiring its publication in a dedicated section of company management reports.

The European Financial Reporting Advisory Group (EFRAG) will be responsible for establishing European standards, following technical advice from a number of European agencies.

EU rules on non-financial information apply to all large companies and all companies listed on regulated markets. These companies are also responsible for assessing the information at the level of their subsidiaries.

The rules also apply to listed SMEs, taking into account their specific characteristics. An opt-out will be possible for SMEs during a transitional period, meaning that they will be exempted from the application of the CSRD until 2028.

For non-European companies, the requirement to provide a sustainability report applies to all companies generating a net turnover of €150 million in the EU and which have at least one subsidiary or branch in the EU. These companies must provide a report on their ESG impacts, namely on environmental, social and governance impacts, as defined in this directive.

Application will take place in three stages:

• 1 January 2024 for companies already subject to the non-financial reporting directive

• 1 January 2025 for large companies that are not presently subject to the non-financial reporting directive

• 1 January 2026 for listed SMEs, small and non-complex credit institutions and captive insurance undertakings.

Further information is here, including the link to the CSRD itself.

Office for Environmental Protection (England and NI)

The Office for Environmental Protection (OEP) was established by the Environment Act 2021 and its remit covers England and Northern Ireland. The OEP has now published its work programme for its first year, and also its Strategy and Enforcement Policy.

The work programme is here.

The Strategy and Enforcement Policy is here.

The OEP’s role is to hold government and other public authorities to account for their environmental commitments in environmental law.

The documents published clarify that the OEP will monitor and report on a wider set of targets that fall under the definition of environmental law, rather than just those that come under the Environment Act 2021, to pursue its objective of sustained environmental improvement. The OEP will also look at the landscape of international environmental targets, assess progress towards these and use this evidence to flag any potential gaps in government’s targets as part of OEP monitoring and reporting on environmental improvement plans and the implementation of environmental law.

The way in which OEP can take public authorities to court differs in England and in Northern Ireland. In England, the statutory process is ‘environmental review,’ which is a bespoke process available to the OEP, the detail of which is set out in the Environment Act. In Northern Ireland, the OEP can take public authorities to court through making a ‘review application,’ which is a challenge by way of judicial review. The OEP has reviewed its enforcement policy to ensure that the differences between these two procedures are highlighted in the appropriate places.

The OEP is only able to take enforcement action in situations where public authorities are alleged to have failed to comply with environmental law. Environmental law means any legislative provision to the extent that it is mainly concerned with environmental protection. In considering whether law is environmental, the OEP will assess whether the relevant individual provision in question is mainly concerned with environmental protection. The OEP’s enforcement policy is updated to further explain the meaning of environmental law in this context.

UK REACH (Britain)

On 30th June 2022, the various organisations involved published their rationale for prioritising substances within the UK REACH programme 2022-2023. This document is here.

Priorities are established for 2 types of activity in UK REACH:

• Restriction – a mechanism that can lead to controls on the use of a substance or group of substances

• Regulatory Management Options Analysis (RMOA) – analysis produced by HSE and/or the Environment Agency to understand the risks of using a substance, or group of substances, and make recommendations for managing them.

The following are 5 priorities –

1 Per- and polyfluoroalkyl substances (PFAS) – acting on the recommendations of an ongoing RMOA, due for publication in summer 2022

2 Intentionally added microplastics – an evidence project on identifying and managing the risks they pose

3 Formaldehyde and formaldehyde releasers in articles – an RMOA to review the evidence base and evaluate a potential restriction

4 Bisphenols in thermal paper – an RMOA to review the evidence base and evaluate a potential restriction

5 Hazardous flame retardants – reviewing and updating the existing evidence on potential environmental risks, to feed into wider chemicals policy.

In addition, the HSE is running a number of calls for evidence in relation to additions to the Annex 14 (UK Authorisation List). Addition to the List means prior authorisation is needed to use, or place on the market, the relevant substance, after the specified sunset date.

Note – the DEFRA Secretary of State, together with Welsh and Scottish Ministers will need to authorise any decision.

The HSE link is here.

UKCA marking (Britain)

The UK Conformity Assessed (UKCA) mark is the new mandatory mark on a large number of manufactured goods to indicate that they conform to legislation enacted in Westminster for Britain (GB).

Businesses have until 1 January 2023 to start using UKCA marking which replaces EU marking.

On 20th June 2022, the then UK government announced that conformity assessment activities undertaken by EU bodies before the end of 2022 would be considered as the basis for UKCA marking in 2023.

That UK government announced that legislation on this would be brought forward before the end of 2022 to enable manufacturers to apply the UKCA mark on these products without the need for re-testing.

The purpose of this new legislation (if enacted) would be to allow CE marked products that are manufactured and imported into the UK by the end of 2022 to be sold, without the need to meet UKCA requirements. This would remove the current need for retesting and recertification for products that are imported whilst the UK recognised CE requirements. 

The 20th June 2022 announcement also states the UK would continue to accept spares onto the GB market which comply with the same requirements that were in place at the time the original products or systems they were being used to repair, replace or maintain were placed on the market.

Legislation would also be brought forward to extend current labelling easements to allow important information and other UKCA markings to be added to products using a sticky label or an accompanying document.

In addition, the 20th June 2022 announcement states that manufacturers of construction products under AVCP system 3 – such as radiators, sealants and tile adhesives – whose products are tested by an EU notified body before 1 January 2023 would be able to obtain a UKCA mark without having to retest through a UK-approved body.

The 20th June 2022 announcement is here.

The business sectors that these measures apply to include:

• aerosols

• electrical and electronics

• equipment for explosive atmospheres

• pyrotechnics

• gas appliances

• lifts

• machinery

• outdoor equipment

• personal protective equipment

• toys

• pressure equipment

• civil explosives

• recreational craft

There are different rules for:

• medical devices

• construction products

• cableways

• transportable pressure equipment

• unmanned aircraft systems

• rail products

• marine equipment