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- ESG International Weekly News 10/15- 10/21
ESG International Weekly News 10/15- 10/21
October 20,2025
1.🇺🇸 Federal Reserve, FDIC Withdraw Climate Risk Rules for Large Banks
🌎 Washington Pulls Back Climate Oversight for Financial Sector
The Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and Office of the Comptroller of the Currency (OCC) have formally withdrawn the Principles for Climate-Related Financial Risk Management for Large Financial Institutions, dissolving a framework that guided banks with over $100 billion in assets to integrate climate considerations into governance, scenario analysis, and risk management.
Regulators said existing safety and soundness standards already cover all material risks, including climate-related ones, making the principles unnecessary.
⚖️ Political Reversal and Policy Context
The move marks a major policy reversal under the Trump administration, which has rolled back multiple climate-related commitments.
The Federal Reserve has also withdrawn from the Network for Greening the Financial System (NGFS).
In a United Nations speech, President Trump called climate change “the greatest con job ever perpetrated on the world.”
The Fed Board voted 5–2 to rescind the principles; Governor Michael Barr dissented, stating:
“Revoking the principles as climate-related financial risks increase defies logic and sound risk management practices.”
🌍 Implications for Financial Institutions and Global Investors
For large banks, the rescission introduces regulatory uncertainty. While traditional prudential standards remain, the absence of climate-specific expectations could hinder alignment with frameworks like ISSB and TCFD.
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Widening Gap: European and Asian regulators are strengthening climate risk rules as the U.S. retreats.
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Investor Concerns: Global investors may view this as a clear divergence from sustainable finance norms.
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Reputational Risks: U.S. banks may face inconsistent international compliance requirements.
The decision raises concerns about how the U.S. financial system will manage growing physical and transition riskswithout a dedicated supervisory framework.
2.🇪🇺 EU Lawmakers Scale Back Sustainability Rules, Raising Thresholds for Corporate Reporting and Due Diligence
🌍 EU Moves to Cut Scope of Sustainability Rules
The European Parliament’s Legal Affairs Committee (JURI) voted on October 13 to approve major reductions to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).
Under the proposal, CSRD will apply only to firms with at least 1,000 employees and €450 million in annual revenue, up from 250 employees, while CSDDD will cover companies with at least 5,000 employees and €1.5 billion in turnover.
Civil liability provisions have been removed, and exemptions granted to financial holdings and listed subsidiaries.
⚙️ Competitiveness Concerns Drive the Shift
The vote followed months of lobbying from business groups and governments—particularly France and Germany—arguing that the directives could harm industrial competitiveness and investment.
Lead negotiator Jörgen Warborn, a Swedish member of the European People’s Party, said the amendments protect “European competitiveness,” and that the committee “has not been influenced by how the United States perceives this.”
The U.S. Chamber of Commerce had earlier called the directives “an unprecedented regulatory overreach,” while French and German CEOs jointly urged their governments to scrap CSDDD altogether.
⚠️ Critics Warn of Weakened Accountability
Sustainability advocates said the rollbacks go too far, undermining the EU’s global leadership in transparency and green finance.
“By limiting the availability of essential data, the EU will be compromising on its competitive edge,” said Susanna Arus, EU Public Affairs Manager for Frank Bold.
Beate Beller of Global Witness called the decision “a dark day for Europe.”
🧭 Next Steps Toward Final Adoption
The Parliament’s position will now move into trilogue negotiations with the Council and the European Commission.
A final agreement is expected by year-end, but implementation of the revised rules will likely not occur before 2026.
If adopted, these changes would represent one of the most significant retreats from sustainability legislation since the European Green Deal—signaling a shift from ambition to pragmatism in Europe’s approach to corporate accountability.The EU’s retreat marks a turning point in corporate sustainability policy—prioritizing competitiveness over transparency.
While easing compliance costs, it risks eroding Europe’s credibility as a global standard-setter for climate and human-rights governance.
3.✈️ South Korea Sets 2027 Start for Mandatory SAF on International Flights
🌏 Seoul Charts Path to Cleaner Skies
South Korea will require all international flights departing its airports to use Sustainable Aviation Fuel (SAF) starting in 2027, with a 1% blend rising to up to 10% by 2035.
The rule, developed by the Ministry of Land, Infrastructure and Transport (MOLIT) and the Ministry of Trade, Industry and Energy (MOTIE), makes South Korea one of Asia’s first major air hubs to enforce a binding SAF mandate.
From 2028, airlines must ensure that 90% of annual refuelling volumes meet the SAF requirement, facing penalties of up to 150% of market value for shortfalls.
🏭 Building a Regional SAF Market
The mandate accelerates Asia-Pacific’s shift toward cleaner aviation fuels, joining initiatives in Singapore, Japan, and Australia.
Fuel suppliers will also be bound by blending obligations beginning in 2027, with future ratios for 2030 and 2035 to be reviewed in 2026 and 2029.
A new SAF Alliance will unite airlines, refiners, and regulators to boost domestic production and standardization.
💡 Incentives and Penalties
Airlines exceeding SAF targets will receive priority in international route allocations, gaining up to 3.5 points in traffic-rights scoring.
Non-compliance could result in fines of 150% of average SAF prices, though enforcement will be postponed during the first year.
Operators may defer up to 20% of their obligations for three years.
The government is also exploring direct subsidies to replace fee discounts, currently valued at 600 million won from Incheon and Korea Airport Corporations.
Passengers can voluntarily contribute toward SAF use when booking flights, rewarded with lounge access, upgrades, or SAF-themed souvenirs.
🌱 Defining Sustainable Fuels
Only fuels meeting ICAO carbon-reduction standards will qualify as SAF, requiring at least a 10% lifecycle emissions reduction.
Bio-aviation fuel quality standards will be finalized by mid-2026, with incentives for next-generation synthetic SAFs using renewable power and captured carbon.
After 2030, a weighting system may reward fuels achieving higher carbon reduction rates.
✈️ Domestic Progress and Industry Readiness
Nine South Korean airlines already use locally produced SAF on short-haul routes.
Korean Air expanded its 1% SAF blend sourced from HD Hyundai Oilbank and GS Caltex on flights to Kobe and Osaka, after initial testing on Incheon–Haneda routes in 2023.
Vice Minister Kang Hee-up called the policy “Korea’s first step toward achieving carbon neutrality in international aviation.”
🌍 A Global Shift in Aviation Policy
South Korea’s plan mirrors European and UK mandates beginning in 2025 requiring a 2% SAF blend.
The International Air Transport Association (IATA) projects that global SAF output will double in 2025 yet meet under 1% of total demand.
By embedding SAF use into law, South Korea aims to create market stability that attracts investment in refining, feedstock processing, and synthetic fuels—
potentially becoming a model for other Asian nations seeking to balance growth and decarbonization.
4.🇨🇳 China Reports $30.5 Billion in Economic Losses from 2025 Natural Disasters
📉 Disasters Affect Nearly 55 Million People Nationwide
China’s Ministry of Emergency Management reported 217.5 billion yuan ($30.5 billion USD) in direct economic losses from floods, typhoons, droughts, and landslides during the first nine months of 2025.
Nearly 55 million people were affected across the country, with widespread destruction of agriculture, infrastructure, and housing.
Heavy rainfall and severe flooding caused the most damage, particularly in northern and central provinces.
In August alone, disasters led to 19.6 billion yuan ($2.7 billion) in losses, impacting 7.1 million people across 24 provinces, destroying over 3,700 homes, and forcing 80,000 evacuations.
🌾 Agricultural and Infrastructure Damage
Over 530,000 hectares of crops were damaged or destroyed, severely affecting rural communities in provinces such as Anhui, Henan, and Hebei.
The Ministry of Transport reported 16 billion yuan ($2.2 billion) in damage to roads across 23 provinces.
The central government allocated 540 million yuan for emergency road repairs and 5.8 billion yuan in total disaster relief funds.
🌦️ Climate Change Pressure and Government Response
Officials warned that climate change is intensifying the frequency and severity of extreme weather events.
The 2025 disaster season has brought more concentrated rainfall and faster-onset flooding, exposing weaknesses in flood control and urban drainage systems.
Authorities called for accelerated upgrades, improved early-warning systems, and expanded “sponge cities” designed to absorb and manage rainwater—though implementation remains inconsistent.
💰 Financial Strain and Outlook
The mounting economic toll is straining local government finances, many of which already face high debt levels.
Analysts warn that losses may rise further in Q4 if extreme weather persists.
Experts stress that stronger investment in disaster resilience will be critical to balancing China’s twin goals of economic stability and climate adaptation.
“The scale of this year’s damages shows that we are entering a new era of climate risk,”
said a Beijing-based environmental policy analyst.
5.🇲🇾 Malaysia’s Rubber Industry Moves to Implement Net Zero Transition Framework
🌿 Malaysia Advances Rubber Sector’s Low-Carbon Transformation
The Malaysian Rubber Council (MRC) and the Malaysian Green Technology and Climate Change Corporation (MGTC) have signed an MoU to operationalize a Net Zero Transition Framework for the rubber industry — shifting from strategic planning to implementation.
The agreement builds upon the Low Carbon Transition Roadmap for Malaysian Rubber and Rubber Product Manufacturers, jointly developed by MRC and MGTC under the National Industrial Master Plan 2030 (NIMP 2030)to strengthen Malaysia’s green industrial base.
🧭 From Roadmap to Real-World Implementation
The partnership will introduce structured GHG management and capacity-building programs across the rubber value chain,
including an industry-specific emissions tracking and calculation tool to help manufacturers quantify, manage, and reduce their carbon footprint.
Sectoral benchmarking will assess readiness and identify improvement areas.
Over 50 MRC member firms have already joined early-stage GHG programs, signaling strong private-sector engagement.
“These measures will strengthen the sector’s technical capacity to meet global sustainability standards while maintaining competitiveness,”
said the MRC.
⚙️ Aligning Industrial Policy with Climate Commitments
As a major contributor to exports and employment, Malaysia’s rubber sector faces mounting pressure to decarbonize amid evolving trade rules and investor expectations.
The initiative supports the national goal of net zero emissions by 2050, consistent with Malaysia’s Paris Agreementcommitments.
It also complements the National Agricommodity Policy 2021–2030 (DAKN 2021–2030),
which envisions Malaysian rubber as a globally responsible and sustainable commodity.
An MGTC spokesperson said,
“The transition toward low-carbon production is both an environmental necessity and an economic opportunity.”
🌏 Industry Readiness and Global Relevance
Malaysia remains one of the world’s top rubber producers but must balance production efficiency with emissions reduction.
The MRC–MGTC partnership embeds climate risk management and carbon disclosure within manufacturers,
preparing them for markets where buyers and financiers prioritize carbon performance.
If effectively implemented, the framework could position Malaysia as a regional benchmark for commodity decarbonization,
mirroring global ESG certification trends emphasizing measurable results.
🔋 Toward a Future-Ready Rubber Sector
The collaboration marks a shift from broad sustainability pledges to industry-level accountability and data-driven action.
It demonstrates how public agencies are aligning industrial and environmental policy to support long-term ESG competitiveness.
Next steps include expanding participation, integrating renewable energy in production,
and scaling supply-chain emissions tracking systems nationwide.
If successful, Malaysia’s approach could serve as a model for other commodity-based economies seeking to decarbonize without compromising growth.