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ESG Weekly News Update: January 14, 2022

General ESG News

Forbes: Corporate America’s Response to ESG Initiatives

  • Despite negative headlines, corporates around the world have been stepping up to support international net-zero commitments, and stakeholders are seeking more accountability from companies and their boards.

  • Tech firms, which have been slow moving on social issues, are moving toward other sustainability initiatives like decarbonization. Banks are making commitments to invest in climate action. Stock exchanges are pushing for increased ESG disclosure.

  • It is expected that legislation will pass requiring mandatory ESG-related disclosure from public companies, and it is heartening to see large sectors of corporate America recognize their roles in society beyond simply generating shareholder value.

Forbes: ESG Is Here And There’s No Turning Back

  • While there are many critics of the ESG movement and those who consider it to be “marketing hype,” transparent data reporting and proof of forward-looking ESG business goals are what the newest generation of socially conscious stakeholders are looking for.

  • A recent survey across Europe and North America reveals that more than half of respondents would be more likely to invest in a company that can demonstrate its ESG performance. The proportion is highest for the 18-34 age range.

  • Additionally, as Gen Z enters the work force, ESG will become an increasingly important factor in attracting and retaining talent. However, clear and mandated ESG definitions and quantifiable reporting metrics are needed to help both investors and employees evaluate companies.

  • Technology will be crucial for navigating the rapidly evolving ESG landscape in a way that can keep up with stakeholder demands.

Forbes: 2022 Forward Look: The Future of Risk, Omicron, The Great Resignation, Hybrid Work, ESG and More

  • The role of chief risk officer will become more prominent as it is necessary for business decisions to be made by considering the high impact risks the company may face and by assessing how adaptable the company can be in any given situation.

  • It has become increasingly important to be flexible in offering both in person and remote work models to retain employees and keep them engaged and productive.

  • The Great Resignation will create talent shortages in some field that could exist for many years to come. Future leaders aim to be “net talent gainers,” creating places that people want to be regardless of circumstance as well as learning more about why people stay or why people leave.

  • JP Morgan reports there is growing evidence of a positive relationship between ESG factors and financial performance. It is important for leaders to understand that people, risk, and capital are interconnected across all ESG factors.

Bloomberg: ESG Resolutions for 2022

  • For businesses just beginning their ESG journey or those looking to review their strategies there are four action items that are a good place to start:

  • Prioritizing ESG (setting and communicating goals, implementing ESG into training, and ensuring ESG is a board-level priority).

  • Conducting an ESG assessment specific to the business’s operations.

  • Implementing ESG reporting and monitoring controls.

  • Leveraging the current compliance infrastructure, including audits and risk assessments.

JD Supra: ESG in 2022: 10 Things to Look Out For

  • The third instalment of Latham’s annual 10 Things to Look Out For blogpost highlights the ESG-related developments and trends that are expected to remain in the headlines in 2022:

  1. SEC – When and What to Expect

  2. China – Uyghur Forced Labor Prevention Act

  3. Supply Chains – Tracking New Legal Proposals

  4. Energy Transition/Technology

  5. COP27

  6. Taxonomies

  7. Reporting – ISSB/Rating Agencies to Be Regulated?

  8. Scope 3 Emissions – Further Clarity Required

  9. DEI/Value Chain

  10. ESG Litigation/Disputes

Banking Exchange: ESG to be done “properly” in 2022

  • According to James Sym, head of European equities at River & Mercantile, 2022 will see the financial services industry taking ESG seriously, and companies will start truly considering how to allocate capital to business and projects that are moving the needle on decarbonization and other critical ESG issues. This will be in contrast to portfolios claiming to be “green” simply based on a rating from a data provider.

  • Capital allocators have the opportunity to make a real difference in decarbonizing the economy, and recent research reveals that investors focused on ESG issues believe that seeing the benefit of their investment at work is essential.

Fast Company: How will ESG change in 2022? Here are 7 predictions

  • 2021 was a turning point for ESG, and in 2022, as sustainability issues become integrated into global commerce, Fast Company makes the following predictions:

  • The weather will get worse

  • Climate disclosure will be required

  • Standards will converge

  • Voluntary ESG reporting will continue

  • ESG investing will continue to grow

  • Politics could ruin everything

  • The economy will continue to drive the clean energy transition.

HR Grapevine: The shocking pay gap between white, Black & Asian workers

  • A recent study of UK adults from People Like Us and Censuswide suggests that the pay gap between ethnic minorities and their white counterparts could be as much as 16%, which equates to thousands of pounds over the span of a career.

Sustainability Mag: ‘Corporate climate crisis’: Employees want transparency

  • Recent research by the London studio PLAY reveals that 77% of workers want employers to be transparent about their environmental impacts, and they do not feel employers are doing enough to mee this expectation. Employees are skeptical about their employers’ sustainability initiatives.

  • While employees and employers have a disconnect in their views on whether existing initiatives are effective, they agree on how best to support the fight against climate change – major, collaborative behavior changes.

  • There is also a disconnect between companies’ commitments and their actions, and companies need to increase their efforts to be transparent with their workforce and provide them with the tools and resources needed to develop sustainable habits.

Security Brief: The shape of risk management in 2022: Cyber risk quantification, ESG, and operational resilience

  • Global integrated risk management (IRM) and governance, risk management, and compliance (GRC) company say the past 18 months have marked a turning point with a renewed focus for enterprises to reassess their GRC capabilities in constantly evolving market conditions.

  • Deloitte survey found that 84% of financial services firms in Asia Pacific aim to enhance existing resilience plans, with 88% reporting they were conducting or planning to conduct frequent simulation exercises.

  • Cyber risk quantification: MetricStream believes many enterprises will likely do away with traditional risk assessment measurement tools in 2022 and instead adopt advanced cyber risk quantification tools for precise measurements of an enterprise's risk appetite by assigning a dollar value.

  • Environmental, social, and governance: MetricStream says implementing an ESG-enabled GRC strategy will take precedence among enterprises to accurately measure and report ESG scores.

  • Operational resilience: MetricStream says adopting an effective GRC strategy to rationalize data from varied sources across the enterprise ensures that leaders will be well on their way to managing, embracing, and ultimately thriving on risk in 2022.

Inc: What Board Members Need to Know About ESG

  • Investors, employees, and customers are demanding that companies and boards align with their ESG values. Below are five tips for boards that may lack ESG experience and maturity:

  • Immerse yourself in your company's sustainability report as well as those of your main competitors and customers

  • Become familiar with your company's policies for employees and suppliers (are there ethics, diversity, and equity policies?)

  • Prepare your company for the new ESG reporting guidelines from the International Sustainability Standards Board and other requirements from the SEC

  • Direct company strategy towards genuinely integrating ESG into the core business model focus on outbound and inbound materiality.

  • Understand how your company can grow without exceeding its share of planetary boundaries.

National Law Review: Does Poor ESG, Social Responsibility Rating Increase an Organization’s Cyber Risk?

  • An organization's corporate social performance can affect its likelihood of being subject to a cyber-attack; specifically, organizations that have “corporate social performance” strengths outside of the core business are found to be more vulnerable to attacks.

  • Perceived greenwashing and efforts to mask poor ESG performance have also been found to make firms more attractive targets for security threats.

StudyFinds: Younger Generations Adopting Diets That Help Slow Down Climate Change

  • New survey research finds that three in five teens and young adults support discovering more ways to slow down or limit climate change.

  • Of the 1,400 Germans between the ages of 15 to 29 were surveyed, 57% supported climate change and 17% are “flexitarians,” if not vegetarians.

Treasury and Risk: ESG and Employee Mental Health

  • There is a growing importance in addressing mental health conversations around the topic of ESG. More investors and boards are pushing to take the well-being of their employees into account when making decisions.

SHRM: A Data Deluge Is Coming, Courtesy of Automation

  • HR and IT systems are already becoming overloaded with data from automated and integrated systems. Organizations do not yet know how to manage this data to reduce risks or promise meaningful guidance into increasing motivation and productivity.

  • One solution to dealing with the increasing amount of HR data is more sophisticated analytics. Because of this, vendors are adding these features and capabilities to existing human capital management systems. Some are also incorporating new tools with AI technology and machine learning.

Medscape: The Workday May Shift With Climate Change

  • Temperatures rise globally will shift the work pattern as workers in the hottest locations are increasingly often forced to stop work in the middle of the day due to extreme heat posing unsafe conditions.

  • Labor productivity lost could reach $1.6 trillion a year if temperatures increase by an additional 2 °C (3.6 °F).

  • Researchers found that 30% of the global labor losses due to extreme heat could be saved by moving that work from the three hottest hours to the three coolest hours of the day.

Security Brief: The shape of risk management in 2022: Cyber risk quantification, ESG, and operational resilience

  • Global integrated risk management (IRM) and governance, risk management, and compliance (GRC) company say the past 18 months have marked a turning point with a renewed focus for enterprises to reassess their GRC capabilities in constantly evolving market conditions.

  • Deloitte survey found that 84% of financial services firms in Asia Pacific aim to enhance existing resilience plans, with 88% reporting they were conducting or planning to conduct frequent simulation exercises.

  • Cyber risk quantification: MetricStream believes many enterprises will likely do away with traditional risk assessment measurement tools in 2022 and instead adopt advanced cyber risk quantification tools for precise measurements of an enterprise's risk appetite by assigning a dollar value.

  • Environmental, social, and governance: MetricStream says implementing an ESG-enabled GRC strategy will take precedence among enterprises to accurately measure and report ESG scores.

  • Operational resilience: MetricStream says adopting an effective GRC strategy to rationalize data from varied sources across the enterprise ensures that leaders will be well on their way to managing, embracing, and ultimately thriving on risk in 2022.

ESG Clarity: Tackle Climate Change or Miss Out on Young Talent

  • Research shows Generation Z will turn down roles and take pay cuts to work with more ESG-conscious firms.

  • 68% of Gen Zs interviewed are anxious about environmental issues, 63% said they feel the burden of climate change on their shoulders, 64% said it is important for employers to act on ESG related issues and two in five report a lack of action would affect their mental wellbeing.

Diversity, Equity, and Inclusion

Forbes: Why Reverse Mentoring May Not Be The DE&I Fix It’s Made Out To Be

  • In the wake of recent social and racial justice movements, employee resource groups (ERGs) and reverse mentoring programs have seen a resurgence. Reverse mentoring in DE&I pairs a younger/junior “diverse” colleague with a senior manager who is not typically considered “diverse.” The intent is for the younger colleague to educate the senior manager about diversity, their lived experiences, their experience within the organization, etc.

  • One main criticism of reverse mentoring is that the unequal power dynamic makes it difficult for the mentor to be honest/critical with the mentee, which is a core facet of mentoring. Additionally, it is difficult to express this sentiment without coming across as not being a “team player.”

  • Reverse mentoring can also lead to some individuals feeling isolated, and it places a disproportionate burden on diverse colleagues to educate others. This also comes with an emotional toll.

  • A more equitable approach would be a more traditional mentoring program with the focus on skills like allyship, anti-discrimination, and equity. It is also important to ask diverse colleagues how they would like to be included and supported.

ESG Disclosures, Standards, Rankings, and Reporting Morningstar: ESG Ratings May Be Focused on Companies’ Bottom Lines, but That Doesn’t Mean They Have No Broader Impact

  • There is a need for a broadly agreed-upon understanding of what sustainable investing encompasses. Not having this agreed-upon understanding allows for miscommunication within a company and to investors as well as greenwashing.

  • Recent Bloomberg research about MSCI’s scoring methodology points out that the company focuses on how businesses are impacted by the world, not the other way around.

  • It is worth noting that these ESG concerns are material for businesses and are essential for the continuation of sustainable investing. Investors wanting to see the companies they invest in having positive impacts on the world should convince them to address the ESG issues they face.

Corporate Compliance Insights: 2022 Will Prove a Pivotal Year for ESG Reporting

  • SEC-Required Reporting on ESG: The SEC proposed rules for mandatory reporting relating to many key areas of ESG in early 2021. There has been some debate on how much authority the SEC has with these mandates, but it is expected they will put forth a climate disclosure rule for public comment sometime in 2022 or early 2023.

  • EU ESG Required Reporting: The European Commission proposed a corporate sustainability reporting directive to include European sustainability reporting standards that could be applied to all undertakings within the EU. As of July 2021, the Global Reporting Initiative has been working with the EU on the initial stages of these standards.

  • IFRS Sustainability Standards: The International Financial Reporting Standards Foundation (IFRS) announced the creation of the International Sustainability Standards Board (ISSB) that is tasked with developing mandatory corporate ESG disclosures.

  • Other ESG Developments Expected in 2022: There is an expected transition to the new GRI universal and sector standards. The Blue Dot Network, an ESG certification initiative for large infrastructure projects, is expected to be rolled out.

Bloomberg: Muni Market's Regulator Is Seeking Standards for Disclosure on ESG Debt: Joe Mysak

  • Municipal Securities Rulemaking Board is interested in getting borrowers to disclose on how ESG relates to their bonds and maybe looking at standards in the near future.

  • Muni’s have been marketed as green bonds by States and local governments, but there was no standard to it, no independent verification.

  • Many investors and other market participants are seeking ESG-related information beyond what historically has been provided to the market. In response, private vendors are offering ESG certification services.

Forbes: ESG Alert: As Sustainability Regulations Become Stricter, Can Banks Keep Up?

  • There is a ESG Knowledge Gap as according to recent Oxford Economics research, only 56% can segment suppliers by risk level and category level quickly and easily and only 47% regularly refresh risk mitigation plans to address potential disruptions.

  • Several banking professionals said most banks currently have a gap in the tools, data, and processes needed to report on the supplier regulatory targets.

  • With institutional knowledge of the bank’s supply chain operations, procurement professionals are perfectly positioned to help their institutions boost ESG compliance. Some of the most successful teams use digital business networks to support these activities.

  • Banks can develop a common set of standardized questions to collect supplier data that can ease both vendor’s compliance efforts and streamline data collection. Additionally, developing simplified, streamlined reporting to share internally and externally with suppliers, customers, and stakeholders can help all parties understand how well the bank is meeting its ESG mission.

ESG Clarity: US Risks Falling Behind As Global ESG Reporting Standards Take Shape

  • Companies that work both domestically and abroad will most likely have more of a patchwork ESG plan and reporting standards which can cause inefficiencies and confusion.

  • The ISSB provides hope for more concise standards by offering baseline standards that allow for reporting requirements that are specific to certain jurisdictions.

  • The announcement of the SEC’s Climate and ESG Taskforce will provide an easier way to spot misconduct and greenwashing.

  • The EU is farther ahead than the US in terms of its ESG integration and metrics. The US, because of politics and hesitancy, will continue to be left behind unless the country and the companies within start to actively participate in the push for more streamlined ESG metrics and assets.

ESG Today: State Street to Require Companies to Provide TCFD-Aligned Climate Disclosures

  • In a recent letter to portfolio company CEOs, State Street CEO Cyris Taraporevala outlines the firm’s expectations for the coming year, including a requirement for companies to publish TCFD-aligned disclosures. The firm states that it will take voting action against companies that do not meet these expectations.

  • In the letter, State Street also announced that it will expand its policies requiring portfolio companies to have at least one woman on their boards. For companies in major indices, this expectation increases to 30% women directors by 2023.

  • State Street will also begin taking voting action against directors of S&P 500 and FTSE 100 companies without at least one person of color on their board and those who fail to disclose the racial and ethnic diversity of their boards.

ESG Today: French Regulator AMF Sets Addressing Greenwashing, Developing ESG Reporting Standards as 2022 Priorities

  • AMF, the French market regulator, announced its priorities for 2022, including the developing of sustainability reporting standards and protecting investors against greenwashing. Other key actions include contributing to EU-led initiatives as the country takes over the presidency of the Council of the European Union in the first half of 2022, pushing for a framework to protect retail investors, continuing to modernize its regulatory action, and more.

  • For 2022, the AMF highlights actions like assisting issuers in implementing the EU Taxonomy, contributing to European initiatives on sustainability reporting standards, and preparing the market for the introduction of the CSRD. The AMF also aims to promote the development of labels and standards for financial products to help continue the growth of funding toward sustainable initiatives.

Investment Trends Yahoo! Finance: Moody’s -- Action on environmental commitments, social issues among ESG credit trends to watch in 2022

  • Recent Moody’s insights indicate that increasing global awareness of the consequences of climate change will increase investors’ focus on physical and transition climate risks, social considerations (especially gender and racial diversity), ESG disclosure, emerging markets, net-zero initiatives, and more

  • Investors are also expected to focus more on biodiversity and natural capital, as well as board-level ESG oversight and independence.

CNBC: These are the top 100 ESG stocks in America: The 2022 JUST 100 ranking

  • Just Capital ranks the top companies in the U.S. on ESG metrics. For 2022, Alphabet (which owns Google) reached the top spot, which was previously occupied by Microsoft.

  • Tech companies dominate the market, but Facebook is a notable exception. It dropped 700 spots within the 1,000 stocks ranked, falling behind even ExxonMobil.

Yahoo! Finance: One of the World’s Biggest Wealth Funds Targets Sustainable Finance

  • Kuwait Investment Authority wants to make its entire portfolio compliant with ESG standards as they begin thinking about life after oil.

  • KIA’s target includes all asset classes and regions under management. They recognize the long-term financial risks and opportunities presented by resource depletion.

The European Sting: Putting Capital Markets into Stakeholder Capitalism

  • Capital markets have a key role to play in building a more equitable and environmentally sustainable economic system.

  • ESG assets under management reached $35 trillion in 2020 and is expected to exceed $50 trillion in 2025.

  • Capital markets must promote transparency and reliable ESG disclosures to prevent greenwashing from stalling the global transition to a low carbon economy.

Benefits Pro: More CRE Investors Now See ESG as Crucial

  • Research has found that sustainability is no longer a ‘nice to have,’ with ESG being prominent on investors agendas.

  • Aaron Jodka, Director of Research US Captial Markets at Colliers states the US is still playing catchup on ESG investing, with the real estate investors playing a big part in pushing ESG to the forefront.

Morningstar: Do You Hold Companies with Water-Related Risk?

  • Access to water is a sustainability issue for investors as water is a renewable but finite resource.

  • Our reliance on water poses a threat to healthy ecosystems as well as the operations of businesses, communities, and more.

  • Poor disclosure poses challenges to investors who are seeking to fully comprehend water related risks.

ESG Today: Activist Investor Engine No. 1 to Provide Real-Time Transparency into Proxy Voting

  • Engine No. 1 has launched a new platform that allows investors in its Engine No. 1 Transform 500 ETF (which invests in the 500 largest U.S. public stocks) to see how the fund votes on every proposal for each portfolio company.

  • In September of 2021, the investor unveiled its Total Value Framework, which is its data-driven approach to linking companies’ ESG impacts to their valuation.

  • According to Engine No. 1, its new platform differentiates its ETF from traditional funds in terms of transparency and accountability to investors.

ESG Today: BlackRock Launched New Funds Targeting Themes Enabling, Benefiting from Net Zero Transition

  • BlackRock has launched the BGF Climate Action Multi-Asset Fund and the BGF Climate Action Equity Fund to provide investors with access to climate themes that are expected to either help enable or benefit from the transition to a net-zero economy. The funds will integrate ESG criteria into their investment process and are classified as Article 9 under the EU Sustainable Finance Disclosure Regulation.

  • The multi-asset fund will invest in a broad range of asset types, while the equity fund will invest in a relatively concentrated portfolio of equities across a broad market cap range. The funds will target areas like clean power, resource efficiency, sustainable nutrition, biodiversity, clean transportation, and more.

Companies & Industries Forbes: 2022 Predictions: Inflection Points in Work, Technology, and ESG

  • Digital progress will continue: Cybersecurity has expanded immensely; Business leaders should deliberately automate their most employee-centric processes first.

  • AI and humans will collaborate more: There is no need to fear AI; Human-AI interactions are becoming more accepted and embraced in the workplace.

  • Employees will demand and deserve more: Companies must improve the emotional side of work experiences, engaging employees and fostering a greater sense of belonging; Low-code solutions allow employees to solve their own problems and improve processes.

  • We will be acutely aware of our physical world: As much as digital transformation is important; climate change is a tangible issue we all must face and act on.

  • ESG will dominate C-suite discourse: Companies are realizing that ESG strategies are imperative to their business models and the success of all level employees.

Yahoo! Finance: ESG Oil and Gas Outlook 2022: ‘It’s Here to Stay’

  • Specific to the oil and gas sector, methane is expected to become a focus in the coming years, and companies are announcing their concrete ESG and decarbonization plans. Additionally, investors are increasingly focusing on transparency and ESG data quality.

  • 2022 also expects to see higher returns for ESG investments, as well as larger inflows of capital into ESG-related funds, especially in cleantech.

Fast Company: Our Company’s B Corp Journey Presented These Three Big Challenges

  • WeTransfer has always been a company that strives to align its business with its values, and when the company began the process to become B-Corp certified, it was surprised at the challenges it faced, specifically:

  • Developing standard measurements

  • There is no finish line

  • Changing our collective mindset

  • The CEO of WeTransfer warns that companies should not embark on this certification journey simply for the title, and they should consider whether or not they will receive shareholder support first.

Environmental Leader: More of the Fortune Global 500 Participating in Sustainability Efforts, Investment Potential Remains

  • A report by Natural Capital Partners finds that 38% of Fortune Global 500 companies have already made significant 2030 targets.

  • There has been a 50% increase in companies that have already reached or plan to reach carbon neutrality by 2030.

  • There has also been a 25% increase in science-based targets and net zero efforts, most having goals set for or after 2030.

The Drum: How Brands Can Help Turn the Public’s Sustainable Intentions into Actions

  • The “intention gap” refers to brands often acting in ways that do not align with their knowledge, values, and intentions, with the biggest obstacle being habits.

  • Understanding habits can help the advertising industry find ways to close the intention-action gap to drive more sustainable behaviors. The two key features of habits are that they are automatic and context-dependent. Sustainable brands should be looking to seize upon this unique moment of change to influence habits and bring about lasting pro-environmental behaviors.

Science Direct: The Banking Instability and Climate Change: Evidence from China

  • This study shows insight on the framework focused on the impact of climate change on banking stability and the risk dependence between the banking sector and energy sectors. Low carbon transitions have created a greater dependence on the banking sector's risk on new energy sectors. On average, the banking sector exhibits more risk dependence on the new energy sector versus the traditional energy sector.

Nasdaq: Green Team Spotlight: Thorunn Gudmundsdottir on How Sustainable Practices Can Result in ESG Solutions

  • The Global Green Team Community is an employee resource group at Nasdaq that brings together employees who are passionate about sustainability. Thorunn Gudmundsdottir is a risk management specialist and Green Team lead at the Nasdaq Iceland office.

  • According to Gudmundsdottir, it is incredibly rewarding to see the successes the team has had in influencing Nasdaq’s policies and practices, including progress in the areas of reducing waste, stopping the use of disposable goods, offsetting the company’s carbon footprint, offering lectures about climate change, and more.

  • Gudmundsdottir also predicts seeing more action in the areas of the energy transition (including electric cars, airplanes, and ships), more emphasis on renewable energy, an awakening of the circular economy, sustainable food and fashion products, net-zero initiatives, and sustainable finance.

HBR: How VCs Can Help Startups Set (and Meet) ESG Goals

  • Based on a survey HBR conducted, they summarized as following:

  • First, promoting ESG objectives among portfolio firms is contingent upon the development of specific, practical tools, as well as measurement and benchmarking frameworks.

  • Second, promoting ESG practices among startups requires that venture capitalists first enhance and solidify the legitimacy of their own claims.

  • Finally, and presumably most significantly, VCs need to find ways to support startups to increase the authentic incorporation of ESG factors.

  • HBR identified three main categories of issues VCs should prioritize:

  • Selecting and screening investments

  • Valuation

  • Term sheet, monitoring, and metrics

  • Very purpose of the VC industry may take on a new and ambitious goal: to identify and fund ground-breaking new business models that will complement our efforts in the global quest towards a more sustainable and more inclusive future for all.

FoodDive: Why food companies should rethink the financial benefits of ESG

  • ESG’s primary benefit in the era of decarbonization and social transformation is not simply in risk mitigation, but in its role as a value creation tool.

  • Food and beverage companies feel the impacts of their sustainability successes and failures most immediately in terms of revenue.

  • Three channels define the ESG value proposition for food and beverage companies:

  • Increased revenue through ESG-conscious customers

  • Increased investment flows from sustainable funds

  • The ability to recruit and retain top talent

ESG Clarity: S&P Global Buys Climate Risk Platform

  • S&P Global has acquired The Climate Service, a climate risk modelling platform.

  • This platform provides modelled transition risks (examples: drought, water stress, extreme temperatures) and physical risk (examples: changing legal and regulatory conditions) analyses in financial terms.

Government Policy The Wall Street Journal: The ESG Regulation Picture for 2022: Five Key Questions for Business

  • The SEC proposal for climate disclosure rules is expected to be published this year.

  • Chinas new carbon market system allocates tradable emission allowances to polluter, but some say these allowances are not strict enough.

  • Under its green taxonomy investing rules, the EU proposed natural gas and nuclear power as environmentally sustainable energy sources.

  • The International Sustainability Standards Board (ISSB) plans to seek public feedback on its two proposed disclosure standards early this year and hopes to issue its first set of rules later this year.

  • Analysts predict companies will have to begin looking at their impact on biodiversity in a more systematic way. A UN framework for reporting could pave the way for this innovative approach.

JD Supra: SEC Enforcement Related to ESG Investing Likely to Increase in 2022

  • The SEC created an ESG taskforce within the Division of Enforcement in March of 2021. The purpose of the taskforce is to identify and investigate ESG-related violations, such as greenwashing, and its primary goal is to ensure investors are given the most accurate information possible and advisors are following through on their word.

  • The SEC will pursue scenarios with issuers, funds, and proxy voting but will not be engaging in regulation by enforcement.

  • This “all-agency” approach includes the appointment of a Senior Policy Advisor for Climate and ESG, an announcement of its Examination Priorities for 2021 and the creation of a rulemaking agenda for investment companies and advisors. · New buzz word: Metrics.

ESG Today: Sustainable Investor Group Urges Lawmakers to Keep Gas Out of EU Taxonomy

  • The Institutional Investors Group on Climate Change (IIGCC) has published an open letter to European Union Member State representatives and parliament members calling for them to exclude gas from the EU Taxonomy green investment classification system.

  • The EU Taxonomy went into effect at the beginning of 2022, but the assessment of gas and nuclear energy as eligible sectors for “green” investment is ongoing.

  • The European Commissions stated that these energy sources would be classified in the Taxonomy under very strict conditions, but some member states strongly object.

  • The letter from the IIGCC specifically notes that while natural gas may have a transitional role in supporting net-zero initiatives, it does not meet the described requirements to be classified as a transitional activity.

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