Weekly ESG News: Financial Services and Insurance Industry (04/2024)
News in the spotlight: EU Parliament approves delay of CSRD reporting for non-EU companies
Members of the European Parliament have approved a two-year delay for non-EU companies and specific sectors to implement sustainability reporting requirements under the Corporate Sustainable Reporting Directive (CSRD).
Products and Services
TwentyFour Asset Management upgrades fund to SFDR Art. 9
London-based TwentyFour Asset Management has upgraded its Vontobel Fund – TwentyFour Sustainable Short Term Bond Income to Article 9 under the EU’s Sustainable Finance Disclosure Regulation (SFDR). The move, effective from January 26, 2024, signifies the fund’s commitment to investing in securities that contribute to limiting global temperature rises below 2°C. This contrasts with the trend of downgrades observed in 2022 and 2023. Meanwhile, Morningstar’s Q4 2023 SFDR review revealed record outflows from Article 8 funds and the first outflows from Article 9 funds, but assets in these categories reached a new record of €5.2 trillion, representing 60% of total EU fund assets.
Morgan Stanley IM launches three new active funds under SFDR Art. 8
Morgan Stanley Investment Management’s Calvert Research and Management has launched three new active funds under Article 8 of SFDR, expanding their sustainable offerings in Europe to a total of 11 funds. The MS INVF Calvert Global Equity Fund, MS INVF Calvert Global High Yield Bond Fund, and MS INVF Calvert US Equity Fund are all actively managed, with a strong emphasis on integrating ESG and sustainability factors into the research process. The investment teams will actively engage with company management to influence their approach to financially material ESG issues. Vittorio Ambrogi, Head of European Distribution at MSIM, highlighted the firm’s commitment to meeting investor demand for sustainable funds and delivering best-in-class products.
Regulations, Law & Frameworks
GRI launches new Biodiversity Reporting Standard
The Global Reporting Initiative (GRI) has recently launched a transformative update to its Biodiversity Standard, GRI 101: Biodiversity 2024, with the goal of establishing a new global benchmark for corporate accountability in addressing biodiversity impacts. This standard empowers organizations worldwide to transparently disclose their significant impacts on biodiversity, focusing on location-specific reporting, direct drivers of biodiversity loss, and societal impacts. The GRI Biodiversity Standard aligns with global frameworks such as the UN Kunming-Montreal Global Biodiversity Framework, Science Based Target Network, and Taskforce on Nature-related Financial Disclosures. Although it becomes effective from January 1, 2026, organizations can freely download GRI 101 now, and a two-year pilot program will engage early adopters. The standard’s development involved collaboration with stakeholders and received feedback from 122 organizations during a public comment period in 2023.
EFRAG launches public consultation for sustainability reporting standards for SMEs
The European Financial Reporting Advisory Group (EFRAG) has initiated a public consultation on two Exposure Drafts (EDs) for sustainability reporting standards targeting Small and Medium-sized Enterprises (SMEs). The Exposure Draft for listed SMEs (ESRS LSME ED) aims to set proportionate and relevant reporting requirements for public-interest SMEs, while the voluntary reporting standard for non-listed SMEs (VSME ED) provides a simple reporting tool to help non-listed SMEs respond efficiently to sustainability information requests. The consultation, open until May 21, 2024, encourages stakeholders to participate in online questionnaires and a parallel field test, with interest submissions for the field test accepted until January 31, 2024. The standards are anticipated to support SMEs in accessing finance and transitioning to a sustainable economy.
EU Parliament approves delay of CSRD reporting for non-EU companies
Members of the European Parliament have approved a two-year delay for non-EU companies and specific sectors to implement sustainability reporting requirements under the Corporate Sustainable Reporting Directive (CSRD). The deferral, proposed by the European Commission in October, received a 21-2 vote from the Committee on Legal Affairs. Sectors affected include oil and gas, mining, textiles, agriculture, and more. The extension allows companies outside the EU until 2026 to comply with the CSRD. The directive mandates comprehensive sustainability disclosures for all companies listed on EU-regulated markets, impacting both EU and non-EU entities, including U.S. companies with EU subsidiaries. Securities and Exchange Commission Chair Gary Gensler warned that without a final climate disclosure rule, U.S. businesses could be subject to EU climate disclosures.
ESG Data & Analytics
SIX launches new climate data offering
Global financial information provider SIX has introduced a climate data offering to aid in climate factor reporting, monitoring, and informed investment decision-making. The service grants clients access to diverse climate data sets, covering over 33,000 global companies in various industries with modeled and reported emissions data. These climate-specific datasets complement SIX’s existing coverage of environmental, social, and governance (ESG) data and regulatory risk data. SIX has partnered with established providers like MSCI, Inrate, and CDP to offer a comprehensive global Greenhouse Gas Emissions Dataset. The new offering supports market participants in meeting climate-related regulatory requirements and enhances their ability to make well-informed investment decisions amid increasing regulatory scrutiny. Martina Macpherson, Head of ESG Product Strategy and Management at SIX, underscores the importance of understanding and managing climate risk and opportunities in the evolving global landscape.
Net Zero Commitments
HSBC issues energy policy
As of January 2024, HSBC´s energy policy is committed to facilitating a secure transition to a net-zero future, informed by consultations with scientific bodies and international entities. Aligned with 2030 targets, the policy focuses on reducing financed emissions in key sectors while supporting clients actively engaged in the transition. HSBC no longer provides financing for new oil and gas field projects but continues to support clients with compatible transition plans. The policy covers various energy sectors, aiming to balance global emission reduction, an orderly transition, and a just shift. The recent review reinforces the commitment to sustainable finance, targeting $750 billion to $1 trillion by 2030.