March Global Regulatory Brief: Green finance

The Global Regulatory Brief provides monthly insights on the latest risk and regulatory developments. This brief was written by Bloomberg’s Regulatory Affairs Specialists.

Green finance regulatory developments

The financial sector continues to face new rules and government expectations as part of the broader effort to aid the green transition. The following green finance policy developments represent a sample of wider regulatory and policy coverage available to Bloomberg Terminal customers. Run REGS <GO> to find out more or contact your Bloomberg representative to learn more.

• China: Government publishes framework for Sovereign Green Bond issuance in overseas markets
• EU: Commission proposes significant changes to sustainable finance regulatory framework 
• Turkyie: Parliament considers climate change bill
• UK: FCA provides update on D&I proposals

China MoF publishes framework for Sovereign Green Bond issuance in overseas markets

The Ministry of Finance (MoF) of the People’s Republic of China has issued its framework for issuing international green bonds. The framework is built on China’s Green Bond Principles as well as ICMA’s framework.

Summary: The framework lays the foundation for international green bond issuance by China’s MoF, outlining that eligible Sovereign Green Bonds will have to adhere to core components across four key areas: 1) Use of Proceeds; 2) Process for Project Evaluation and Selection; 3) Management of Proceeds; and 4) Information Disclosure.

In more detail: Some of the key takeaways include: 

• Green Expenditures of eligible Sovereign Green Bonds should contribute to at least one of the following environmental objectives: climate change mitigation; climate change adaptation; natural resource conservation; pollution prevention and control; and biodiversity conservation. They will also have to meet the eligibility criteria set out in China’s Green Bond Endorsed Projects Catalogue (also commonly referred to as its “taxonomy”). 
• The MoF will maintain responsibility for project evaluation and selection, and will establish a Green Expenditures list.
• An annual Sovereign Green Bond Information Disclosure will be published on the MoF website, and will include the following information: transaction details (e.g., ISIN, currency, issue amount, tenor etc.); for each Sovereign Green Bond issued, a brief description on the 1) green project category, 2) green expenditure category (if any) and 3) use of proceeds in the relevant fiscal budget year. It will also disclose remaining balance of unallocated proceeds. 
• Where possible, the MoF will also provide investors with information around the environmental impact of Green Expenditures. 
• MoF will publish external verification report on its annual Sovereign Green Bond Information Disclosure.

EU proposes significant changes to sustainable finance regulatory framework

The European Commission has published its proposals to amend the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D), and the EU Cross Border Adjustment Mechanism (CBAM) Regulation. In parallel, it also published a consultation on changes to the EU Taxonomy’s technical screening criteria and reporting regime. 

Background: The legislative proposals form part of the EU’s first “Omnibus” package (Omnibus I), and are meant to simplify sustainability-related reporting obligations and reduce compliance burdens under the EU’s Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CS3D) and the EU Taxonomy. The proposals around CBAM look to ease requirements to benefit smaller importers and SMEs more broadly. 

Summary: Omnibus I contains three legislative proposals:

• An Omnibus proposing to introduce a 2-year delay for companies in the second and third wave of reporting under the CSRD, as well as a one-year delay to CS3D implementation for the first group of companies in scope (i.e., new proposed go-live: 26 July 2028 for first wave of CS3D companies)
• An Omnibus proposing changes to scope of CSRD (estimated reduction of 80% according to the Commission), removing sector-specific standards and limiting value chain disclosures, softening due diligence requirements under CS3D, as well as making Taxonomy reporting voluntary for certain groups of companies. 
• An Omnibus proposing to simplify CBAM for small importers and reduce overall compliance complexity. 

Alongside the legislative proposals, the Commission also issued a consultation on amendments to the Taxonomy disclosure regime (Article 8 Delegated Act) and the technical screening criteria (Taxonomy Climate Delegated Act and Environmental Delegated Act).

Next steps: All of the legislative proposals will be subject to the standard EU legislative process. However, it is expected that the Omnibus proposing delays to the CSRD and CS3D implementation timeline will be fast-tracked this year in an attempt to provide legal certainty to entities in the second and third wave of reporting (FY2025 and FY2026). 

The consultation on the proposed amendments to the detailed rules (“Level 2”) under the EU Taxonomy will be open until 26 March 2025. 

Türkiye introduces climate change bill

The ruling AK Party in Türkiye submitted its first climate change related bill to Parliament on 20 February 2025 setting out the establishment of a carbon market board and an emissions trading system (ETS). It also seeks to identify green investments, and climate financing, climate change incentives and green taxonomy studies will be brought under a legal framework. 

Intention: The overarching aim of the draft law is to reduce greenhouse gas emissions, in order to help meet Türkiye’s commitment to become a net-zero emission economy by 2053. 

Structure: Both the ETS and the carbon market board will be set up by the climate change department of the Environment Ministry. 

• Companies that fall within the scope of the ETS will be obliged to obtain a greenhouse gas emission permit in order to carry out any activities that cause these emissions. 
• The allowances will be accepted as capital market instruments and the climate change department will be able to earn income from these instruments, and this income can then be used to support climate-friendly investments. 
• The pricing of these instruments will be decided upon by the carbon market board which will also govern the distribution of allowances and any other actions related to the ETS.

Enforcement: The proposal includes fines ranging from 500,000 to 5 million Turkish liras for firms that fail to submit their verified greenhouse gas emissions reports within the prescribed timeframe. And businesses that fail to obtain a verified annual greenhouse gas emission report will be subject to fines ranging from 1 million to 10 million Turkish lira. 

Looking ahead: The proposed text will be presented to the appropriate committee at the end of February and then forwarded to the Turkish Grand National Assembly for approval.

UK FCA provides update on D&I proposals

The Financial Conduct Authority (FCA) published updates on its diversity and inclusion work in a letter to the Treasury Select Committee (TSC). 

Context: This letter follows the FCA and Prudential Regulation Authority’s (PRA) joint consultation in 2023 which asked for feedback on proposals aimed at boosting diversity and inclusion in regulated firms, as well as the TSC’s own report ‘Sexism in the City’ where it set out recommendations to help diversity and inclusion. 

Summary: The FCA has said it will not move forward with its proposed diversity and inclusion rules that would have required regulated firms to set diversity targets and disclose workforce demographic data, to avoid potential duplication, and imposing extra regulatory burdens and costs on firms. 

• Instead of mandatory requirements, the FCA will now encourage voluntary industry-led initiatives to improve diversity and inclusion. 
• The letter also announces that it is delaying its review of non-financial misconduct to ensure alignment with new legislation. It will set out next steps by the end of this year. 
• It also announced it would delay work looking at the impact of removing the bonus cap on gender pay and equality. It will consider whether or not to move forward with this work in the 2026/27 financial year.

View the additional regulatory briefs from this month:

• Trading and markets
• Risk, capital and financial stability
• Digital finance

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