Creating a climate of change digest

The current NFIP regulation was set to expire on September 30, 2024, and to continue issuing new flood insurance contracts, Congress needs to renew the NFIP's statutory authority. The association emphasized that this measure would assist policyholders in better preparing for flood-related disasters. 

The NAIC letter also argued against a temporary extension of the NFIP, stating that it would hinder consumers' ability to plan effectively given that most flood insurance policies do not become effective until 30 days after purchase. On September 26, 2024, President Biden signed legislation passed by Congress, extending the NFIP's authorization to December 20, 2024.

On September 16, 2024, in response to a recent congressional letter, the NAIC leadership sent a letter to Congress regarding the state insurance regulators’ long-standing and latest efforts to address climate-related financial risks. The letter emphasized the strength of the US state-based insurance regulation system, highlighting its flexibility to address unique risks and market developments. It noted regulators' commitment to collaboration, data sharing, and promoting best practices through the NAIC. The letter also mentioned that property insurers have faced challenging underwriting performance with a combined ratio over 100%, and policyholders are directly impacted by elevated risks and costs due to inflation. NAIC leaders urged Congress to pass the Disaster Mitigation and Tax Parity Act of 2023 (S. 1953 and H.R. 4070), which would exclude qualified catastrophe mitigation payments from gross income for tax purposes, allowing consumers to use state-provided mitigation grants to fortify their homes without federal taxation.

On September 20, 2024, the Commodity Futures Trading Commission (CFTC) approved final guidance regarding the listing for trading of voluntary carbon credit (VCC) derivative contracts. The guidance does not create new obligations for designated contract markets (DCMs). Instead, it aims to help DCMs meet their existing obligations when designing and listing VCC derivatives. DCMs are required to address specific Core Principle requirements outlined in the Commodity Exchange Act (CEA) and CFTC regulations that pertain to the listing of VCC derivative contracts for trading. The guidance offers factors for DCMs to consider in relation to their various Core Principle compliance obligations when listing VCC derivative contracts on their markets.

On September 20, 2024, the International Auditing and Assurance Standards Board (IAASB) approved the International Standard on Sustainability Assurance 5000 (ISSA 5000), General Requirements for Sustainability Assurance Engagements, the first set of rules for audits of corporate sustainability statements. The IAASB has approved ISSA 5000 to establish a consistent global framework for sustainability assurance. The development of ISSA 5000 included several key activities: initial development and consultation, release of an exposure draft, solicitation of public comments and industry feedback, revisions based on feedback, and final approval of the standards. ISSA 5000 serves as the primary standard for sustainability engagements, eliminating the need for practitioners to apply the International Standard on Assurance Engagements 3000 (ISAE 3000) for these engagements. The standard outlines specific requirements for sustainability information engagements, including practitioner competencies, ethical considerations, assurance levels, and reporting boundaries. ISSA 5000 will be effective for engagements on sustainability information for periods beginning on or after December 15, 2026, with early application permitted.

On September 25, 2024, the IFRS Foundation at New York Climate Week published a guide for preparers on voluntarily applying ISSB standards. The guide aims to support companies as they start to apply ISSB standards voluntarily as well as helping them communicate their progress to investors. Designed as a roadmap for companies as they start using the ISSB standards, the IFRS guide focuses on the voluntary application of IFRS S1 and S2 disclosure standards issued by the ISSB, in disclosing sustainability-related financial information. These standards focus on providing a global baseline for climate and sustainability disclosures and help investors in decision-making by improving the comparability and reliability of information.

On September 27, 2024, California Governor Gavin Newsom signed into law California State Senate Bill (SB)-219, which amends portions of Sections 38532 and 38533 of the California Health and Safety Code that were established upon the passage of California SB-253 and SB-261. Newsom’s administration had proposed that the implementation of California’s mandatory climate disclosure laws relating to GHG emissions (SB-253) and climate-related risks (SB-261) be delayed for two years. The two-year delay sought by Governor Newsom was rejected. SB-219 retains most of the provisions in SB-253 and does not change the reporting deadlines under SB-253 and SB-261. SB-219 offers some flexibility, time, and discretion for CARB to adopt the regulation, develop the reporting program, and determine the timeline for S3 emissions disclosures in 2027.

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