Weekly ESG News: Financial Services and Insurance Industry (40/2024)
News in the spotlight: TPG Rise Climate and GIC are acquiring Techem for €6.7 billion to boost their decarbonization and digital growth.
TPG Rise Climate and GIC are acquiring German energy monitoring company Techem for €6.7 billion ($7.4 billion) to support their decarbonization and digital expansion in real estate, with the deal expected to close in early 2025.
Products and Services
TPG Rise Climate and GIC Acquire Techem for $7.4 Billion
TPG Rise Climate, the climate-focused investment strategy of TPG, along with Singapore’s GIC, announced the acquisition of German company Techem for approximately €6.7 billion ($7.4 billion). Techem operates in 18 countries, serving over 13 million homes with more than 62 million digital measuring devices, and generating over €1 billion in annual revenue. The company specializes in optimizing water and heating services, as well as monitoring energy usage. Techem aims to expand its decarbonization and digital services in real estate. About 40% of global CO2 emissions come from the real estate sector, with 70% linked to building operations. The deal is set to close in the first half of 2025, with TPG Rise Climate leading and GIC as a minority investor. Techem’s CEO, Matthias Hartmann, highlighted the new partnership as key to advancing the company’s digitization and decarbonization goals. The acquisition is TPG Rise Climate’s largest deal to date.
BNP Paribas Lists Four ESG Equity ETFs on London Stock Exchange
BNP Paribas Asset Management (BNPP AM) has listed four ESG equity ETFs on the London Stock Exchange, marking a strategic move to expand its presence in the UK’s robust ETF market. These ETFs focus on sustainability and thematic investments, reflecting BNPP AM’s global ambitions. The funds are part of BNPP AM’s new ICAV structure, launched in 2023 to broaden access for international clients.
The newly listed ETFs include:
– BNP Paribas Easy S&P 500 ESG UCITS ETF
– BNP Paribas Easy MSCI ACWI SRI S-Series PAB 5% Capped UCITS ETF
– BNP Paribas Easy MSCI World ESG Filtered Min TE UCITS ETF
– BNP Paribas EASY ECPI Global ESG Infrastructure UCITS ETF
Miriam Breen has been appointed to lead Business Development for ETFs in the UK and Ireland, with the goal of driving growth and expanding BNPP AM’s reach in sustainable investing.
HSBC and IFC Launch Fund to Support Sustainable Bond Issuers in Emerging Markets
HSBC Asset Management (HSBC AM) and the International Finance Corporation (IFC) have launched a specialized fund aimed at boosting sustainable financing for corporate bond issuers in emerging markets. This initiative includes a $100 million anchor investment from IFC, supporting HSBC’s Global Emerging Market Corporate Sustainable Bond Strategy, which targets publicly listed bonds from corporate and financial institutions. Classified as Article 9 under the Sustainable Finance Disclosure Regulation (SFDR), this fund emphasizes issuer-level sustainability and transparency. The collaboration, which builds on their previous partnership since 2019 with the HSBC Real Economy Green Investment Opportunity GEM Bond Fund, aims to attract additional institutional investors and bridge the financing gap for UN Sustainable Development Goals (SDG)-aligned activities. Nicolas Moreau, CEO of HSBC AM, underscored the importance of this expanded partnership in advancing sustainability in emerging markets.
Net Zero Commitments
Morgan Stanley’s 1GT Climate Private Equity Fund Closes at $750 Million
Morgan Stanley Investment Management (MSIM) has successfully closed its 1GT climate private equity fund, securing $750 million to focus on reducing global carbon emissions. The fund aims to prevent or remove one gigaton of CO2 emissions by 2050, aligning its financial incentives with climate goals. The 1GT fund targets innovative companies in mobility, power, and sustainable food sectors across North America and Europe. Vikram Raju, MSIM’s Head of Climate Private Equity Investing, emphasized its commitment to supporting growth in companies that significantly lower the carbon footprint. Financial incentives for the fund’s team are tied to achieving emissions reduction goals, with half of their compensation linked to the gigaton target. The fund has made significant investments in companies like Instagrid, Huel, and Everstream Analytics, reflecting Morgan Stanley’s broader strategy of integrating environmental sustainability into its investment process. Overall, the 1GT fund sets a benchmark for climate-focused investment strategies, promoting both environmental and financial sustainability.
India Introduces Carbon Accounting Framework for Airports to Achieve Net Zero Emissions
India has launched a Carbon Accounting and Reporting Framework to help airports reach carbon neutrality and net zero emissions. The Ministry of Civil Aviation requires airport operators to map carbon emissions and work toward carbon neutrality in a phased manner. Over the past decade, India has constructed 12 new greenfield airports with carbon neutrality as a priority, and 73 airports have switched to 100% green energy since 2014. The goal is for all airports to use green energy by 2023 and achieve net zero emissions by 2030. Major airports in Delhi, Mumbai, Hyderabad, and Bengaluru have already received international recognition for their carbon neutrality efforts. Solar power installations and green energy procurement further demonstrate India’s commitment to sustainable aviation.
Regulatory & Law
EU Commission Warns 17 Member States Over Failure to Implement CSRD Rules
The European Commission has warned 17 EU member states, including Germany, Spain, and Poland, for failing to implement the Corporate Sustainability Reporting Directive (CSRD) into national law by the July 6, 2024 deadline. The CSRD significantly expands sustainability reporting requirements for over 50,000 companies. The directive took effect in 2024 for large companies, with reports due in 2025, and will apply to smaller firms in the following years. The Commission warned that non-compliance could disrupt harmonized sustainability reporting and affect investors’ ability to assess corporate performance. If the states do not comply within two months, the Commission may take legal action. The Commission also issued warnings to 26 member states for delays in implementing renewable energy targets under the Renewable Energy Directive.
World Bank Launches Sustainable Finance Center for Francophone Africa
The World Bank Group has launched the Sustainable Finance Knowledge Center for Francophone Africa to empower companies and financial institutions in integrating sustainable finance into their business models. The platform offers training primarily in French to address the sustainable finance knowledge gap in the region. The Center aims to equip businesses with strategies for climate adaptation, targeting countries vulnerable to climate change. Vincent Arthur Floreani, IFC Country Head for Benin, noted its potential to enhance green finance capacity. This initiative involves six partners, including the IFC Green Bond Technical Assistance Program and the West African Development Bank, fostering a network of climate finance experts to promote resilient economic growth in Francophone Africa.
Leadership Announcement
KPMG Appoints Maura Hodge to Lead US Sustainability Practice
KPMG has appointed Maura Hodge as the new US Sustainability Leader, taking over from Rob Fisher, who has transitioned to lead the firm’s Financial Services and Insurance consulting practice. Hodge, who has been with KPMG for nearly 20 years, previously served as ESG Audit Leader, focusing on ESG measurement, reporting, and assurance. She brings over 15 years of experience in auditing financial statements and corporate sustainability information. Hodge emphasized the strategic importance of sustainability in business and KPMG’s role in helping clients navigate related challenges. Fisher, who led the sustainability practice for 3.5 years, praised the accomplishments of the team and expressed confidence in Hodge’s leadership for the future of KPMG’s sustainability services.