Weekly ESG News: Financial Services and Insurance Industry (45/2024)
News in the spotlight: EIOPA calls for higher capital for fossil fuel assets.
The European Insurance and Occupational Pensions Authority (EIOPA) has released a report recommending higher capital requirements for fossil fuel assets held by European insurers.
Products and Services
NatureFinance Launches NatureAlign to Guide Nature-Positive Financial Investments
NatureFinance has launched NatureAlign, a tool for financial institutions to evaluate environmental impact in line with the Global Biodiversity Framework. The first module allows asset managers and banks to assess sustainability baselines, using biophysical, spatial, and financial data to analyze portfolio impacts and identify areas for improvement. Compatible with the CSRD and TNFD frameworks, it aids in managing nature-related risks and dependencies. A key feature is the SEED Biocomplexity Index from ETH Crowther Lab, which offers detailed ecosystem and water risk data. Julie McCarthy, CEO of NatureFinance, stresses the need for finance to align with sustainability targets, with future modules focused on setting nature-centered goals and reducing environmental impact. (source: naturefinance.net)
Mizuho Invests in Pollination to Boost Global Sustainability Goals
Mizuho Bank has invested $20 million for a minority stake in Pollination, a climate and nature solutions provider, to form a strategic partnership aimed at advancing decarbonization initiatives for Mizuho’s clients and expanding Pollination’s global reach. Founded in 2019, Pollination assists organizations with net-zero and nature-positive strategies across finance, governance, and policy. This partnership will enable Pollination to extend its reach in markets like Japan, South-East Asia, and EMEA, while enhancing its investment and decarbonization efforts. Mizuho’s Yasuhiko Ushikubo emphasized the alliance’s role in equipping clients to address complex sustainability issues and promote a nature-positive future. (source: mizuhogroup.com)
Allianz Launches Surety Solution for Green Tech Investments
Allianz Trade has launched Surety Green2Green, a new solution designed to help clients invest in low-carbon technologies and renewable energy projects. The solution issues surety bonds and guarantees to secure project completion, ensuring businesses meet their contractual obligations. Projects eligible for coverage include renewable energy, carbon removal, and green buildings, aligned with Allianz’s low-carbon standards. Premiums from the bonds are invested in certified green bonds, supporting the sustainable transition of the economy. Allianz aims to provide confidence and support for initiatives critical to decarbonization and the transition to a greener future. (source: allianz-trade.com)
Optera Enhances Supply Chain Emissions Reporting with New Features
Optera has launched an updated version of its Supply Chain Manager to help companies meet growing regulatory requirements for Scope 3 emissions reporting. The platform now includes features such as facility-level emissions data from suppliers, increased calculation transparency, and automated reporting capabilities for major frameworks. With a database of over 10,000 supplier emissions disclosures, it helps companies establish baseline emissions and supports data traceability. The new update aims to streamline the decarbonization process and facilitate collaboration among cross-functional teams. Optera’s CEO, Tim Weiss, emphasized the platform’s role in driving climate action throughout supply chains. Recent polling revealed that most companies are actively working to reduce emissions across their value chains.
Leadership Announcements
DBS Appoints Shilpa Gulrajani as Head of Sustainable Finance for Institutional Banking
DBS Bank has appointed Shilpa Gulrajani as Head of Sustainability for its Institutional Banking Group. In her new role, Gulrajani will lead the bank’s sustainable finance business, focusing on driving ESG solutions to help corporates and institutions transition to a net-zero future. With over 20 years of experience at BNP Paribas, most recently as Head of Corporate Development & Sustainability for APAC, Gulrajani brings extensive expertise in ESG advisory and financing. She also co-leads the Singapore-Asia Taxonomy workstream, aimed at defining green and transition activities for sustainable investments. DBS is committed to aligning its lending and investment portfolios with net-zero emissions by 2050, becoming the first Singapore bank to join the UN-linked Net-Zero Banking Alliance in 2021.
Regulations and Law
EU Insurance Regulator Calls for Higher Capital Requirements for Fossil Fuel Assets Due to Transition Risks
The European Insurance and Occupational Pensions Authority (EIOPA) has released a report recommending higher capital requirements for fossil fuel assets held by European insurers. The report, requested by the European Commission, aims to address the high transition risks these assets face as the economy moves towards decarbonization. EIOPA suggests that insurers increase capital by up to 17% for fossil fuel-related stocks and 40% for bonds to mitigate potential investment losses. The report also assesses climate-related prevention measures and social risks but does not recommend specific actions on social risks due to insufficient data. EIOPA’s findings underscore the growing recognition of sustainability risks among insurers, particularly the risks tied to fossil fuel investments. The European Commission will now review EIOPA’s recommendations for potential implementation. (source: eiopa.europa.eu)
UK Regulator Closes Green Claims Investigation into Unilever After Changes
The UK’s Competition and Markets Authority (CMA) has closed its investigation into Unilever’s environmental claims, following improvements made by the company. The CMA had initially launched the probe in December 2023, concerned that Unilever’s claims might mislead consumers about the environmental attributes of some products. These included vague language about sustainability, exaggerated claims regarding natural ingredients, and unclear recyclability statements. However, the CMA cited Unilever’s changes to its product claims and the broader positive impact of its green claims enforcement program as reasons for closing the investigation. Unilever confirmed its commitment to responsible, transparent claims and stated that it had cooperated fully with the process. The CMA emphasized that its Green Claims Code has helped businesses understand how to promote their environmental credentials legally.
Net Zero Commitments
Meta Partners with Engie for 260 MW Solar Deal to Advance Net-Zero Goals
Meta has entered into a deal with Engie North America to secure 260 MW of renewable energy from the Sypert Branch solar project in Milam County, Texas. Expected to be operational by late 2025, the project will supply 100% of its energy output to Meta’s data center in Temple, Texas, supporting its goal of achieving net-zero emissions by 2030. Meta has already procured over 12 GW of renewable energy and aims to add 9.8 GW to U.S. grids by 2025. Engie, which developed and will operate the project, is a leader in the energy transition. Dave Carroll, Chief Renewables Officer at Engie North America, highlighted the deal’s role in supporting Meta’s growth. Urvi Parekh, Head of Clean Energy at Meta, emphasized that such collaborations are key to making the clean energy transition a reality. (source: engie-na.com)
H&M Signs Solar PPA to Boost Renewable Energy Infrastructure in Texas
H&M Group has signed a virtual power purchase agreement (VPPA) with Lightsource bp to support its climate goals and enable the construction of new renewable energy infrastructure in Texas. Under the agreement, Lightsource bp will provide energy from its 125 MW Second Division solar project in Brazoria County, set to be operational by the end of 2024. The project is expected to reduce carbon emissions by 155,000 metric tons annually and promote biodiversity through sustainable land practices, including sheep grazing. This deal is part of H&M’s commitment to sourcing 100% renewable electricity in its operations by 2030 and achieving net-zero emissions by 2040. The company aims for at least 50% of its renewable electricity to come from PPAs with new generation projects, helping to expand renewable energy capacity globally. H&M sees value in directly contributing to clean energy development, moving beyond certificates to support long-term sustainability. (source: hmgroup.com)