Weekly ESG News: Financial Services and Insurance Industry (07/2024)
News in the spotlight: IFC enables access to MALENA, an AI-Powered accelerator for sustainable investors
IFC has launched MALENA, an AI-powered tool for ESG analysis in emerging markets. Developed with over 15 years of data, MALENA simplifies complex ESG information, addressing data shortages in these markets.
Products and Services
ASEAN exchanges partner to build sustainability ecosystem
Bursa Malaysia, Indonesia Stock Exchange (IDX), The Stock Exchange of Thailand (SET), and Singapore Exchange (SGX Group) have collaboratively launched the ASEAN-Interconnected Sustainability Ecosystem (ASEAN-ISE). Bursa Malaysia will act as the ASEAN-ISE Secretariat to implement common ESG metrics in their data infrastructures. The initiative aims to create an integrated ESG ecosystem, achieve economies of scale, and empower exchanges to assist ESG-compliant corporates. The inclusion of SGX Group strengthens the alliance, and the Participating Exchanges will commit to adopting and implementing the ‘ASEAN Exchanges Common ESG Metrics’ in their reporting platforms. The formalization of the ISE Governance Framework is expected at the 37th ASEAN Exchanges CEOs Meeting in July 2024.
Amundi launches Global Short Term Bond Fund
Amundi, Europe’s largest asset manager, has launched the Amundi Funds Global Short Term Bond Fund for conservative fixed income investors, seizing the opportunity presented by favorable market conditions. The fund utilizes a global top-down and bottom-up approach to construct a diversified portfolio primarily consisting of investment-grade short-dated bonds. Classified under SFDR as Article 8, the fund integrates ESG considerations, aiming for a higher ESG score compared to the broader universe. Co-managed by Jacques Keller and Rajesh Puri, it aims to outperform the Bloomberg Global Aggregate 1-3 Year Total Return Index. Amundi Fixed Income, managing close to €597 billion, highlights the opportune timing for investments in short-dated fixed income.
Goldman Sachs Asset Management launches Global Green Bond ETF
Goldman Sachs Asset Management has launched the Goldman Sachs Global Green Bond UCITS ETF, among the first passive green bond funds tracking a custom index developed with Solactive. The ETF, listed as GSGR on various exchanges, provides exposure to the Solactive Global Green Bond Select Index. Developed with Goldman Sachs Asset Management’s Green, Social, and Impact Bonds team, the index includes companies with lower climate risk than passive benchmarks. The fund discloses under Article 9 of SFDR. Furthermore, it enables investors to incorporate sustainable bonds into global fixed income portfolios, reflecting the firm’s commitment to green investments.
STOXX licenses new ESG version of the DAX to DZ BANK
STOXX Ltd. has licensed the DAX 30 ESG index, a new ESG benchmark, to DZ BANK, expanding ESG investment options in German equities. Developed in collaboration with DZ Bank, the index is based on the ISS ESG Corporate Rating and comprises the top 30 stocks with the best ESG performance scores from the HDAX universe. Exclusion filters are applied for criteria like controversial weapons and tobacco. The DAX 30 ESG index forms the basis for tradable discount certificates on the Frankfurt Stock Exchange. Additionally, the DAX 30 ESG Decrement 4.0% Index, launched as an underlying index for DZ BANK certificates, tracks the DAX 30 ESG Net Return Index with a constant 4 percent per annum markdown.
Regulations, Law & Frameworks
ICMA publishes new paper on transition finance in the debt capital market
The International Capital Market Association (ICMA) released a new paper on transition finance in the debt capital market, building on their 2020 Climate Transition Handbook. The paper reviews current guidance on transition finance, emphasizing the need for clearer definitions and highlighting concerns about “greenwashing.” ICMA sees potential in new sustainability reporting standards from ISSB and ESRS to mainstream transition plans, unlocking finance in the sustainable bond market. They propose voluntary adoption of transition plans by the market and provide a model structure aligned with various recommendations, aiming to facilitate financing for sectors like fossil fuels and hard-to-abate industries. Nicholas Pfaff, Deputy CEO of ICMA, emphasizes the importance of defining transition finance and leveraging the sustainable bond market to address climate transition challenges.
ESG Data & Analytics
IFC enables access to MALENA, an AI-Powered accelerator for sustainable investors
IFC has launched MALENA, an AI-powered tool for ESG analysis in emerging markets. Developed with over 15 years of data, MALENA simplifies complex ESG information, addressing data shortages in these markets. The tool enables transparent decision-making for sustainable investments, allowing users to upload documents and extract insights such as greenhouse gas emissions and sentiment predictions. With a public access initiative, IFC aims to contribute to responsible global investment practices. Amundi collaborated in shaping MALENA, and its development received support from entities like the Danish International Development Agency and Korea’s Ministry of Economy and Finance.
Leadership Announcements
Investec appoints Alicia Forry as Head of ESG Alternative Investments
Investec Alternative Investment Management (IAIM) has appointed Alicia Forry as Head of ESG, Alternative Investments, bolstering its European mid-market private credit management. IAIM focuses on private market credit strategies and manages over £3bn in assets through Investec’s direct lending strategy. With seven years of experience at Investec, Forry will embed responsible investing practices across private market credit strategies. IAIM manages Investec Private Debt Fund I (PDF I) and aims to enhance ESG credentials in the mid-market. The appointment reflects Investec’s commitment to sustainable business practices and long-term value creation for stakeholders.
Net-Zero Commitments
JPMorgan and State Street quit Climate Action 100+
Two major asset managers, JPMorgan Asset Management and State Street Global Advisors, are leaving Climate Action 100+, a group focused on urging companies to address climate change, while BlackRock, the world’s largest money manager, is reducing its involvement. The exits mark a setback for the group’s efforts, as none of the top five global asset managers are fully supporting Climate Action 100+. The withdrawals reveal a growing divide among US-based asset managers, with larger firms facing pressure from Republicans on climate issues. Smaller competitors and European firms have largely remained committed to climate coalitions. The departures come amid increased scrutiny and legal challenges to asset managers engaging in climate-related initiatives in the US.
ESG- and Green Bonds
Japan to issue $11bn Climate Transition Bond
Japan is issuing an $11 billion Climate Transition Bond, a global first, to support its emission reduction goals and the Green Transformation (GX) program. Certified under the Climate Bonds Standard, it assures investors of environmental alignment. Over 55% of the proceeds fund research for Japan’s 1.5°C temperature limit, with the remainder supporting subsidies, excluding gas-fired power generation. The bond strictly excludes allocations for gas-fired power generation or ammonia co-firing in coal-fired plants. The independent verification report is provided by the Japan Credit Rating Agency (JCRA), emphasizing their contribution to Japan’s net-zero transition.