Clients updates / Corporate Governance and ESG

The publication of the questionnaire aligns with global trends and reflects the importance of this subject for investors. According to the TASE press release, only 70 companies currently publish full ESG reports.

The monitoring of greenhouse gas emissions is not only important for protecting environmental quality, but it also offers commercial benefits, such as monitoring energy and supply chain expenses and participating in carbon emissions trading markets. 

Notwithstanding growing awareness and the measures being taken to reduce greenhouse gas emissions (as part of Israel’s commitment under the Paris Agreement), the emerging Arrangements Law could cause a regression in environmental legislation and hinder efforts to protect Israel’s population from environmental hazards.

This week, the Israeli government approved the joint proposal submitted by the Prime Minister and the Minister of Environmental Protection to obligate all government ministries to formulate climate action plans. The proposal was approved ahead of the upcoming United Nations Climate Change Conference, which will be held in Sharm El Sheikh, Egypt.

The Israeli Ministry of Environmental Protection announced this week its imposition of a pecuniary sanction totaling about ILS 3 million on the leading supermarket chain Shufersal for violations of the Clean Air Law. (In particular, the company violated provisions mandating the reduction and prevention of air pollution from its vehicles).

About seven years ago, one of the worst ecological disasters in Israel’s history occurred. During work to divert an oil pipeline, one of the old pipelines belonging to the government company Eilat Ashkelon Pipeline Co. Ltd. (EAPC) ruptured near the Evrona Nature Reserve. As a result, about five million liters of crude oil poured from the pipeline into the nature reserve located in the Arava Valley.

The Bank of Israel published its latest annual review at the end of May. The review includes an announcement by Supervisor of Banks Yair Avidan that he is promoting the formulation of updated comprehensive regulations on environmental risk management, considering the considerable importance he attributes to the subject of the environment.

In light of global capital market investors’ growing interest in the topic of responsible investments, the Israel Securities Authority recently published a proposed outline for corporate responsibility and ESG risk disclosures.

Israel’s Ministry of Environmental Protection imposed a financial sanction of NIS 634,000 on Bazan Group’s Gadiv Petrochemical Industries for not complying with a deadline to stop harmful emissions. The ministry stated that due to the severity of the violation, both a financial sanction and administrative enforcement measures would be imposed.

A recently launched government program aims to encourage companies to publish social responsibility reports, or ESG (environmental, social, and government) responsibility reports. The Ministry of Strategic Affairs in the Prime Minister’s Office announced the launch of the “Impact Nation” program, as part of a broad move to promote publication of positive economic information regarding Israeli companies, following the publication of the Israeli companies database by UN Human Rights Council.