Weekly ESG News: Financial Services and Insurance Industry (33/2024)
News in the spotlight: World Bank Issues $225 Million Amazon Reforestation Bond Linked to Carbon Removal.
The World Bank issued a $225 million bond linking investor returns to carbon removal from Amazon reforestation projects.
Products & Services
Standard Chartered has launched a new ESG-linked cash account that rewards corporate clients with favorable interest rates or fee pricing for meeting significant ESG-related targets. This initiative is part of the bank’s broader range of sustainability-focused Transaction Banking Cash solutions, which includes products like the Sustainable Account and Sustainable Trade Finance. The ESG-linked cash account’s rewards are tied to KPIs that are relevant and ambitious for the client’s business, based on external benchmarks and past performance. Initially, the account will be rolled out in Hong Kong and Singapore, with plans for expansion across other markets.
Silva Capital has launched the Silva Carbon Origination Fund, a new initiative focused on generating high-integrity carbon credits through reforestation and sustainable agriculture projects in Australia. Mining giants Rio Tinto and BHP, along with airline Qantas, have collectively invested A$80 million (USD$53 million) as the fund’s initial investors, with a goal to ultimately raise A$250 million. The fund will develop large-scale carbon sequestration projects on agricultural land, combining environmental planting with productive farming to generate Australian Carbon Credit Units (ACCUs). This investment aligns with the companies’ strategies to meet decarbonization targets and compliance obligations.
Microsoft has introduced Project ESG Reporting, a new tool designed to help companies create, review, and approve ESG reports across various standards and frameworks. Currently in preview, the tool addresses the challenges of reporting under multiple voluntary and regulatory frameworks. It includes templates for standards such as CSRD, IFRS S1 and S2, GRI, and SASB, with options for custom template creation and diverse data input types. Key features include integration with Microsoft’s Sustainability Manager, collaboration workflows, and disclosure generation in Excel. Alongside this launch, Microsoft announced new Sustainability Manager features for data traceability, auditability, and emissions reporting.
Ambercycle, a materials sciences company focused on circularity, has received a $10 million investment from Taiwanese polyester manufacturer Shinkong Synthetic Fibers Corporation to support the construction of its first commercial plant, set to open in 2026. Ambercycle, founded in 2015, specializes in recycling end-of-life textiles into regenerated materials like cycora, a purified, virgin-grade polyester made from recycled PET. The investment reflects growing demand for sustainable textiles, with the global need for decarbonized polyester expected to rise to seven million metric tons by 2026. This collaboration strengthens the ongoing partnership between Ambercycle and Shinkong, advancing the production of sustainable, high-performance materials.
Leadership Announcements
AESG has launched a new headquarters in Sydney, Australia, to serve the Australasian market, appointing Devan Valenti as Director of Sustainability. The Sydney office will focus on services such as Environmentally Sustainable Design (ESD), ESG Advisory, and Net Zero Consultancy. Valenti, with over a decade of sustainability experience across three continents, has been instrumental in the development of Australia’s Green Star Buildings Rating. Prior to joining AESG, he was the ESG Lead for Asia Pacific at the International WELL Building Institute. This expansion aligns with Australia’s ambitious decarbonization and emissions reduction targets for 2035.
ESG & Green Bond Issuances
The World Bank has launched a $225 million bond, linking investor returns to carbon removal units (CRUs) generated by reforestation projects in Brazil’s Amazon rainforest. This marks the first bond to tie financial returns directly to carbon removal rather than avoided emissions. The nine-year bond offers a fixed guaranteed return and a variable component tied to CRUs from projects by Mombak, a company focused on large-scale reforestation. Proceeds will support the World Bank’s sustainable development activities, while investors will forgo part of their coupon payments to fund Mombak’s efforts. HSBC acted as the lead manager, with investors including T. Rowe Price and Nuveen.
Net Zero Commitments
KLA has announced a new Scope 3 emissions reduction target, approved by the Science Based Targets initiative (SBTi), aiming for a 52% reduction in emissions per billion transistors inspected, measured, or processed by customers using KLA products by 2030, based on a 2021 baseline. Scope 3 emissions, which account for over 98% of KLA’s total GHG footprint, are primarily driven by the use of its products. This new goal builds on KLA’s earlier commitments to cut Scope 1 and 2 emissions by 50% and transition to 100% renewable electricity by 2030. The announcement coincides with the release of KLA’s 2023 Global Impact Report, highlighting the company’s ESG achievements.
GM has signed its largest renewable energy purchase agreement to date, a 15-year deal with NorthStar Clean Energy to supply power to three of its assembly plants. This milestone supports GM’s goal to become carbon neutral by 2040 and solidifies its position as the automotive industry’s largest buyer of renewable energy by capacity. The agreement involves NorthStar’s 180 MW Newport Solar project in Arkansas, which will provide renewable energy to GM’s assembly plants in Michigan and Missouri. This deal builds on GM’s commitment to power all U.S. sites with 100% renewable electricity by 2025.