Weekly ESG News: Financial Services and Insurance Industry
News in the spotlight: Sustainability disclosure and labeling regime confirmed by the FCA
The FCA has introduced measures to enhance transparency in the $18.4 trillion global ESG market, addressing concerns of greenwashing and positioning the UK as a leading sustainable finance hub. The initiative includes Sustainability Disclosure Requirements and a consumer-centric investment labeling regime. To ensure clarity, an anti-greenwashing rule will be enforced, along with product labels detailing sustainability goals and stringent naming and marketing requirements. Sacha Sadan, FCA’s Director of Environmental, Social, and Governance, emphasized the significance of building investor trust and protecting consumer interests. The measures, tested with over 15,000 individuals, respond to the majority of UK adults expressing a preference for investments with environmental and social impact considerations.
Weekly Sustainable Finance Newsletter 48/2023
ESG News of the last week in detail
Products and Services
Lloyds Bank led syndicate for £300m of debt financing for Statera Energy
London-based energy company Statera Energy, backed by EQT Infrastructure, has secured £300m in debt financing led by Lloyds Bank. The funding will support Statera’s Thurrock Battery Energy Storage System (BESS), contributing 300MW (600MWh) of flexible storage capacity to the UK. Additionally, the financing will aid the development of a 270MW flexible generation plant, which has already secured a capacity market contract. Statera Energy, now under the ownership of Swedish Private Equity firm EQT Infrastructure, plans to expand its portfolio, aiming for a project pipeline of over 16GW, with 7.5GW expected to be operational by 2030.
responsAbility launches USD 500 million climate investment strategy for Asia
ResponsAbility Investments AG, along with Germany’s KfW and the Dutch development bank FMO, has launched a USD 500 million climate investment strategy to address rising CO2 emissions in Asia. Focused on sectors like renewable energy, battery storage, electric mobility, energy efficiency, and circular economy, the strategy employs an innovative ‘Climate Impact Assessment and Monitoring Framework’ to ensure transparency and target direct CO2 savings of 10 million tons. Using a blended finance structure, it aims to mobilize USD 500 million, offering institutional investors attractive opportunities to tackle Asia’s climate challenges and contribute to Sustainable Development Goals. The initiative has received support from key figures, including Ewout van der Molen (Head of Climate Finance at ResponsAbility), Stephanie Lindemann-Kohrs (Director of Global Equity and Funds at KfW), and Marnix Monsfort (Director of Energy at FMO). Read more here.
Ninety One announced transition debt strategy for emerging markets
Global investment manager Ninety One has unveiled its Emerging Market Transition Debt (EMTD) strategy on November 29, 2023, aimed at driving investment into the energy transition in emerging markets. The strategy focuses on providing commercial financing to high-emitting companies in emerging markets with strong potential to reduce carbon emissions. Developed in collaboration with global capital providers and advisors, including Cambridge Associates and Wiltshire Pension Fund, the EMTD strategy seeks to balance real-world impact with commercially attractive risk-adjusted returns. The portfolio manager for EMTD, Matt Christ, emphasizes the importance of not sacrificing returns for impact, while Ninety One’s Chief Sustainability Officer, Nazmeera Moola, highlights the strategy’s role in supporting the corporate sector’s climate-oriented evolution. The solution is set to be implemented in early 2024, working with leading companies across various emerging markets. Read more here.
SDG Loan Fund backed by Allianz mobilizes USD 1.1bn
The SDG Loan Fund, a collaborative effort by Allianz Global Investors, FMO Investment Management, and the MacArthur Foundation, has successfully raised $1.1 billion from institutional investors, including Allianz, FMO, and Skandia. Utilizing a “blended finance” model, the fund aims to address the funding gap for the United Nations Sustainable Development Goals (SDGs) in emerging markets. With a focus on energy, financial inclusion, and sustainable agriculture, the fund’s structure involves a first-loss investment from FMO and a guarantee from MacArthur, unlocking $1 billion in private capital for impactful projects. The SDG Loan Fund targets economic growth, equality, and climate action, aiming to create 60,000 jobs and reduce greenhouse gas emissions by 450,000 tCO2 per year.
Stripe launched new “Climate Orders” service
Stripe’s new service, Climate Orders, enables companies to pre-order “offtake” contracts for carbon removal projects, facilitating emissions offsetting. The initiative, part of Stripe Climate, supports vetted carbon removal projects from Frontier’s portfolio, aiming to accelerate the deployment of crucial technologies for achieving net-zero goals. To address cost and uncertainty concerns, Stripe offers flexible contracts with projects like CarbonCapture, Charm Industrial, and Heirloom, assuming the risk of potential price changes. The company charges a fee for managing transactions. The first certificates from projects in Frontier’s portfolio are expected in 2027.
ESG Data and Analytics
Nasdaq launched a new technology stack to scale global carbon markets
Nasdaq recently launched a groundbreaking technology aimed at securely digitizing the issuance, settlement, and custody of carbon credits, with the goal of supporting the development and institutionalization of global carbon markets. The service employs smart contract technology, offering a standardized, auditable ecosystem for market operators and registries. Nasdaq’s technology also allows for the creation of standardized digital credits, paving the way for a more efficient and scalable carbon market. In conjunction with the launch, Nasdaq announced a technology partnership with Puro.earth, a leading standards and registry platform for engineered carbon removal, to register CO2 Removal Certificates (CORCs). This collaboration is expected to modernize carbon crediting infrastructure and contribute to the growth of the voluntary carbon removal market.
Bloomberg integrated UN Framework to measure impact on SDGs
Bloomberg has introduced a groundbreaking tool, the first of its kind, allowing investors to evaluate a company’s impact on any of the United Nations’ 17 Sustainable Development Goals (SDGs). Utilizing the UN Environmental Programme Finance Initiative’s Sector Impact Map, Bloomberg’s tool maps over 500 sectoral activities to 38 impact topics and the SDGs, differentiating between positive and negative impacts on the environment, people, and economic development. As the demand for objective SDG-related data increases, this tool provides clarity for investors directing capital towards sustainable assets and assessing private sector alignment with SDGs. The tool is available on the Bloomberg Terminal and through Bloomberg Data License for enterprise use.
Regulatory and Law
Sustainability disclosure and labeling regime confirmed by the FCA
The FCA has introduced measures to enhance transparency in the $18.4 trillion global ESG market, addressing concerns of greenwashing and positioning the UK as a leading sustainable finance hub. The initiative includes Sustainability Disclosure Requirements and a consumer-centric investment labeling regime. To ensure clarity, an anti-greenwashing rule will be enforced, along with product labels detailing sustainability goals and stringent naming and marketing requirements. Sacha Sadan, FCA’s Director of Environmental, Social, and Governance, emphasized the significance of building investor trust and protecting consumer interests. The measures, tested with over 15,000 individuals, respond to the majority of UK adults expressing a preference for investments with environmental and social impact considerations.
BCBS Consults on Climate Risk Disclosure Framework
The Basel Committee on Banking Supervision is seeking public input on a Pillar 3 disclosure framework for climate-related financial risks. The proposed framework, part of the Committee’s global strategy, aims to enhance financial stability by establishing qualitative and quantitative disclosure requirements for international banks. Stakeholder feedback will influence the consideration of mandatory elements, with submissions accepted until February 29, 2024, and all comments made public on the Bank for International Settlements website unless confidentiality is requested.
Leadership Announcements
Nuveen expanded its global ESG team
Nuveen has expanded its global responsible investment teams by hiring Sasha Miller as Head of Responsible Investment Strategy for EMEA and APAC, and Enrico Colombo as Senior Director of Stewardship. Miller, formerly with Schroders, will drive responsible investment growth across regions, reporting to Kelly Hagg. Colombo, previously Vanguard’s lead analyst for investment stewardship, will enhance Nuveen’s company engagement and lead its stewardship program, reporting to Peter Reali. These appointments align with Nuveen’s global growth strategy in navigating the evolving ESG landscape, according to Amy O’Brien, Nuveen’s Global Head of Responsible Investment.
LGT Wealth Management appointed Siobhan Archer as global stewardship lead
LGT Wealth Management has appointed Siobhan Archer as Global Stewardship Lead to advance its sustainability goals. Archer will drive the company’s global stewardship initiatives, aligning with its net-zero 2030 strategy. Reporting to Phoebe Stone, she will provide strategic input on net-zero, biodiversity, and human rights, serving as the primary contact for collaborative engagements. Archer’s extensive experience in sustainable investing includes previous roles at UN PRI and Arabesque Asset Management. LGT has recently joined Nature Action 100 and supports the Global Investor Commission on Mining 2030. Ben Snee, CEO at LGT Wealth Management, highlighted Archer’s expertise in fostering positive change through stewardship activities.