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ESG Weekly News Update: April 22, 2022


Happy Earth Day! The first Earth Day was held on April 22, 1970, mobilizing more than 20 million Americans to call for increased protections for the planet. Earth Day is recognized worldwide and is about raising public awareness about environmental issues affecting our planet. We must all do our part to help protect and save the earth for generations to come. And remember – Earth Day is Every day!

Check out these websites and articles to learn and hear more about this day that celebrates our beautiful planet.

  • LinkedIn post from our ESG Managing Director, Derek Young

  • The History of Earth Day

  • National Geographic: How The First Earth Day Ushered In A Golden Age of Activism

  • CBS News: 10 Earth Day Facts That Might Surprise You

  • History: The First Earth Day

  • Podcasts to tune into:

  • For What It's Earth – Quick breakdown of current environmental issues

  • Climate Change for Beginners: An Extinction Rebellion Podcast – FAQs about climate change

  • Mothers of Invention – Feminist climate change solutions

  • Outrage + Optimism – Politics behind climate change

  • Sustainable(ish) – Small ways to integrate sustainability into your life

  • How to Save a Planet – Smart and inspiring stories to get you energized about climate change

  • Climate of Change – Cate Blanchett and Danny Kennedy are joined by guests to discuss climate change and its development

  • Comedians Conquering Climate Change – Hosted by Esteban Gast

  • The Climate Question – Poses questions as to why we find it so hard to save our own planet

General ESG News

Forbes: Why Communications Should Be Part of ESG Strategy Planning

  • PR firms are increasingly being asked to support ESG-related communications. Both PR agencies and audiences are becoming more familiar with greenwashing and its consequences, and professional communicators are increasingly realizing the role they can have in supporting corporate change and fostering the conversations that ignite action.

  • Businesses are relying on outside PR agencies to help avoid ‘groupthink’ and to maintain a wider perspective on the ESG and sustainability landscape. There are several important steps to take to get started with ESG communications:

  • Pool expertise and include a range of voices

  • Conduct a thorough audit of the business

  • Tie all ESG and business components together

  • Capitalize on what the business already has

  • With ESG issues continuing to gain momentum, it is crucial for companies to engage externally and to maintain open and transparent lines of ESG communication.

Forbes: Embracing ESG: Funding Options for Socially Conscious Businesses

  • In most cases, social enterprises and companies committed to ESG must also fulfill business and financial objectives, and each funding option comes with benefits and drawbacks:

  • Venture capital can provide sizable sums of funding, but it can be difficult to obtain and is known to focus on ‘growth at all costs.’

  • Business loans come without the pressure that venture capitalists can put on business owners, but lending terms are generic and not tailored to a business’s unique cash-flow situation, which can make their thresholds too high for some social enterprises to meet.

  • Revenue-based financing offers the advantage of flexibility, but the associated revenue requirements can be unreachable.

  • Social enterprises should choose the funding option that best fits their situation and allows them to fulfill their purpose without compromising for money.

CIO: CIOs can and should play a pivotal role in ESG strategy

  • A successful ESG strategy relies upon IT, providing transparent, data-driven insights and providing a way to track progress.

  • CIOs have an opportunity to set the tone for their organizations and are an integral part of defining an organization's ESG strategy and incorporating this into their own digital transformation efforts. Here are useful first steps:

  • Step 1: Identify enterprise ESG goals that IT can deliver through digital transformation

  • Common technology led ESG goals include:

  • Environmental: Lowering emissions using a combination of IoT, remote monitoring, artificial intelligence, and machine learning.

  • Social: Supporting DEI by establishing talent and supplier diversity programs and investing in solutions that promote health and wellbeing.

  • Governance: Bolstering data security, maintaining regulatory compliance, and standardizing ESG reporting across the organization.

  • Step 2: Weave ESG into the fabric of your digital strategy.

  • Step 3: Get buy-in and build the business case for strategic ESG initiatives.

SeattleTimes: 1,500 Gen Zers were polled about climate change. Here are the results

  • This survey found that overall, climate change is a primary concern for a majority of teenagers, but it is also one of their biggest sources of motivation.

  • 84% of teenagers believe climate change left unchecked will trigger global political instability and render parts of the planet uninhabitable.

  • A large majority of respondents feel companies and legislators are not doing enough, and said they still wish to become involved in helping the planet’s future.

  • Just under 50% feel their community is doing enough to protect their environment, and nearly 70% fear their families will soon experience flooding, wildfires, extreme heat, and other extreme weather events exacerbated by the burning of fossil fuels.

  • 42% are worried or anxious about the state of the environment 50 years from now.

  • 39% are worried or anxious about the state of the environment just one year from now.

MPRNews: Battle over carbon capture as tool to fight climate change

  • Residents of Ascension Parish, Louisiana are afraid a $4.5 billion plant designed to capture climate-changing carbon and make clean-burning hydrogen fuel will do more harm.

  • There are several other carbon capture and storage projects proposed or in the works throughout the U.S. and the companies behind them claim they can successfully remove carbon from the air, then safely transport and store the carbon underground.

  • Carbon capture and storage projects are gaining traction since Congress approved $3.5 billion for them in 2021.

  • Opponents of carbon capture and storage maintain the technology is unproven and has been less effective than alternatives such as solar and wind at decarbonizing the energy sector.

  • A study in 2020 by researchers from the University of California, San Diego, found over 80% of 39 projects that have sought to commercialize carbon capture and storage ended in failure. The study cited lack of technological readiness as a top factor.

Triple Pundit: The Challenge of Plastic and Achieving Sustainable Packaging

  • The U.S. Plastics Pact is a partnership of brands, retailers, nonprofits, agencies, and governments working to make all plastic packaging recyclable, reusable, or compostable by 2025. The Pact has outlined several targets and a roadmap for achieving them.

  • One challenge in sustainable packaging is defining first what plastic packaging is ‘problematic,’ then what recyclable, reusable, or compostable packaging means. The Pact has worked to identify what materials it considers problematic or unnecessary, including opaque or pigmented PET bottles, labels with adhesives or inks that can make the entire package non-recyclable, Styrofoam, PVC, and things like single-use cutlery.

  • According to Pact members, 66% of its business members are already rolling out plans and initiatives to eliminate the problematic materials, and this is crucial, because these members account for 33% of all plastic packaging by weight in the U.S.

  • It is also important to reduce the number of types of plastic resins used in plastics, because the reduction in variation can make it possible for mechanical plastic recycling to scale up.

  • Major manufacturers and retailers, including Mars, Target, and Walmart, are already taking significant steps toward reducing plastic waste, eliminating difficult-to-recycle materials, and increasing the amount of recyclable and reusable packaging they use.

Forbes: Will Jefferies Succeed In Bringing ESG Credibility To Wall Street?

  • Aniket Shah, Jefferies new Global head of ESG& Sustainable Finance Strategy was interviewed by Forbes and made the following statements:

  • The single largest ambition is to simplify for our clients and to focus their attention on the most commercial and most relevant parts of ESG for them.

  • The biggest impediment to implementing effective zero-emission strategies is public policy.

  • ESG ratings are an answer to a non-clearly delineated problem. Anything that contains subjectivity will engender different methodologies and eventually divergence, just as we experience divergence in credit risk ratings.

  • The perpetual growth paradigm is one the world might no longer allow. In this context, I would like to point out that the latest IPCC Working Group 3 Report conveyed that significant lifestyle changes can lower 40-70% of greenhouse gas emissions by mid-century.

  • High income countries should compensate the developing world for their efforts in achieving energy transition, investors should advocate for that going forward.

Reuters: Brand Watch: In the face of climate change and war, brands need to both act and advocate

  • Brands are political actors – they benefit from political decisions, and they seek to influence decisions through lobbying, donations, etc. The Ukraine crisis has given international brands no option but to respond. Many announced that they were suspending their Russian operations, and others took explicit political stances. However, most brands are being more cautious, stating they are retreating from the region due to legal barriers or logistical complications. These brands want to ‘keep the door open’ should the situation normalize.

  • Many consumers want to see Western brands join into the moral outrage, and brands are increasingly being treated as ethical agents. They will be judged on their response to these issues, not just on their compliance and performance.

  • It is also important to look at what brands are saying versus what they are actually doing. Additionally, it is not yet clear whether the stakeholder demands for brands to act in response to this military crisis will expand to other areas of political activity, environmental concerns, human rights, etc.

  • Brands must also be transparent in why they choose to act or not act – some are unable to entirely remove their operations from the region due to franchising rules. Others are choosing to support their staff in the region. At minimum, transparency can reduce misinterpretation.

Forbes: Owning Net-Zero: Small Actions Make A Big Difference In B2B Relationships

  • Up to 95% of the supply chain of large companies consists of small and midsized companies as vendors, and the “smaller” vendors can significantly impact the entire supply chain’s overall sustainability and performance. Therefore, supply chain transparency is important.

  • Resource management is a fundamental sustainability issue that midsize companies must assess regardless of the industry. Midsize businesses can tie their operations to three agenda items:

  1. Meet current and anticipated future regulatory compliance needs.

  2. Improve the efficiency of existing systems by embedding sustainability metrics and insights into core and differentiating business processes.

  3. Create socially equitable new products, services, and business models.

  • Companies can leverage their data to measure, manage, and maximize ESG performance and fulfill each customer’s requirements. Moreover, “combining operational, financial, and experiential data from the entire value chain with a supply chain control tower provides deep, industry-specific insights and intelligence that can be embedded in processes and extended across the business network.”

The Globe and Mail: Globe Climate: An Investigation Into The Murky World Of ESG Ratings

  • Globe Climate is a newsletter about climate change, environment, and resources in Canada. You can sign up for Globe Climate here. It is updated every Monday.

  • Noteworthy reporting topics this week include emissions, energy, wildlife, wine, and in-depth with The Narwhal.

Diversity, Equity, and Inclusion

All Work: The Great Retention: Why Leaders Should Re-Evaluate Their DE&I Retention Strategies

  • For companies with poor retention rates, instead of blaming the workers who leave, it is better to look inward and examine how and why the company’s practices may be to blame. Additionally, companies cannot overlook the fact that there are costs for failing to retain diverse talent and learning how to retain the most marginalized workers will ultimately benefit everyone.

  • Retaining talent from underrepresented groups goes beyond providing an inclusive workplace and means investing in their growth. It also involves more than preventing microaggressions – beyond not doing harm, they must also do good.

  • Companies should articulate clear retention plans, including things like “stay interviews” that function like wellness checks for employees, as well as employee resource groups and flexible work schedules. It is important to “remove policies that unnecessarily restrict who a person can be at work and to add resources that support different ways of being,” according to Deanna Singh, leadership, and DE&I expert.

  • Recent research found that women and minority professionals are leaving organizations that keep them static – it is not always about compensation. They do not want to be caught in the trap of “tokenism,” where their employers view their presence as satisfying diversity expectations and assuming they will stay if they are paid well.

GCN: Diversity can help bridge IT workforce gap, NASCIO finds

  • The National Association of State Chief Information Officers (NASCIO) produced a new report of its study that found that states need to prioritize diversity and inclusion (D&I).

  • Some organizations have been able to attract diverse candidates by partnering with community colleges and recruiting through social media, but others face many barriers.

  • NASCIO recommends improving D&I by “ensuring the existing diverse workforce feels comfortable, designating a senior executive sponsor for D&I initiatives and establishing a formal program with measurable goals. Employee-led D&I councils are another effective way to promote inclusivity.”

  • NASCIO also stated that long-term D&I success may be achieved if states embrace remote and flexible work options because traditionally underrepresented groups often view this more positively. Agencies should continuously measure employee engagement in diversity and scrutinize hiring practices. The report also suggested that the workforce demographics of an office should mirror those of the local community

Washington Business Journal: Your Guide to DEI

  • Washington Business Journal’s second Corporate Diversity Index found that larger, public companies, tended to demonstrate clear paths to equity accountability and more detailed formal plans to identify and address gaps, likely because they have more shareholders to consider, increased public scrutiny, and more money to take action. The smaller companies varied greatly. They often do not know where to begin with their DEI strategies or let DEI slip through the cracks.

  • The equity manual:

  • Evaluate and view processes with a broad perspective on DEI.

  • Choose the right auditor.

  • Prepare for a painful revelation.

  • Take a comprehensive approach.

  • Under the small business category, PTA-Pinnacle Talent Acquisition and MBA Growth Partners were two companies that stood out as being 100% owned, operated, led, and staffed by people of color at the time of the surveys.

Forbes: Microaggressions, diversity, and career advancement: Why Black workers are joining the Great Resignation

  • Employees have different motivations as they consider switching jobs. 49% of the workforce think they will make more money simply by changing jobs, and most workers identify compensation as their top consideration, according to recent research.

  • Black workers were more likely to look for different jobs because of a lack of career momentum and systemic glass ceilings that create barriers to advancements such as promotion gaps and little support or allyship.

  • According to Being Black in Corporate America, 23% of Black men feel someone of their race or ethnicity would never achieve a top position at their companies, and 65% said Black employees must work harder to advance.

  • Recent research finds that Black people are less likely to feel valued at work. One of Savanta’s reports found that over 80% of BIPOC employees have experienced some sort of microaggressions in the workplace, and 40% of Black women state their qualifications have been questioned and that they frequently needed to provide more evidence of their competence compared to 28% of white women.

  • The four key drivers to retain Black employees and employees of color are “an inclusive culture, effective people managers, family sustaining wages and benefits, and transparent career pathways.”

The HR Director: Five Actions to Create Systemic Culture Change in Your Organization

  • The pandemic exposed and widened existing gaps that have acutely impacted people of color and women in the workforce.

  • Organizations need scalable ways to transform their workplaces and drive real change to be more diverse, equitable, and inclusive. The following are five powerful actions organizations can take to begin to drive meaningful change.

  1. Utilize an evidence-based approach

  2. Dig for deep insight into employee experience

  3. Drive a mindset shift from the very top down

  4. Create a deliberate connection between DE&I and organizational culture, values, and strategy

  5. Embedded DE&I into everything through conscious change management.

ESG Disclosures, Standards, Rankings, and Reporting

Investment Exec: Better and more integrated ESG investing standards are progressing

  • National Bank Financial noted: The number of ESG exchange-traded funds (ETFs) doubled to 100 in 2021 from 50 in 2020, while inflows accelerated in both years, benefiting ESG-themed equity, fixed-income, and asset-allocation ETFs.

  • The Canadian Securities Administrators (CSA) published guidance on ESG-related investment fund disclosures that align Canadian regulations with international standards on investment regulation and decision-making.

  • “Focusing on only one aspect of ESG profoundly misunderstands the concepts of ESG and responsible investing,” says Dustyn Lanz, senior advisor at ESG Global Advisors.

Business World: Why analytics are essential to quality non-financial corporate reporting

  • The recent Global Corporate Reporting Survey from EY reveals that investors and other stakeholders want credible, consistent ESG disclosures on material issues.

  • As the sheer amount of ESG data increases, the task of manually interpreting the data becomes impossible. It is no surprise that the EY survey found the top technology investment priority for finance leaders over the next three years to be advanced and predictive analytics.

  • According to the survey, the biggest obstacles for finance teams are the volume of external data, issues with data quality and comparability, and insufficient data integration. ESG data is meant to be turned into actionable insights with things like statistics, visualization, and predictive modeling, and this is made difficult when the data is unreliable, disorganized, etc.

  • Cross-disciplinary collaboration is essential to build new analytics capabilities, and finance teams will need to be supported by appropriate budgeting and resources.

FactSet: Do S&P 500 Copmanies That Discuss “ESG” on Earnings Calls Have Higher “ESG” Ratings?

  • FactSet Document Search compared instances of companies citing “ESG” during earnings calls to these companies’ ESG ratings and found that companies that are making more progress on ESG initiatives and scoring higher on ESG ratings may be more prone to discussing ESG during their earnings calls. FactSet will continue to monitor this correlation going forward.

ESG Today: FCA to Require Companies to Disclose on Board and Executive Diversity

  • The Financial Conduct Authority (FCA), the conduct regulator for financial services firms and financial markets in the UK, announced Wednesday that it has finalized rules for its listed companies to disclose on diversity and inclusion at board and executive committee levels.

  • Under the new listing rules, among many topics, companies will have to:

  • Include a statement in their annual financial report setting out if they have met specific diversity targets set by the regulator

  • Aim for targets of having women make up at least 40% of the board, with one woman in at least one senior board position

  • These new rules will apply to all UK-listed companies, including UK and overseas companies with equity shares, or equity shares represented by certificates.

  • The FCA is introducing the rules on a ‘comply or explain’ basis, requiring companies that do not meet targets to explain why not.

ESG Today: Moody’s Expands ESG Credit Impact Scores to Cover Retail & Apparel, Construction, Building Materials Companies

  • Moody's Investors Service announced that it has expanded its ESG profile and credit impact scores to new sectors, including retail and apparel, construction, and building materials.

  • Moody's integrates ESG considerations into the credit analysis of companies and organizations in these sectors, including entity risk exposure and the degree of credit impact. The analysis will include two types of ESG scores: issuer profile scores (IPS) and credit impact scores (CIS).

Insurance Journal: SEC Chief Expects ‘Fair Number’ of Large Companies to Disclose Scope 3 Data in Climate Rule

  • Last month, The Securities and Exchange Commission (SEC) unveiled a landmark rule that would require some companies to disclose scope 3 emissions. SEC Chair Gary Gensler said the rule aims to capture sizable number of the roughly 1600 U.S.-listed firms that are deemed “accelerated filers.”

  • A fair number of companies have made commitments and targets for their future, including Scope 3. disclosures. If a company has said to the public and stakeholders that it has a goal to mitigate the climate risk, one would say that it is important to require them to disclose Scope 3 emissions.

Investment Trends

Financial Advisors: Majority Of Investors Say ESG Allows Them To Make Positive Change

  • A recent survey by the Finra Investor Education Foundation and the National Opinion Research Center at the University of Chicago (NORC) has found that 57% of investors think ESG can be an avenue for positive change in the world, but just 24% are able to correctly define ESG investing.

  • The study stated, “Although media coverage of ESG investing has substantially increased in recent years, only 28% of investors report being at all familiar with ESG investing.” Additionally, women reported to have significantly lower levels of familiarity with ESG than men.

  • The study’s authors concluded that even if they lack a nuanced understanding, they should at least recognize and try to understand that environmental issues are what motivate many ESG investors.

GreenBiz: Bridging the human rights gap in ESG investing

  • Despite its growth and increasing prevalence, ESG as a framework does not adequately capture harm to people, risks to businesses, or guide business decisions that consider human rights.

  • Human rights are universal, cutting across civil, political, economic, social, cultural, and environmental issues (privacy, housing, and a healthy environment), not a subset of niche social topics (child labor and human trafficking). Crucially, human rights are inalienable and should be upheld regardless of their value for business success.

  • The article author states, “In 2021, companies implicated in serious human rights abuses in Asia and Africa were included in key ESG indices and funds. Institutions with strong rhetoric on human rights also lent money to regimes responsible for severe human rights violations, such as Saudi Arabia, Egypt, Russia, and Belarus.”

  • Renewable energy is key to combatting climate change, in order for the transition to renewable energy to be sustainable, renewable energy must respect human rights.

  • Materiality is being redefined to include risks to people and the planet by policymakers and reporting frameworks.

MoneyControl: Institutional investors are flexing their ESG muscles

  • “Universal owners” are trying to strengthen companies’ ESG practices by supporting ESG-related proposals and removing directors who stand in the way.

  • ESG critics and many companies and investors either do not understand or are unwilling to accept the distinction between using ESG to invest and using it to express values or political views. It will not be easy to untwine the impact of ESG initiatives from the several other variables that cause stock prices to shift.

  • “The work is to keep working with companies that aren’t receptive to ESG to get them to improve because, as universal owners, we are not going to divest and will own these companies for a long time, longer than their management will be there, we’ll keep coming back.”- Mastagni.

Sustainable Brands: BlackRock ‘Anticipates’ 75% of Portfolio Edging Toward Net Zero by 2030

  • BlackRock announced that at least 75% of its corporate and sovereign assets managed for clients will be invested in issuers with science-based targets or equivalent by 2030. The outcome of this commitment relies on whether BlackRock ensures that the heavy emitters in its portfolio are covered by the goal.

  • Reclaim Finance, a finance watchdog group, is skeptical of BlackRock’s commitment because if BlackRock fails to establish concrete policies, BlackRock risks “providing cover for the worst climate actors to continue their polluting business as usual.” BlackRock must also elaborate on how it will evaluate whether companies are achieving climate targets.

  • In March 2021, BlackRock signed the Net Zero Asset Managers initiative in which asset managers committed to supporting the NetZero emissions goal by 2050. BlackRock CEO Larry Fink has emphasized that decarbonizing the global economy is “the greatest investment opportunity of our lifetime,” but “divesting from entire sectors will not get the world to net zero.”

The Globe and Mail: Why the booming business of ESG ratings may be giving investors a false sense of sustainability

  • According to Morningstar, assets in ESG-themed mutual funds and exchange-traded funds (ETFs) rang in at US$2.74 trillion globally by the end of 2021. Many of these investors may think their money is improving environmental and social conditions, but the case is more likely that the companies have merely met or exceeded a certain ESG threshold or received ratings from organizations that are not consistent across the world. The Globe reviewed the ranges of companies’ ratings, ranked them, and found wide score variances for some companies.

  • Regulators have started to respond as the International Sustainability Standards Board formed and initiated the process to standardize ESG reporting. The ISSB issued its first draft of rules for sustainability and climate-related disclosure. The U.S. Securities and Exchange Commission has created a climate and ESG task force. Canada’s securities commissions also recently published guidance to improve the disclosure of ESG-themed funds.

  • The difference in methods, tracking metrics, and variable weight given to distinct factors have created uncertainty for individual investors, which imposes risks.

  • With all these concerns, regulation within the ESG landscape is now critical.

ESG Today: JP Morgan Ramps Sustainable Finance Activity to $285 Billion in 2021

  • JP Morgan announced on Tuesday an approximate 30% increase in its sustainable finance activity in 2020 to 2021. The sustainable finance progress was reported through their 2021 ESG Report, noting advancement through financing and facilitating $285 billion in support of climate, community development and sustainable development projects and initiatives.

  • Jaime Dimon, Chairman and CEO at JP Morgan Chase, said, “the past year has shown what companies like ours can and must do to serve our customers… we are leveraging capital and expertise to support a greener future for the planet and advance racial equity. [We] will continue to lead with a tireless focus on doing the right things, even when it is not easy or expedient.”

Companies and Industries

Forbes: Why Your Team Is Key To Building Sustainability Into Your Business

  • Businesses that understand that making sustainability a key principle in their organization are those who will thrive long-term.

  • Building sustainability into all business objectives is the first step to bridging the gap between knowing sustainability and implementing sustainability strategy.

  • Integrating sustainability into your business begins and ends with your team. It is about trust, compassion, authenticity, humanity, and integrity. It requires that you put people first and not just say that you do.

  • An engaged workforce with a clear sense of purpose is fundamental to success.

  • “Genuinely connecting with your customers and your people team through shared values and responsible, authentic leadership can create a cycle of commercial and ethical success.”-Joanna Swash.

EisnerAmper: ESG and Its Impact on the Real Estate Industry

  • Real estate companies now have more responsibility to perform climate-risk due diligence, assess their corporate social responsibility initiatives, and integrate their ESG policies. ESG policies that are effective are “directly correlated with stronger financial performance and better risk management because they provide companies the opportunity to mitigate risks and appease investors.”

  • Environmental: Businesses can develop strategic ESG plans by using climate risk scorecards, performing property vulnerability and resilience assessments, mapping physical risk, and evaluating benchmarks established by organizations.

  • Social: If businesses establish strong ESG policies and procedures, doing so can assist to build trust, attract, and retain employees and tenants, and mitigate risks while meeting community needs.

  • Governance: Strong governing practices also support a company to report and monitor its business performance, track progress, and strengthen data management and analytics. Data is in high demand and of immense value to companies because data helps to understand where change or innovation is needed and keeps the companies on track to be successful in achieving ESG goals.

Forbes: 7 Career Tips For Women From A Leader In Sustainable Fashion

  • According to the UN, there is a one-sixth chance a piece of clothing is made by a woman, and one-eighth chance a woman bought it. Only 14% of the 50 major fashion brands are women-led, even though approximately 80% of Parsons School of Design graduates are women.

  • The fashion industry contributes 8.1% of the world’s greenhouse gas emissions, between 20% and 35% of microplastics in the marine environment, and vast amounts of water.

  • Kerry Bannigan, founder and CEO of the Fashion Impact Fund and cofounder and CEO of the Conscious Fashion Campaign, shared seven career tips for women:

  1. Ask yourself “am I happy?”

  2. Go for “it” – no matter how crazy.

  3. Do not leave your current job until you have another income lined up.

  4. Research.

  5. Ask questions.

  6. Be willing to try something new.

  7. Do good where you are with your time, resources, network, or money.

ESG Today: BofA Commits to Reduce Climate Impact of Loans in Emissions-Intensive Sectors

  • Bank of America (BofA) unveiled a series of targets to reduce emissions associated with its financing activities in several key emissions-intensive sectors. These goals mostly target the auto manufacturing, energy, and power generation sectors.

  • BofA’s new financed emissions goals include 2030 targets to reduce auto manufacturing intensity by 44%, including Scope 1, 2, and 3 emissions, energy sector emissions intensity by 42% for Scope 1 and 2 and 29% for Scope 3, and power generation intensity by 70% for Scope 1.

  • BofA’s Approach to Zero discusses the banks strategy to help finance the net zero transition. “[we at BofA want] to help ensure a just, stable transition to the sustainable future we all want,” stated Bank of America CEO Brian Moynihan.

BAI: Banks Have May Questions About ESG

  • On the E side of ESG, banks are increasing their public commitments to reducing the financing of greenhouse gas and toxic emissions through direct lending or other financial instruments.

  • As for the S of ESG, diversity and inclusion as well as closing the racial wealth gap are growing focus for decisions about capital allocations, including lending.

  • The G is imperative as good governance integrates ESG targets into the business strategy.

  • BAI interviewed Amelia Pan, London-based managing director in the ESG advisory group at PJT Partners, about ESG-related trends and how banks are doing in meeting their goals.

Government Policy WilmerHale: Greenwashing – a new regulatory risk

  • The UK government has focused on ESG disclosure and transparency. Trust and harmonization are key to the effectiveness of disclosure models. If investors are unable to compare companies, the ESG disclosures are meaningless.

  • The Financial Conduct Authority (FCA) has been prioritizing greenwashing. The FCA’s green disclosure regime applies to listed companies and asset management firms. Required disclosures remain aligned with the Task Force on Climate-related Disclosures (TCFD), but the FCA has been building on the TCFD by proposing additional transparency requirements, such as the Sustainability Disclosure Requirements (SDRs). The SDRs would require firms to produce both consumer-facing and institutional level disclosures.

  • Firms may consider the following to protect themselves from greenwashing risks:

  • Internal product consistency

  • Consistency across products

  • Data quality

  • Ensuring the objectives are met.

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