Key terms The terms ‘responsible/sustainable business, ‘corporate responsibility’ (CR) or ‘corporate social responsibility’ (CSR), and ‘environmental, social, governance’ (ESG) are used by business and lawyers in various different contexts. However, for the most part they are all used to convey a business behaving in a responsible manner as part of its day to day activities. Many companies are realising that compliance with national, state and local laws and regulations may no longer provide sufficient protection from legal, regulatory or reputational risk and that falling short of the growing requirements in this area can have financial implications. In this note we will refer to ‘sustainable business’ as the umbrella term. For more on terminology, see Precedent: Sustainability glossary terms (The Chancery Lane Project). What is ‘sustainability’? ‘Sustainability’ is often used alongside terms like ‘environmental sustainability’ or green business. There is no single definition of ‘sustainability’ although many organisations and materials will use the Brundtland Commission Definition of sustainable development to try and define the term. However, the Brundtland Commission Definition

What is sustainable business and ESG issues? Sustainable business is a broad concept and encompasses the impact an entity is having on the environment, but also on society more widely. Sustainability has become an increasingly important part of the corporate agenda, with businesses under pressure to employ responsible operational and strategic practices—especially in light of the climate change targets that stakeholders and governments are focussing on. This Practice Note provides a high level picture of some of the ways that the sustainability cause has impacted executive pay. It also reports on ongoing changes in guidance released by the government and the main institutional investor bodies. For further information on sustainable business more generally, see: ESG and sustainability collection. ESG reporting Heightened emphasis on transparency and accountability through corporate governance and disclosure has renewed the focus on environmental, social and governance (ESG) impacts. There is increasing interest in the ESG performance of companies by various stakeholders. A range of mechanisms exist to shape corporate social responsibility (CSR) and foment voluntary reporting by companies on their ESG

To tackle the triple planetary crisis (ie the three intersecting crises of climate change, pollution, and biodiversity loss), businesses and consumers must both produce and consume products in a much more sustainable way. EU product legislation is increasingly being designed and adapted to ensure that sustainability is built in all stages of the product lifecycle. This Practice Note outlines EU legislative measures designed to ensure product sustainability, with a particular focus on measures supporting and driving product ‘repairability’. Key legislation includes Regulation (EU) 2024/1781 (the EU Ecodesign Regulation), Directive 2011/83/EU (the EU Consumer Rights Directive (EU CRD)), as amended by Directive (EU) 2024/825 (the EU Empowering Consumers Directive), and Directive (EU) 2024/1799 (the EU Right to Repair Directive). Policy context—transition towards a fully circular economy in the EU On 11 March 2020, as part of the European Green Deal, the Commission adopted a Circular Economy Action Plan. The Action Plan adjusted the primary focus of the EU’s circular economy policy away from waste management and onto the entire lifecycle of products. The actions and

Sustainable development was defined in the World Commission on Environment and Development’s 1987 Brundtland report ´Our Common Future` as ‘development that meets the needs of the present without compromising the ability of future generations to meet their own needs’. It seeks to reconcile economic development with the protection of social and environmental balance. In 2001, the EU adopted a strategy in favour of sustainable development, which was revised in 2006 and 2009. In 2009, the Commission highlighted the persistence of some unsustainable trends and the need for greater efforts in their regard but also the EU’s progress in mainstreaming sustainable development in many of its policies. Sustainable development formally became one of the EU’s long-term goals under Article 3 TEU.

The Brundtland Report, as the report entitled Our Common Future is widely referred to, defines sustainable development as: ‘Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It [sustainable development] contains within it two key concepts: • the concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given; and • the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs.’

Sustainable development—global context The Brundtland definition The most widely recognised definition of ‘sustainable development’ dates back to 1987 when the United Nations (UN) Commission on Environment and Development produced a report entitled Our Common Future, commonly referred to as the Brundtland Report. In this report, sustainable development was defined as: • ‘Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It [sustainable development] contains within it two key concepts: ◦ the concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given; and ◦ the idea of limitations imposed by the state of technology and social organisation on the environment's ability to meet present and future needs.’ The UN General Assembly endorsed the Brundtland definition in Resolution 42/187. The UN 2005 World Summit Outcome Document refers to the 'interdependent and mutually reinforcing pillars' of sustainable development, which are: • economic development • social development, and • environmental protection The

Defining sustainable development—the background UK mechanisms touching on sustainable development are generally based on, and have as their overarching objective, some variation of the so-called ‘Brundtland definition’. These mechanisms also widely reference the three interconnected ‘pillars’ of sustainable development, also known as the ‘triple bottom line’ of sustainable development. The Brundtland definition and the ‘three pillars’ concept The Brundtland Report, as the report entitled Our Common Future is widely referred to, defines sustainable development as: ‘Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It [sustainable development] contains within it two key concepts: • the concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given; and • the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs.’ The UN General Assembly endorsed the Brundtland definition in Resolution 42/187 and the UN 2005 World Summit Outcome Document refers to the

The basic definition The concept of sustainable development and what exactly it covers is the subject of much debate. The most widely recognised definition dates back to 1987 when the United Nations Commission on Environment and Development (UNCED) produced a report entitled Our Common Future, commonly referred to as the Brundtland Report. In this report, sustainable development was defined as: ''Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. It [sustainable development] contains within it two key concepts: • the concept of needs, in particular the essential needs of the world's poor, to which overriding priority should be given; and • the idea of limitations imposed by the state of technology and social organization on the environment's ability to meet present and future needs.'' Most definitions of sustainable development incorporate aspects of the 'Brundtland definition', as it is frequently called. At the very least, it provides a starting point for the majority, if not all, definitions of sustainable development. Adoption

Defining sustainable development The concept of sustainable development and what exactly it covers is the subject of much debate. Most definitions of sustainable development rely on some variation of the so-called ‘Brundtland Definition’ and the ‘three pillars’ concept, also known as the ‘triple bottom line’ of sustainable development. However, without a consistent approach to sustainable development, it is difficult to know how to achieve it or to identify precisely when, if ever, we have achieved it. For definitions of sustainable development, see the following Practice Notes: • Sustainable development—definition and application at international level • Sustainable development—definition and application at European Union (EU) level • Sustainable development—definition and application at UK level Sustainability indicators Sustainability indicators are a mechanism by which to measure (or at least an attempt to measure) progress towards the policy goal of sustainable development. Origin Following the conclusion of the ‘Earth Summit’ held in Rio de Janeiro, Brazil, 1992, countries were advised to develop their own sets of sustainable development indicators (SDIs) which would: • coincide with their respective national conditions and priorities,

Background to the Future Generations Act When first introduced in 2012, the Bill which became the Well-being of Future Generations (Wales) Act 2015 (WFG(W) 2015) was labelled the 'Sustainable Development Bill', and that title gives some indication of its broad purpose. According to the First Minister, it was renamed the 'Future Generations Bill' to reflect some change in emphasis to include ideas of the social and economic aspects of sustainable development. Green groups argued that the change of name signalled a move away from environmental sustainability objectives set out in early consultations. The emphasis on sustainable development in Welsh Government is not new. The Government of Wales Act 2006, s 79 places a duty on Welsh Government Ministers to establish a scheme setting out how they propose, in the exercise of their functions, to promote sustainable development. The Welsh Government's sustainable development scheme, 'One Wales: One Planet', sets out the National Assembly for Wales’ (the Assembly) approach to sustainable development.

Introduction to SuDS In a natural setting, rainfall will be intercepted by vegetation or infiltrated into the ground, dependent on the soil characteristics, until the infiltration capacity is exceeded. Once infiltration capacity is exceeded, runoff from the ground is generated. For commercial or industrial developments introducing new buildings and hardstanding areas to once green spaces, interception and natural infiltration is removed or is limited leading to an increase in runoff. Intense or prolonged rainfall can result in large amounts of runoff and a deterioration in water quality. If unmanaged this can cause flooding and pollution, and appropriate drainage design is required to avoid this, both at the development site and further downstream. Sustainable drainage systems (SuDS) represent an alternative approach to traditional piped drainage systems in managing site rainfall run-off and have been part of flood risk policy in the United Kingdom for at least 15 years. Government planning policy in England expects applications which could affect drainage on or around the

Introduction This Practice Note sets out the Financial Conduct Authority (FCA)’s approach to sustainable finance and environmental, social and governance (ESG) issues, including climate and sustainability reporting, sustainability disclosure requirements (SDR), investment labels and anti-greenwashing. It also covers the FCA’s work on ESG ratings and international standards, supervision, governance and stewardship. For information on the UK Prudential Regulation Authority (PRA)’s focus areas, primarily in relation to prudential supervision of climate risk management and related stress tests, see Practice Notes: Prudential supervision of climate risk management in the UK and Climate scenario analysis, stress testing and capital requirements in the UK. The UK sustainable finance framework includes sustainability reporting, investment labels, transition finance and regulation of ESG ratings. It does not include a UK green taxonomy. FCA’s approach to sustainable finance and ESG The FCA articulates its approach on its Climate change and sustainable finance webpage, and in its Strategy 2025 to 2030, and annual work programme for 2026/27. The FCA’s sector-specific supervisory priorities are set out in its Regulatory