Weekly ESG News: Financial Services and Insurance Industry (20/2024)
News in the spotlight: Invesco launches $500mn climate adaptation fund
Asset manager Invesco has launched the Invesco Climate Adaptation Action Fund (ICAAF) to support decarbonisation in emerging markets, aiming to raise $500m over the next nine months.
Regulations, Law and Frameworks
ESMA Guidelines establish harmonized criteria for use of ESG and sustainability terms in fund names
The European Securities and Markets Authority (ESMA) has published final guidelines on the use of ESG and sustainability-related terms in fund names to prevent misleading claims and provide clear criteria for asset managers. To use these terms, funds must allocate at least 80% of investments to meet environmental, social, or sustainable objectives. The guidelines also set exclusion criteria based on Paris-aligned Benchmarks (PAB) and Climate Transition Benchmarks (CTB) for various terms. These rules will apply three months after publication on ESMA’s website, with existing funds given a six-month transitional period. Competent authorities must notify ESMA of their compliance intentions within two months of publication.
UK publishes framework and terms of reference for the development of the UK Sustainability Reporting Standards
On May 16, 2024, the UK Government published the “Sustainability Disclosure Requirements: Implementation Update 2024.” The update details plans to endorse IFRS Sustainability Disclosure Standards by Q1 2025, leading to UK Sustainability Reporting Standards. The FCA will consult on these standards for UK-listed companies, with a decision expected by Q2 2025. Upcoming consultations will cover transition plan disclosures, broadening the SDR to include the Overseas Funds Regime, and the proposed UK Green Taxonomy. The Government also supports the Taskforce on Nature-related Financial Disclosures (TNFD).
Products & Services
Nordea launches two new Article 9 bond funds
Nordea Asset Management (NAM) has launched two new Article 9 Sustainable Labeled Bond Funds: Nordea 1 – European Corporate Sustainable Labeled Bond Fund and Nordea 1 – European Sustainable Labeled Bond Fund. Managed by NAM’s Credit and Rates teams respectively, these funds focus on EURO-denominated investment-grade bonds with sustainable objectives. They aim to deliver both returns and tangible impacts, leveraging NAM’s extensive ESG investment expertise and rigorous sustainable investment standards. This launch underscores NAM’s commitment to sustainable finance, coinciding with the 3-year anniversary of their Global Impact Fund.
Invesco launches $500mn climate adaptation fund
Asset manager Invesco has launched the Invesco Climate Adaptation Action Fund (ICAAF) to support decarbonisation in emerging markets, aiming to raise $500m over the next nine months. ICAAF will invest in public and private placement bonds in developing countries, targeting climate adaptation sectors such as food security and urban infrastructure. The fund will run for 12 years, with a seven-year investment period and a five-year run-off period, allocating 25% to the public sector and 75% to the private sector. Expected returns are 11.75% for public and 8.1% for private investments annually.
ESG Data & Analytics
ERM and Workiva partner to deliver integrated sustainability reporting solution
The SEC’s new disclosure rules are merging financial and non-financial reporting. Workiva uniquely offers integrated financial, ESG, and GRC reporting in one secure platform. This integration helps streamline ESG reporting and operationalize sustainability strategies. ERM, partnering with Workiva, provides robust sustainability reporting solutions. This collaboration aids clients in meeting regulatory requirements and advancing business goals.
Net Zero Commitments
CalSTRS shares progress on net zero pledge
Nearly three years ago, CalSTRS pledged to achieve net zero emissions in its investment portfolio by 2050. At the May board meeting, staff reported significant progress, including a 9.4% reduction in emissions in the Global Equity Portfolio and an 11% reduction in Fixed Income. Over $2 billion has been invested in low-carbon solutions. CalSTRS continues robust engagement through initiatives like Climate Action 100+ and the Oil and Gas Methane Partnership 2.0. Challenges remain, particularly in obtaining accurate data, but CalSTRS is committed to further reducing emissions and promoting universal reporting standards.
BNP Paribas stops new bond issuances in the oil and gas sector
BNP Paribas announced at its AGM that it will no longer participate in conventional bond issues for the oil and gas sector. Reclaim Finance welcomes this move but urges BNP Paribas to extend this policy to other financial services and fully commit to its climate goals. Despite reducing financing for major oil and gas companies, BNP Paribas still provided a loan to Eni in December, highlighting the need for more comprehensive action. Questions remain about the bank’s stance on sustainability-linked bonds and the companies covered by this decision, as it continues to support some hydrocarbon producers through other means.