ISDA whitepapers on environmental, social and governance issues

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Authored by: Simon Deane and Ruby Hui

ISDA released two whitepapers on environmental, social and government (ESG) on 1 December 2021.

The first whitepaper discusses the legal implications of voluntary carbon credits (VCC) and divides them into the following main sections:

1. Legal nature of VCCs including whether VCC could be classified as an intangible asset and possible legal treatment of VCC in different jurisdictions.
   
2. Analysis of major legal issues including ownership and fungibility, security of transfer, intermediation and conflicts of laws, netting and security arrangements following an insolvency.

Recommendations to enhance legal certainty including publishing a legal statement, introducing legislative amendments and guidelines, and launching global standards. For more information, please see here.

The second whitepaper analyses sustainability-linked derivatives (SLD) from a regulatory perspective. To summarise, the paper covers the following issues:

1. Whether SLD could be categorised as swaps under the relevant regulations in the US, EU and/or UK, and the possible exemptions available if so.
   
2. Significance of Category 2 SLDs on the underlying transactions.
   
3. Compliance considerations for market participants.

For more information, please see here.

Key Contacts

Simon Deane

Consultant | Banking and Finance

Email or call +852 2825 9209