ESG disclosures in 2024 – key compliance dates for U.S.-based multinationals

This year, U.S.-based multinationals face an unprecedented number of ESG-related reporting requirements, several of which are new for 2024. In this post, we discuss some of the more significant disclosures that many U.S.-based multinationals and their subsidiaries will be required to make during the first half of the year. 

In many cases, companies will be able to address multiple requirements through combined disclosures. In any event, all of the applicable disclosures should be coordinated if there are different internal owners, both for efficiency and to ensure disclosures are consistent. 

January 1 (but maybe not) – California Voluntary Carbon Market Disclosures Act

California’s Voluntary Carbon Market Disclosures Act (Assembly Bill 1305) was signed into law in October 2023. Among other things, the VCMDA requires website disclosures by companies making net zero claims at the enterprise or product level. The requirements of the VCMDA are discussed in detail in our earlier posts here and here.

Although by its terms the VCMDA took effect on January 1, 2024, it is silent on when disclosures are first required (just one of the many interpretive questions under the VCMDA). In the absence of specificity in the VCMDA or the legislative record or any published guidance, most subject companies have been working to have their first disclosures up early in 2024.   

Injecting an additional consideration into companies’ compliance strategies, in December, the bill sponsor – Assemblymember Jesse Gabriel – weighed in on his intent in a letter to the Chief Clerk of the Assembly (see our post here). He acknowledged in the letter that the VCMDA does not specify the date on which the first disclosures must be made. However, he indicated in the letter that it was his intent that the first annual disclosures be posted by January 1, 2025, to provide reporting entities with sufficient time to align their business practices with the stated objectives of the VCMDA prior to being subject to potential civil fines.

April 30 – German Due Diligence in the Supply Chain Act (LkSG)

The Act requires subject companies to among other things assess and address human rights and specified environmental risks and adverse impacts and put in place related management systems. For 2023, which is the first compliance year, the Act generally applies to companies with 3,000 employees in Germany. The threshold dropped to 1,000 employees for 2024.

Subject companies are required to annually report on their due diligence to the Federal Office for Economic Affairs and Export Control (BAFA). Companies are required to submit their annual report and publish it on their website no later than four months after the end of their fiscal year (April 30, for companies with a December 31 fiscal year-end).

BAFA is arguably thus far the most active ESG regulator. BAFA carried out almost 500 limited compliance checks in 2023. It has indicated it intends to review subject company risk analyses this year.

The Act is discussed in further detail in our earlier alerts here and here.

May 31 – U.S. Conflict Minerals Rule

If tin, tantalum, tungsten or gold (3TG) is necessary to the functionality or production of products manufactured or contracted to be manufactured by a U.S. public company, it must conduct a “reasonable country of origin inquiry” (RCOI) to determine whether the necessary 3TG minerals in the products originated in the Democratic Republic of the Congo or an adjoining country. If the minerals originated outside of the DRC region or are from recycled or scrap sources, the registrant is required to disclose on Form SD its determination and describe its RCOI and the related results. If the registrant knows or has reason to believe that necessary 3TG minerals are from the DRC region, under the Rule, it must conduct enhanced due diligence and generally file a separate Conflict Minerals Report exhibit to its Form SD, describing the measures taken to exercise due diligence on the source and chain of custody of the 3TG minerals, as well as information concerning the processing facilities, country of origin and efforts to determine the mine or location of origin.

U.S. public companies are required to make their next filing under the U.S. Conflict Minerals Rule by May 31, 2024. That filing will be for the 2023 calendar year.

In early 2024, many U.S. public companies solicit from their supply chains information on the 3TG in their products as part of their RCOI and due diligence under the Rule. This year, there are additional watch-outs that may have compliance and disclosure ramifications beyond the Conflict Minerals Rule, as discussed in our post here. 

May 31 – Canadian Fighting Against Forced Labour and Child Labour in Supply Chains Act 

Last May, the Fighting Against Forced Labour and Child Labour in Supply Chains Act was adopted in Canada. The Act will require subject companies to annually report on their steps to address forced and child labor in supply chains. 

Companies come within the Act if they have a place of business in Canada, do business in Canada or have assets in Canada and, based on their consolidated financial statements, meet at least two of the three following conditions for at least one of their two most recent financial years: C$20 million in assets; C$40 million in revenue; and/or an average of at least 250 employees. Companies also must engage in one of the following activities: (1) producing, selling or distributing goods in Canada or elsewhere; (2) importing into Canada goods produced outside of Canada; or (3) controlling an entity engaged in any of the foregoing activities.

The Act took effect on January 1, 2024. The first reports under the Act are due by May 31, 2024 (irrespective of company fiscal year-end). The requirements of the Act are discussed in more detail in our earlier Alert here. Many U.S.-based multinationals plan to address Canadian reporting as part of their global modern slavery statement.

Just before Christmas, the Canadian government published guidance under the Act, as discussed in this post.

A substantive online questionnaire that reporting entities will need to submit with their forced and child labor report also was published. The questionnaire is discussed in our separate post here.   

June 30 – Australian Modern Slavery Act

The Australian Modern Slavery Act requires Australia-based entities and other entities that carry on business in Australia and that have at least A$100 million in annual consolidated worldwide revenue to report each year on their actions to address modern slavery in both their operations and supply chains. 

Statements are required to be submitted to an online government Modern Slavery Statements Register, where they are accessible by the public free of charge. The statement for the prior fiscal year is due six months after fiscal year end (June 30 for companies with a December 31 fiscal year-end).

See our earlier Alerts regarding compliance with the Act here, here, here and here.

June 30 – Swiss conflict minerals and child labor due diligence and reporting

In December 2021, the Swiss Federal Council published an Ordinance specifying due diligence and reporting obligations relating to conflict minerals and child labor. In-scope companies include those  with a registered office, central administration or principal place of business in Switzerland, including Swiss-organized subsidiaries of foreign-based multinationals.

The Ordinance and related provisions of the Swiss Code of Obligations entered into force on January 1, 2022, but were subject to a one-year transition period. Subject enterprises that are required to conduct due diligence generally are required to prepare an annual report discussing compliance with their due diligence obligations. The first report is due in 2024 in respect of the 2023 fiscal year. It is required to be posted on the subject enterprise’s website within six months after its fiscal year-end (June 30 for companies with a December 31 fiscal year-end).

The Swiss requirements are discussed in our earlier Alert here. Note that there are various exceptions to due diligence and reporting, as discussed in our Alert. 

June 30 – UK Modern Slavery Act

The UK Modern Slavery Act requires “commercial organisations” that supply goods or services, do business in the United Kingdom and have annual turnover of at least £36 million to annually prepare a statement indicating the steps taken to ensure that modern slavery is not occurring in their supply chain or business. 

The Act does not contain a required publication date for the statement. However, the guidance under the Act indicates that companies should publish the statement on their website as soon as possible after the end of the applicable fiscal year, and that they are expected to do so within six months after fiscal year-end (June 30 for companies with a December 31 fiscal year-end).

For more information on the Act, see some of our earlier alerts, white papers, articles and webinars here.

June 30 – Norwegian Transparency Act

The Norwegian Transparency Act applies to larger enterprises that (1) are resident in Norway and offer goods and/or services in or outside Norway and (2) are foreign enterprises that offer goods and/or services in Norway and are liable for tax to Norway pursuant to internal Norwegian legislation. “Larger enterprises" include enterprises that exceed the thresholds for two of the following three criteria for two years in a row: (1) sales revenues: NOK 70 million; (2) balance sheet: NOK 35 million; and/or (3) average number of employees in the financial year: 50 full-time equivalents. 

Subject enterprises have three primary obligations: (1) conducting human rights due diligence assessments; (2) publicly reporting on findings and measures resulting from the due diligence; and (3) providing information about due diligence upon request. Enterprises must publish their annual transparency statement on their website no later than June 30 of each year (irrespective of their fiscal year-end).

Enterprises are now in the second compliance period. The first reports under the Act were required to be published on company websites by June 30, 2023. The Norwegian Consumer Authority recently announced a review of 500 enterprises' websites. They found that approximately 100 of the enterprises had failed to publish a required report. In its analysis of the remaining 400 enterprises, the Authority observed a lack of detailed reporting on actual adverse impacts and the measures implemented or planned to address these impacts. Additionally, the Authority highlighted a prevalent approach among enterprises: addressing due diligence assessments primarily through the distribution of forms, codes of conduct or similar documents, which in at least some cases likely falls short of the substantive requirements of the Act.

The requirements of the Act are discussed in more detail in our recent post here.

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