Weekly ESG News: Financial Services and Insurance Industry (06/2024)
News in the spotlight: EU Council and Parliament reach agreement on ESG ratings
EU Council and Parliament reached a provisional agreement on regulations for ESG rating activities to enhance investor confidence in sustainable products.
Products and Services
State Street launches Article 8 emerging market debt fund
State Street Global Advisors has unveiled an Article 8 fund concentrating on emerging market government debt in hard currencies. The fund provides ESG-compliant options for investors who want to seek developping countries exposure. Tracking the JPMorgan ESG EMBI Global Diversified index, the fund aligns with sustainability by favoring issuers committed to ESG practices. This bolsters State Street’s emerging market debt business, emphasizing innovation and meeting the demand for sustainable investments. Compliant with the EU’s SFDR Article 8, the fund is domiciled in Luxembourg. It commenced with a $50 million investment, addressing the growing interest in environmentally and socially conscious investment products.
HANetf closes two of its ESG ETFs
HANetf plans to merge three thematic ETFs due to low demand. The Solar Energy UCITS ETF (TANN) and S&P Global Clean Energy Select HANzero UCITS ETF (ZERO) will merge into iClima Global Decarbonisation Enablers UCITS ETF (CLMA). Additionally, the Procure Space UCITS ETF (YODA) will merge into the Future of Defence UCITS ETF (NATO). The mergers are set for 27 February pending shareholder approval. The decision was influenced by CLMA’s higher sustainability rating, and TANN and ZERO struggled to gather assets, leading to their non-viability. HANetf closed five ETFs last year due to low AUM and previously merged other funds for viability reasons.
Regulations, Law & Frameworks
IIGCC releases guidance for derivatives and hedge funds
IIGCC issued guidance for hedge fund managers on integrating derivatives into net-zero commitments, emphasizing real-economy impact reporting. The challenge of attributing emissions to derivatives is addressed, advocating economic exposure for effective emissions reduction. The guidance promotes transparency and considers all channels of influence for positive real-world impact, aiming to prevent greenwashing. Members, including Cardano’s UK Head of Sustainability, welcome the guidance, highlighting its role in guiding assessments of investment managers’ alignment with beliefs.
EU Council and Parliament reach agreement on ESG ratings
EU Council and Parliament reached a provisional agreement on regulations for ESG rating activities to enhance investor confidence in sustainable products. The rules focus on transparency, requiring ESG rating providers to be authorized and supervised by ESMA. The agreement includes disclosure requirements for financial market participants, introduces a temporary registration regime for small ESG rating providers, and emphasizes a separation of business and activities. Pending approval, the regulation is set to apply 18 months after formal adoption.
GRI launches standards for the mining sector
The newly launched GRI Mining Standard, GRI 14, represents a significant step towards comprehensive sustainability reporting in the mining sector. Developed through a robust multi-stakeholder approach, it addresses 25 key topics, including emissions, human rights, and new additions like tailings management and operating in conflict zones. The standard aims to enhance transparency, enabling mining companies to communicate their impacts globally and build trust with stakeholders. With growing scrutiny on responsible mineral supply, the GRI Mining Standard aligns with industry recommendations and provides a crucial framework for reporting on biodiversity, water usage, community impact, corruption, and emissions.
ESG Data & Analytics
MSCI develops solution for private market climate and sustainability disclosures
MSCI’s new platform, Private Company Data Connect, centralizes private companies’ sustainability data for general partners, fostering transparency and standardization in private markets. It enables due diligence, risk management, and sustainable strategy development. Companies retain control over their data, and the platform integrates with Persefoni’s carbon accounting software. Available on MSCI ONE, the cloud-based technology platform provides comprehensive access to MSCI’s solutions.