Weekly ESG News: Financial Services and Insurance Industry (03/2024)
News in the spotlight: Australia releases draft bill for mandatory climate reporting
The Australian government’s draft Bill proposes mandatory climate reporting (“Australia climate reporting”) for large entities from July 2024, aligning with ISSB standards. Larger companies start reporting from 2024/5, followed by Group 2 entities and others in subsequent years. Disclosures include a climate statement, notes, mandated statements, and a directors’ declaration. Assurance requirements, phased in, would be set by the AUASB. An ‘interim modified liability framework’ aims to protect certain disclosures until 2027. A statutory review is planned post-July 2028. Organizations are urged to prepare for these impending requirements.
US SIF (Sustainable Investment Forum) elects two new members to the Board
US SIF has elected Elizabeth Levy and Kiley Miller to its 2024-2026 Board, reinforcing commitment to sustainable investment. Levy, Trillium Asset Management’s ESG Strategy Head, and Miller, Envestnet’s Sustainable Investing Principal Director, bring crucial expertise. Re-elected members include Diederik Timmer as Board Chair, alongside Stephanie Cohn Rupp, Mamadou Abou-Sarr, and Anthony Eames. This diverse Board, led by Timmer, plays a key role in shaping US SIF’s strategy. Maria Lettini, CEO, expresses excitement about the new members and collective efforts towards ambitious goals in sustainable investing.
Products and Services
Barclays establishes Energy Transition Group to support clients
Barclays has launched a new Energy Transition Group within its Corporate and Investment Bank to provide strategic advice on energy transition opportunities. The team, led by Global Head Mike Cormier, comprises specialists from Barclays’ global Natural Resources, Power, and Sustainable and Impact Investment Banking teams. This initiative aligns with Barclays’ commitment to a 2050 net-zero ambition and a target to facilitate $1 trillion of Sustainable and Transition Financing by 2030.
Schroders launches semi-liquid energy transition fund
Schroders Greencoat launched the Schroders Capital Semi-Liquid Energy Transition Fund, meeting client demand for energy transition investments. Categorized under SFDR Art. 9, this semi-liquid fund allows investments in illiquid infrastructure with a long-term perspective. The fund targets diverse global energy transition assets with a gross return target exceeding 10%. This addition enhances Schroders Capital’s semi-liquid fund portfolio, supporting its commitment to sustainable, private assets.
Eurex to introduce derivatives on Socially Responsible Investing indices
Eurex, a major European derivatives exchange, is expanding its product suite with futures on Socially Responsible Investing (SRI) indices, including STOXX Europe 600 SRI and various MSCI SRI indices. This move targets user groups with stricter ESG mandates, such as asset managers for endowment funds or foundations. Eurex has been a leading player in ESG derivatives since launching its first in February 2019, accumulating nearly 11 million contracts by the end of 2023. The new SRI futures will be supported by a liquidity provider scheme in this dynamic market.
Green Bond & ESG Bond Issuances
Northvolt raises $5bn
Northvolt secures a record $5 billion green loan for expanding its gigafactory, Northvolt Ett, in Sweden, marking Europe’s largest. The funds support cathode production, cell manufacturing, and a recycling plant with a 70% lower carbon footprint. Backed by long-term contracts with partners like BMW, the financing, including debt refinancing, brings Northvolt’s total funds for European and North American expansion to over $13 billion. The company’s commitment to sustainability earns it a ‘dark green’ rating.
Regulations, Law & Frameworks
EBA launches public consultation for management of ESG risks
The European Banking Authority (EBA) is seeking public input on draft Guidelines for managing Environmental, Social, and Governance (ESG) risks until April 18, 2024. The guidelines outline requirements for institutions in identifying, measuring, and managing ESG risks, particularly those related to the transition to an EU climate-neutral economy. To ensure the safety of institutions, the guidelines set forth principles for developing plans in accordance with the Capital Requirement Directive (CRD6) to address financial risks from ESG factors. Stakeholders can provide comments until the deadline, and a virtual public hearing is scheduled for February 28, 2024. The draft guidelines align with the EBA’s roadmap on sustainable finance and the implementation of the EU banking package. Read the full press release here.
Australia releases draft bill for mandatory climate reporting
The Australian government’s draft Bill proposes mandatory climate reporting for large entities from July 2024, aligning with ISSB standards. Larger companies start reporting from 2024/5, followed by Group 2 entities and others in subsequent years. Disclosures include a climate statement, notes, mandated statements, and a directors’ declaration. Assurance requirements, phased in, would be set by the AUASB. An ‘interim modified liability framework’ aims to protect certain disclosures until 2027. A statutory review is planned post-July 2028. Organizations are urged to prepare for these impending requirements.
ESG Data & Analytics
Novata launches Carbon Navigator to simplify emissions measurement
Novata has launched the Carbon Navigator, a solution simplifying carbon data management and reporting. Users can calculate emissions, streamline data tracking, upload expenses for calculations, and share audit trails. The platform addresses the growing demand for ESG data tools, offering a user-friendly experience and benchmarks for efficient carbon footprint monitoring. Novata, with about 6,000 contracted private companies since April 2022, positions itself as a one-stop solution for sustainability data management.
ISS ESG Enhances Biodiversity Impact Assessment Tool with Portfolio Report
ISS ESG has launched the BIAT Portfolio Report, enhancing its Biodiversity Impact Assessment Tool. Investors can now compare portfolio biodiversity risk against benchmarks, view impact breakdowns, and assess dependencies on ecosystem services. The BIAT solution covers 17,000+ companies with 650+ factors. The report aligns with global frameworks, addressing evolving regulatory requirements and supporting investors in measuring impact and risk exposure in line with the UN Convention on Biological Diversity and TNFD.