Guide to ESG: Socio-environmental and governance aspects

There is no separate ESG system in Spain. Instead, there is a fragmented and complex structure with relevant provisions scattered across various pieces of legislation. The Spanish ESG system is still under development and includes both legal obligations set out in dynamic and growing legislation and various sets of recommendations or best practices.

There are two components of the Spanish ESG system: a European and a national one. The European Union has adopted many laws in various ESG areas, including the Non-Diverse Reporting Directive (2014/95/EC), the Shareholder Rights Directive (2017/828), the Sustainable Finance Disclosure Regulation (2019/2088), the Taxonomy Regulation (2020/852) and various provisions incorporating ESG criteria into the second Market in Financial Instruments Directive, the Investment Fund Managers Directive and the Alternative Investment Funds Directive.

The national ESG framework has adopted specific instruments, including laws, ordinances and articles, as well as regulations adopted by some regional bodies.

Laws related to the environment mainly focus on energy transformation, including environmental liability, waste management, energy efficiency in buildings, alternative energy vehicles, energy transition measures and climate change. Laws related to social issues mainly focus on equality, non-discrimination and harmonization of personal and professional life. Laws related to governance focus on corporate governance and long-term shareholder engagement.

The European ESG system in Spain is based on a combination of mandatory laws and soft codes. Several changes to ESG-related legislation are expected to be introduced in the next 12 months, including amendments to the Securities Market Law, the objectives of which are to further regulate reporting, management and remuneration for public companies and investment companies, as well as a proposal to introduce temporary taxes in the energy and credit sectors and to draft a law on the social and solidarity economy.