Weekly ESG News: Financial Services and Insurance Industry
News in the spotlight: Impact Cubed introduces “Impact Cubed SmartESG Global Sustainability Index”
During New York Climate Week, Impact Cubed launched the ‘Impact Cubed SmartESG Global Sustainability Index’ in collaboration with a top European financial institution’s pension plan. This innovative index combines fiduciary standards with optimal ESG outcomes, enabling pension funds to customize their ESG impact without increasing tracking error. It achieves a 90% reduction in scope 1&2 carbon intensity, offers superior environmental performance with 23% of revenue from environmentally positive activities, and enhances governance and social impact compared to other ESG benchmarks. According to Aston Chan, Head of Investment Solutions at Impact Cubed, this Smart ESG index represents the future of sustainable investing, delivering significant impact without additional risk.
Weekly Sustainable Finance Newsletter 38/2023
ESG News of the last week in detail
Products and Services
HSBC plans to provide $1bn of funding for climate tech companies
HSBC has announced a $1 billion financing initiative to support early-stage climate tech companies globally. The funding will assist startups working on solutions such as EV charging, battery storage, sustainable food and agriculture, and carbon removal technologies. This move comes as venture capital funding for climate startups faced a 40% decline in the first half of 2023. HSBC’s goal is to expedite the market entry of critical climate technologies and focus on promising companies worldwide. They aim to back these innovations, recognizing that nearly half of the emissions reductions needed for 2050’s net-zero target depend on emerging technologies. HSBC also plans to invest $100 million in Breakthrough Energy Catalyst to support demonstration projects.
Galvanize Climate Solutions closes over $1bn for equity fund
Galvanize Climate Solutions has successfully closed its Innovation + Expansion Fund at over $1 billion, making it one of the largest climate venture funds to date. The fund, led by experienced investors and supported by a team of interdisciplinary experts, targets early- to growth-stage climate companies. It aims to accelerate decarbonization by providing not only capital but also resources to help these companies scale. The fund has already invested in 11 companies across various sectors, including electricity, transport, industry, buildings, agriculture, and carbon removal.
ESG Data and Analytics
CDP and XBRL announce partnership to accelerate digital sustainability disclosure
CDP and XBRL International have joined forces to boost global digital sustainability disclosure. CDP, known for its environmental disclosure system, will incorporate XBRL’s best practices, enhancing its digital capabilities and data collection. With over 18,700 companies disclosing environmental data through CDP in 2022, the partnership aims to ensure that these disclosures are accessible and comparable, aligning with global standards like the IFRS S2 climate disclosure standard. The collaboration seeks to facilitate the transparent flow of sustainability information and improve access to finance, supporting sustainable decision-making on a global scale.
Impact Cubed introduces “Impact Cubed SmartESG Global Sustainability Index”
During New York Climate Week, Impact Cubed launched the ‘Impact Cubed SmartESG Global Sustainability Index’ in collaboration with a top European financial institution’s pension plan. This innovative index combines fiduciary standards with optimal ESG outcomes, enabling pension funds to customize their ESG impact without increasing tracking error. It achieves a 90% reduction in scope 1&2 carbon intensity, offers superior environmental performance with 23% of revenue from environmentally positive activities, and enhances governance and social impact compared to other ESG benchmarks. According to Aston Chan, Head of Investment Solutions at Impact Cubed, this Smart ESG index represents the future of sustainable investing, delivering significant impact without additional risk. Read more here.
Regulatory and Law
TNFD publishes recommendations for nature-related risk disclosure
The Taskforce on Nature-related Financial Disclosures (TNFD) has released its final Recommendations, aiming to integrate nature-related risks into financial and business considerations. Developed over two years with input from over 200 companies and financial institutions, these Recommendations align with existing reporting standards and global biodiversity goals. Companies like GSK have committed to adopting them, signaling a shift in global financial flows toward nature-positive outcomes. These Recommendations provide a valuable framework for assessing and disclosing nature-related risks and opportunities, aligning corporate reporting with climate and biodiversity goals. It’s a significant milestone in addressing nature loss as a critical financial risk.
SEC adopts new rule to prevent misleading claims in investment fund names
The Securities and Exchange Commission (SEC) has adopted amendments to the Investment Company Act “Names Rule” to prevent misleading fund names and enhance investor protection. The rule now requires more funds to adopt an 80 percent investment policy if their names suggest a particular investment focus. It also mandates quarterly portfolio reviews and specific time frames for compliance. Additionally, prospectus disclosure requirements for fund names have been strengthened, and reporting and recordkeeping requirements have been introduced. These amendments will take effect 60 days after publication in the Federal Register, with larger fund groups having 24 months and smaller groups having 30 months to comply.
400 NGOs and business addressed concerns about weakening of net zero policies by the UK government
Over 400 NGOs and businesses, including UKSIF, Nestle, IKEA, Brunel, Aviva Investors, and EON, have expressed serious concerns in an open letter to the UK Prime Minister about any potential weakening of the country’s net-zero policies. They emphasize the long-term economic harm such a move could cause and the negative impact on the UK’s international climate leadership. The letter highlights the economic benefits of swift action on achieving net zero, emphasizing the importance of smart policies to promote clean technologies and support for vulnerable communities. Delaying clean tech development exposes households to volatile fossil fuel markets and job losses, while also burdening the public purse with substantial energy bill subsidies.
GFANZ Launches Consultation on Transition Finance Strategies and Measuring the Impact on Emissions
The Glasgow Financial Alliance for Net Zero (GFANZ) Secretariat has launched a consultation to refine its transition finance strategies and measure their impact on reducing emissions. These strategies include financing climate solutions, supporting assets aligned with a 1.5°C pathway, transitioning assets toward a 1.5°C-aligned path, and phasing out high-emission assets. The consultation seeks feedback on segmenting portfolios, estimating decarbonization contributions, and introduces the concept of Expected Emissions Reductions (EER). The goal is to provide transparency, consistency, and clarity in transition finance activities. The public consultation will run until November 2, 2023, with the final report to be published by COP28. GFANZ leaders stress the importance of accurate measurement and transparency for mobilizing private finance to combat climate change
Aviva Investors appoints Louise Piffaut as ESG head for liquid markets
Aviva Investors has appointed Louise Piffaut as head of ESG, liquid markets, completing its ESG senior management team. Piffaut, previously head of ESG integration for equities, will oversee the firm’s stewardship, voting, engagement activities, and ESG integration. This move aims to ensure a comprehensive and integrated approach to support sustainability initiatives. The ESG senior management team includes global head of ESG Mirza Baig, head of sustainable outcomes Sam Tripuraneni, head of responsible investment for real assets Ed Dixon, ESG strategy director Jess Foulds, and sustainability ambition director Candice Thorpe.
Net Zero / Decarbonization Commitments
Norwegian wealth fund announced stricter demand for climate risk handling
Norway’s $1.4 trillion sovereign wealth fund, the world’s largest, has announced stricter climate risk demands for companies it invests in, emphasizing the transition to a low-carbon future over target setting. The fund, which derives revenues from oil and gas production, owns stakes in around 9,200 companies globally. Companies are now required to establish consistent key performance indicators (KPIs) for measuring their climate transition plans, disclose progress on their net-zero strategies annually, and demonstrate how executive pay aligns with these targets. The fund also addressed the use of voluntary carbon credits by companies, recommending a focus on emissions reduction while allowing credits as a supplementary signal of climate ambition.