Weekly ESG News: Financial Services and Insurance Industry
News in the spotlight: Auquan raises $3.5m to grow generative AI ESG services for financial services
Auquan, an AI innovator for financial services, has raised $3.5 million in a seed round led by Neotribe Ventures. They have launched the Auquan Intelligence Engine™, powered by retrieval augmented generation (RAG) AI, which extracts intelligence from unstructured data to assist with business due diligence, research, compliance, and risk monitoring. The product has already been adopted by major financial institutions. Auquan’s RAG AI combines information retrieval systems and generative AI to provide up-to-date, credible, and accurate insights for financial services, addressing the industry’s need for dynamic, context-aware generation. The company will use the funding to further develop its AI-powered intelligence engine and expand its presence in the United States.
Weekly Sustainable Finance Newsletter 42/2023
ESG News of the last week in detail
Products and Services
Robeco enhances sustainability disclosures on factsheets and websites
Robeco is enhancing sustainability disclosures on over 100 factsheets and product pages on its website. This move aims to provide more detailed information on sustainability characteristics for all investment products, covering aspects such as environmental footprints, alignment with Sustainable Development Goals (SDGs), engagement levels, exclusions, and ESG ratings from external data providers. The company’s proprietary sustainability reporting tool, ESGenius, will create graphics illustrating these sustainability aspects, promoting transparency and adherence to sustainability principles throughout its product range. This initiative reflects Robeco’s commitment to comprehensive sustainability reporting and avoids cherry-picking in their disclosures, ensuring they maintain their leadership position in sustainable investing.
Copenhagen Infrastructure Partners (CIP) closes to new funds
Copenhagen Infrastructure Partners (CIP) has closed two funds, CI Advanced Bioenergy Fund I (CI ABF I) and CI Green Credit Fund I (CI GCF I), with a total of approximately EUR 2 billion in commitments from investors in the Nordics, Europe, and Asia Pacific. CI ABF I, with EUR 750 million in commitments, focuses on producing clean fuels from organic waste, while CI GCF I, with EUR 1 billion in commitments and an additional EUR 200 million in co-investments, provides debt financing for renewable energy projects. CI GCF I has already closed three investments in Europe and North America. CI ABF I invests in advanced bioenergy infrastructure projects in Europe, producing green gas and green fuels from sustainable feedstocks, including waste wood and agricultural biowaste. Multiple projects in Denmark, the Netherlands, Belgium, and Spain have secured investment decisions to produce Renewable Natural Gas and biogenic CO2 from various waste sources.
Regulatory and Law
MAS published guidelines for a Net Zero Economy for consultation
The Monetary Authority of Singapore (MAS) has issued consultation papers outlining guidelines for banks, insurers, and asset managers on transition planning for a net-zero economy. MAS emphasizes engagement over divestment, encourages a multi-year approach to assessing climate-related risks, and highlights the importance of considering environmental risks beyond climate-related ones. MAS recognizes the need for financial institutions to actively support their clients and investee companies in decarbonizing their activities. Public consultation on these guidelines is open until December 18, 2023.
EBA recommends enhancements to the Pillar 1 framework to capture ESG risks
The European Banking Authority (EBA) has recommended updates to the Pillar 1 framework to address environmental and social risks in the banking sector. These risks are increasingly affecting traditional financial risks and the stability of the financial system. The EBA suggests risk-based improvements to the framework, such as incorporating environmental risks into stress testing and encouraging the consideration of these factors in credit assessments. In the medium to long term, EBA explores scenario analysis, transition plans, and revisions to supervisory formulas to better address environmental risks.
UK Government launched a call for evidence for Greenhouse Gas (GHG) Scope 3 emissions
The UK’s Department for Energy Security and Net Zero is soliciting feedback on the feasibility, advantages, and drawbacks of including Scope 3 greenhouse gas emissions reporting in the country. This initiative is in response to the International Sustainability Standards Board’s (ISSB) new standards for sustainability disclosures, which cover Scope 1, Scope 2, and Scope 3 emissions. While Scope 1 and Scope 2 emissions reporting is mandatory for large organizations through the Streamlined Energy and Carbon Reporting (SECR) framework, Scope 3 reporting remains voluntary. The goal is to enhance transparency, energy efficiency, and accountability in environmental reporting. The call for evidence is open to a broad audience, including UK businesses, the investment community, trade associations, academics, and other stakeholders. Responses may be shared with government bodies and the UK Sustainability Disclosure Technical Advisory Committee. The consultation period ends on December 14, 2023.
EU delays European Sustainability Reporting Standards by two years
The European Commission is proposing a two-year delay in implementing certain elements of its sustainable finance framework, aiming to ease reporting burdens for companies, particularly small and medium-sized ones. This is in response to complaints about the challenging compliance pace. The EU Parliament’s attempt to overhaul the ESRS recently failed. The European Commission is also reviewing other aspects of its ESG framework. The European Financial Reporting Advisory Group (EFRAG) plans to provide guidance for sustainability reporting requirements. EFRAG aims to complete guidelines for banking, insurance, and capital markets in 2024. The commission is committed to reducing reporting requirements by about 25% while working with the European Parliament and the council to balance reducing burdens with preserving policy objectives.
UN Global Compact launches new guidance on Sustainable Infrastructure
The UN Global Compact has launched new guidance and assessment tools in Beijing, China, aimed at promoting sustainable infrastructure development within the Belt and Road Initiative (BRI). These resources, titled “Global Compact Ten Principles Applied in Infrastructure Sectors under the Belt and Road Initiative” and “Maximizing Impact towards the SDGs,” emphasize the role of businesses in driving economic growth while adhering to principles of human rights, labor practices, environmental sustainability, and anti-corruption. The UN Global Compact CEO, Sanda Ojiambo, stressed the importance of inclusive and sustainable infrastructure projects. Additionally, the United Nations introduced an online platform for Partnership Data Hub on Sustainable Infrastructure for the BRI and shared private sector case studies on advancing corporate sustainability in support of the Sustainable Development Goals. This initiative received support from the UN Peace and Development Fund (UNPDF) to facilitate collaboration among various stakeholders.
ESG Data and Analytics
Auquan raises $3.5m to grow generative AI ESG services for financial services
Auquan, an AI innovator for financial services, has raised $3.5 million in a seed round led by Neotribe Ventures. They have launched the Auquan Intelligence Engine™, powered by retrieval augmented generation (RAG) AI, which extracts intelligence from unstructured data to assist with business due diligence, research, compliance, and risk monitoring. The product has already been adopted by major financial institutions. Auquan’s RAG AI combines information retrieval systems and generative AI to provide up-to-date, credible, and accurate insights for financial services, addressing the industry’s need for dynamic, context-aware generation. The company will use the funding to further develop its AI-powered intelligence engine and expand its presence in the United States.
Net Zero / Decarbonization Commitments
CPP Investments Publishes 2023 Report on Sustainable Investing
Canada Pension Plan Investment Board (CPP Investments) has published its 2023 Sustainable Investing Report, emphasizing its commitment to achieving net-zero greenhouse gas emissions by 2050 and integrating sustainability factors into investment decisions. The report highlights their active ownership model, involving engagement with portfolio companies to drive long-term sustainability outcomes. CPP Investments has made progress toward its net-zero goal, with investments in green and transition assets reaching $79 billion by March 31, 2023, and the achievement of carbon neutrality for its internal operations. They have also applied a decarbonization investment approach to various assets, developing transition plans and increasing value within their portfolio.
Deutsche Bank publishes initial Transition Plan and further net-zero targe
Deutsche Bank has released its Transition Plan and new net-zero targets for high-emission sectors. This plan outlines the bank’s commitment to achieving net-zero emissions by 2050, covering its own operations, supply chain, and financing provided to clients. Notably, the bank has set additional net-zero targets for coal mining, cement, and shipping sectors, representing a significant step in reducing carbon-intensive industries. As of the end of 2022, approximately 55% of financed emissions in the corporate loan portfolio are now covered by net-zero pathways. Deutsche Bank is dedicated to playing a leadership role in sustainability and decarbonizing the economy. The bank’s plan also focuses on nature and biodiversity and includes the formation of a Nature Advisory Panel to assess nature-related risks. This comprehensive approach reflects the bank’s commitment to addressing climate change and transitioning towards a more sustainable future.