ESG Weekly News Update: May 6, 2022



General ESG News


Greenbiz: The temperature is rising on heat as an ESG issue

  • Over the past few years, excessive heat from the changing climate and other disasters have gone from “hypothetical to horrifying” and are impacting human health, agriculture, power grids, water supplies, and other elements of critical infrastructure.

  • The hotter and longer heatwaves and extended droughts are affecting many regions, especially India and the Pacific Northwest of the U.S. (and western Canada). In Florida, Miami-Dade County recently became the world’s first jurisdiction to appoint a Chief Heat Officer.

  • Despite the growing attention to increased heat, most indications are that companies and economies have not yet fully recognized the risks, meaning the economic disruptions could be significant. According to recent research from Moody’s, heat stress and water stress threaten the largest proportion of assets across all sectors.

  • Beyond economic disruptions, employees face the most devastating impacts from heat stress. The Biden administration is developing a national standard on heat stress for workers, as currently only California, Minnesota, and Washingtons have such standards in place.

Forbes: How Corporate Responsibility Is Influencing Consumer Buying Decisions

  • In 2022, good products and service are the bare minimum for businesses. Brands must stand for something without simply offering lip service. Currently, corporate social responsibility is impacting how customers interact with brands in several ways:

  • Shoppers are seeking out eco-friendly products

  • Shoppers are boycotting irresponsible businesses

  • Shoppers are amplifying CSR messaging.

Nasdaq: The Rise of ESG 3.0: How the Future of ESG Can Deliver Better Results

  • ESG 1.0 can be defined as the philosophy of excluding companies and industries that compromise certain principles. ESG 2.0 came with the growing recognition of the financial implications of poor ESG performance. The emerging age of ESG 3.0 is when capital actively drives impact, and it can be measured with three metrics:

  • Potential avoided emissions (PAE)

  • Time value of carbon (one ton of CO2e prevented post-2030 is less impactful than one ton prevented now)

  • Carbon returns (or the ratio of PAE per amount invested)

  • Naturally, capital should flow to solutions with high time value of carbon and carbon returns, and data and disclosure (as regulated/mandated by the SEC) will be key to “unlocking” ESG 3.0.

Fortune: How boards approach sustainability goals while still focusing on profits

  • Sustainability officers face greater scrutiny as shareholders seek more ESG goals and actions. Some sustainability officers have been consulting with outside experts for assurance and support to meet their metrics.

  • 50% of disclosing companies attain third-party assurance. 90% of such use niche consulting or domain-specific entities to evaluate climate-related data, and 10% use standard auditors.

  • Corporate leaders debate on whether to establish a sustainability committee or create one that “trickles down to every level of management.” At this point, corporate boards must become fluent in ESG, understand the frameworks and requirements, and start acting to advance the large goals set to meet at a time that likely goes beyond their careers.

Financial Advisor: The Only Way Out Is Through

  • There are many tensions and disagreements when it comes to equity of firms. Firms may address these issues and needs with a well-developed equity plan, that is clearly documented and communicated, but this process typically stalls out.

  • The retention of minority partners is not guaranteed if they do not see a clear path to acquire more equity in the future. Overall, talent will observe the action or lack thereof of partners, then possibly transfer to a competitor firm if they do not see a promise of future ownership.

  • The obvious, crucial question is: “How genuine are owners in their commitment to [a]ffect an internal succession?” Self-reflection is also important for owners, “when it comes to succession, are you clear on what you want for yourself, your partners, your team, and your clients?”

  • Trust and transparency are essential in business as in other areas of life. When shareholders collaborate well, they “create the greatest potential for restoration and renewal.”

Asia Insurance Review: More than half of rated Asia-Pacific companies face ESG risks

  • In an April 2022 report, S&P Global Ratings found that 57% of rated companies in Asia Pacific face ESG risks, over $4 trillion in aggregated debt. The report covered over 500 rated companies from China, India, Indonesia, Japan, Korea, Australia, and New Zealand.

  • Environmental risks, particularly climate transition risks, waste, and pollution, have the most significant impact (40% of the companies, about $3 trillion of debt). The report predicts the companies will continue to face environmental risks over the next couple of years since fossil fuels still account for most of Asia-Pacific's power generation mix.

  • Approximately 22% of the rated companies are negatively impacted by governance factors, especially those in Indonesia, India, and China.

  • 19% are negatively influenced by social factors, generally in commodity and mobility sectors.

IPE: Measuring health impacts could expand ESG metrics

  • With awareness that the private sector impacts human health, the UK’s All-Party Parliamentary Group for Longevity created a strategy in April 2021 with the goal to reduce health inequalities and add five years to life expectancy while maintaining or increasing economic gains.

  • John Godfrey, executive board chair of Business for Health and the corporate affairs director at Legal & General, discusses a three-pillar approach to health that is similar to the three scopes used for greenhouse gas emissions. He poses the three scopes as:

  • Scope 1: Do employees experience positive or negative health outcomes as a result of working?

  • Scope 2: What is the impact of products and services?

  • Scope 3: What is the wider kind of role of business in society, especially in the context of leveling up health outcomes?

  • The quantification of health impacts by corporate activities may help avoid scandals like the US opioid epidemic. The metrics may be used as a traffic light system to easily compare companies against their peers.

Euronews: Looking for a career change? There are more green jobs than people with the skills to do them

  • A sustainability professional is a technical expert and expert generalist on a wide range of topics, who wears many hats within the company. Although the required skillsets are transferable, it takes time to develop many skillsets for this type of work, and training courses can help fill the gaps, especially on sustainable business, carbon accounting and terminology.

  • The need for talent in sustainability is growing quickly, but time is needed to develop the talent pipeline. Therefore, it is important to “attract more people into sustainability careers now and provide them with the experience and mentorship they need.”

Wall Street Journal: A Carbon Tax Lets Markets Lead the Fight Against Climate Change

  • Economists find that carbon tax is among the fastest, fairest, cheapest, and most effective actions to limit global warming.

  • Under the Energy Innovation and Carbon Dividend Act, the poorest may be able to see the greatest health and economic benefits as 95% of low- and middle-income earners are expected to save money or break even.

National Law Review: Earth Day Series 2022: Environmental, Social & Governance Part 3 – Practical Steps to Develop or Refine an ESG Policy

  • With “Invest in Our Planet” as its theme, Earth Day 2022 focused additional attention on ESG as an important metric for evaluating activities that may impact human health or the environment. The following steps provide practical guidance on how to establish or refine an ESG program.

  • Step 1: Leadership Buy-In

  • Step 2: The Ten Principles

  • Step 3: Review the Sustainable Development Goals

Harvard Law: How to Focus the Company Around ESG Priorities

  • Before an organization can link executive compensation to ESG goals, it must establish methodologies for identifying material ESG risks and opportunities.

  • This article lays out helpful tips on setting ESG goals, such as how to set science-based net zero targets, develop interim targets in transition plans, establish a stakeholder centric communication strategy, prepare for employee communications, embed ESG into company culture, communicate with investors, and highlight ESG to other stakeholders.

Wilmer Hale: SEC Climate & ESG Task Force Enforces on “E” and “S”

  • On April 28th, 2022, the Security and Exchange Commission (SEC) announced an action against Brazilian mining company, Vale S.A., in relation to an environmental and social catastrophe: the collapse of its Brumadinho dam in January 2019.

  • The dams collapsed killed 270 people, causing significant environmental impacts resulted in a loss of more than 4 billion in Vale market capitalization.

  • Public companies should be aware that the SEC ESG taskforce will continue to play a role in coordinating with the Division of Enforcement, the Office of The Whistleblower, and other parts of the agency to bolster its efforts on ESG matters.

Forbes: Adjusting for Climate Change: Clean Energy Tax Proposals (Podcast 23:18)

  • Beth Viola and Nicole Elliott of Holland and Knight LLP, a multinational law firm, discuss the latest clean energy tax proposals and the likelihood of their passage in Congress.

NPR: Vacuuming carbon from the air could help stop climate change. Not everyone agrees

  • Some of the world’s biggest companies, including Facebook and Google, are investing in a new climate change strategy that pulls carbon dioxide directly out of the air – this is known as carbon dioxide removal. According to some recent climate assessments, this strategy will be necessary for countries to meet their emissions reduction targets.

  • Much of the CO2 removal technology is still new and very expensive, and many techniques have significant impacts on the land. However, certain emissions, like those from agriculture, are difficult to remove with common emissions reduction strategies. This is why many scientists argue that direct removal is necessary.

  • In its simplest form, carbon removal technology traps emissions from the air and stores them in natural formations or underground.

  • Regardless of the path countries choose to take to mitigate climate change, the IPCC emphasizes that carbon capture/removal should not be the main strategy – the focus should be on cutting emissions.

Forbes: How Does The Great Resignation End?

  • The “great reshuffling” of the past few years has caused salary demands to increase, leaving smaller businesses struggling to fill roles. While unemployment is low, there is a record number of unfilled positions in the U.S. According to Daniel Jakaitis, Founder and CEO of Chatkick and Forbes Councils Member, there are six trends currently positioned to bring the Great Resignation to and end:

  • Streamlined internal processes

  • Simplified global payroll

  • Making remote work feel like in-person work

  • More effective human capital management

  • Inevitability of business cycles

  • Return to the office.

Forbes: Are Your Financial Transactions Morally And Socially Responsible?

  • Fintech can be a powerful tool to drive positive social change, according to Khalid Parekh, Founder and CEO of FAIR, an ethical neobank. Parekh and his company support socially responsible financial and investment decisions and practicing socially responsible investing (SRI) to fuel positive change in the world while also generating financial returns.

  • Socially responsible banking is gaining traction, and many organizations are looking to adopt policies that demonstrate their values and commitments.

Forbes: Four Reasons Business Leaders Should Take A Community-Based Approach To Solving Problems

  • Rose Stuckey Kirk, Senior Vice President and Chief CSR Officer at Verizon, has been working for years to build a responsible business plan to address environmental and social issues and to drive positive change in a way that’s good for business. She has learned that the “feet on the street” approach of hearing directly from communities must be central to the plan, for four main reasons:

  • You can become a local partner

  • You learn what communities really need

  • You discover the unique barriers communities are facing

  • You meet remarkable people that can give you perspective.

Lexology: Data Centers and ESG - two irreconcilable growth stories?

  • The world's demand for data is increasing exponentially with each passing day. In turn, of course, the demand for data centers is increasing as well. There are several ESG pitfalls of data centers:

  • Some experts have highlighted that data centers could account for up to 13% of global electricity consumption by 2030.

  • Data center hot spots can burden the landscape and energy infrastructure. As well as the vast amounts of water used in cooling and energy generation

  • Conversely, there are also several ESG opportunities related to the rise in data centers

  • data centers have many options, including immersion cooling, AI to better manage data center workloads, and sourcing renewable materials for use in construction.

  • The surplus heat produced as a by-product at a data center can be recycled to heat homes, schools and hospitals by connecting to local heat networks.

  • Larry Fink noted,” divesting from entire sectors or simply passing carbon-intensive assets from public markets to private markets will not get the world to net zero.”

Earthworks: A Truly Clean, Just, and Equitable Energy Future is Attainable

  • “Securing energy independence and the transition from fossil fuels to cleaner alternatives go hand in hand.”-Lauren Pagel

  • For frontline communities, “energy security” means risky policies that incentivize more extraction, either of oil and gas or the minerals necessary to build electric car batteries, wind turbines and other renewable energy infrastructure.

  • According to a report by MSCI, US energy transition metals “97% of nickel, 89% of copper, 79% percent of lithium and 68% of cobalt” are located within 35 miles of Native American reservations and tribal lands.

  • “By prioritizing mineral recycling, reuse, and substitution while promoting demand reduction, the country and the world can move away from extraction reliance.”- Lauren Pagel.

AdvisorPerspectives: ESG Ratings: Solution or Starting Point?

  • Third-party ratings don’t tell the whole story for investors seeking a comprehensive view of how ESG issues affect return potential—or how companies may improve their ESG performance in future.

  • According to Michelle Dunstan, there are four things companies should consider as they integrate ESG into their company model:

  • Issues with Third-Party Ratings

  • These ratings rely partly on nonfinancial information that is self-reported, so scores are based on what a company says, rather than what it’s done.

  • Third-party ESG ratings don’t reflect a company’s potential for improvement or its vulnerability to possible future risks.

  • ESG Assessments Must Look to the Future

  • ESG assessment requires a forward-looking approach that static metrics may miss as regulations and popular opinion continue to evolve constantly.

  • ESG Integration Drives Returns

  • By fully integrating ESG issues in an investment process, investors can recognize risks before making an investment; this approach also helps investors identify sources of return potential in ESG leaders.

  • Engagement Is Key to ESG Assessments

  • A third-party rating may be useful to begin a conversation with company management, but it takes persistent engagement supported by in-depth research to create the conditions for a successful outcome.

Diversity, Equity, and Inclusion

Mondaq: Dimensions of Diversity: Equality and Opportunity – The Importance of Supplier Diversity (Podcast)

  • From Buchanan Ingersoll & Rooney PC comes the “Dimensions of Diversity” podcast. The most recent episode explores global supplier diversity and inclusion, discusses best practices and how supplier diversity works to combat racial and social injustice, and identifies ways to eliminate barriers for minority suppliers and how to measure the effectiveness of supplier diversity programs.

Forbes: The DEI Road Map: How Tech Companies Can Achieve Their Diversity And Inclusion Goals

  • The technology sector has been struggling to improve its performance in diversity, equity, and inclusion. Although gender equality has progressed, women are less likely to be in leadership roles, and Black, Latinx and Indigenous people are still minorities in tech.

  • Companies that do not prioritize diversity risk reducing their competitiveness against diverse peers and alienating potential employees. Companies should not only work to attract diverse talent but also retain diverse talent, which is a challenge in tech. Companies should also know that women working in corporate America are more likely to burn out than men.

  • Practical steps for companies to better their DEI efforts include:

  • Leveraging opportunities

  • Treating DEI as a strategic pillar

  • Setting achievable goals.

The Morning Brew: DE&I Efforts Are Incomplete Without a Thorough Internal Review, One Expert Says

  • Aubrey Blanche, CultureAmp’s Senior Director of Equitable Design, Product, and People, discusses how companies are not truly integrating DE and I if they are not auditing that. According to their 2022 workplace DI report, while 89% of companies globally have conducted a pay equity analysis at least once, and 55% of companies conduct such studies annually, only 43% of companies have ever audited their performance review processes.

  • Blanche states the choice to expand equity audits comes from a strategic and structural perspective. She also stresses the need for employee buy in as culture amp relies on voluntary self-reported data, with most employees responding to surveys.

PR Newswire: New Survey Finds Gen Z Employees Care Most About Mental Health, DE&I, And Flexibility

  • On Wednesday, TalentLMS, a learning management system, is releasing results of a survey on Generation Z in the workplace.

  • According to the survey, 53% of US employees aged 19 to 25 plan to stay at the same company over the next year. 45% of Gen Zers prefer hybrid work models, and 81% find it important to have flexibility in when and where they work.

  • 77% of Gen Zers find it important to work for a company that cares about DE&I. 76% define a great place to work as one with caring, friendly, and socially conscious people.

Fast Company: The Fundamental Link Between Innovation and Inclusion

  • Recently, the most successful innovative brands have figured out how to mix multi-disciplinary thinkers to generate breakthrough ideas -- “the next wave of meaningful innovation is rooted in inclusion.”

  • It is important to develop an accurate definition of inclusion (separate from diversity) and what it means to uplift and empower the voices ‘seated at the table.’

  • In the post-COVID digital world, technology companies have the opportunity to work to close the digital and broadband divide, and banks can leverage their assets to democratize investing and create accessible banking experiences.

  • There is great potential for inclusive partnerships between tech, telecom, finance, and commercial innovation. Also, beyond doing good, it is becoming increasingly clear that promoting inclusivity positively affects the bottom line and makes strong business sense.

ESG Disclosures, Standards, Rankings, and Reporting

Greenbiz: When agencies rate companies’ ESG scores, what are they actually rating?

  • As investing clients increasingly demand ESG options, asset management firms must come up with ways to measure the sustainability of their portfolio companies. However, there are currently dozens of ESG ratings agencies in existence, and even among the agencies that dominate the market, the information they provide does not always align.

  • Many of the prominent ratings agencies do not highlight the quantitative methods they use to arrive at ESG risk factors and issues and the resulting company scores. As it stands, asset management firms can arbitrarily choose to use one agency’s scores over another to arrive at a completely different investment decision.

  • Experts Todd Cort and Dan Etsy from the Yale center for Business and the Environment argue that “it is likely impossible, and probably counterproductive to the ESG investing industry, to attempt to force homogeneity across investment approaches.” They believe that data collection should demonstrate greater transparency while still reflecting the varying needs of investors.

  • Cort and Etsy differentiate between impact standards and methodological, materiality-based standards. Impact data standards demonstrate a carefully structured environmental and social benefit, while materiality-based standards drive financial risk and opportunity. Furthermore, the difference between high-level “outcomes” and “outputs” from specific ventures further complicates the process.

  • ESG standardization will require work, and there is no single, narrow framework that will adequately address all investor needs. Future ESG data and frameworks will highlight the original purpose of the investment strategy, which is allowing clients the opportunity to facilitate sustainability.

ESG Today: Moody’s Analytics, Global Sustain Launch ESG Risk Assessment Course

  • Sustainability advisory services company Global Sustain announced Wednesday the launch of an e-Learning course on ESG Risk Assessment developed in collaboration with financial intelligence analytic tools provider Moody's Analytics.

  • The online course consists of three modules, including the Principles of ESG, Assessing and Managing ESG Risk, and Integrating ESG in Credit Assessment and Reporting.

CFO Dive: Global ESG Standard Setting Gains Speed

  • The International Sustainability Standards Board (ISSB) is rallying regulators from the US, Europe, Japan, in other jurisdictions around common rules for disclosures about climate risk and other ESG issues.

  • The working group of regulators will meet this month and in July to craft a global baseline of ESG disclosure standards. The ISSB aims to bring consistency across borders and intends to urge regulators worldwide to consider adopting its proposals as the foundation for their own domestic sustainability disclosure rules.

Investment Trends

Sustainability: The 5 Avenues of Value Creation that ESG Opens Up

  • Sustainable investing grew 68% since 2015, accounting for $30 trillion. ESG opens five avenues of value creation:

  • Leveraging social impact to grow revenue;

  • Preventing waste also reduces costs;

  • Organically befriending government agencies;

  • Strengthening your workforce; and

  • Sowing a sustainable culture reaps higher rewards.

  • It is important to carefully decide on ESG goals tied to the company’s line of business. The ESG goals and policies should be more easily identifiable, verifiable, and measurable.

Sustainalytics: High-Impact ESG Issues: What Your Company Needs To Know

  • All companies are exposed to non-financial factors that can impact their business. The effects of environmental, social, and governance ESG issues on a company's business of growing concerns for stakeholders.

  • In Sustainalytics ESG Risk Ratings methodology, an issue is considered material if it's likely to have substantial impact on the value of a company and/or if its presence or absence in the company's financial reporting is likely to influence the decisions made by a reasonable investor.

  • Conducting an ESG materiality assessment is an important first step when trying to understand where to focus company attention and resources. The following are seven key actions to effectively manage material ESG issues.

  1. Invest in learning and understanding industry best practices from leading peers

  2. Understand your company starting point and establish a benchmark for your key performance indicators, then set up targets for improvement

  3. Establish board level oversight

  4. Establish relevant ESG policies and programs and seek external certifications

  5. Leverage sustainable finance instruments to fund the development of assets and projects

  6. Consistently disclose on related ESG strategies and progress against targets

  7. Set up ESG education and training programs for management and staff.

Forbes: Defining The Next Generation Of ESG Investing

  • ESG investing began in the 1960s fueled by civil rights, anti-war, and environmental movements. It was originally coined as “socially responsible investing.”

  • Today, ESG investing is mainstream. Over 33 percent of all assets under professional management in the U.S. are now put into socially responsible investment.

  • Sam Giber, a Partner at investment fund Blisce, recently published a report titled 2022: The Reopening Outlook. The report analyzes consumption data, web traffic, industry research reports, and data from Blisce’s portfolio companies, as well as proprietary survey of over 450 European and U.S. consumers. Sam dove into the report with Forbes and gave his thoughts on the ESG landscape and what the future of sustainable investing looks like.

S&P Global: Top 6 Credit Risk Factors When Assessing Banks in the Context of Market Volatility

  • According to S&P Global Ratings there are 6 credit risk factors when assessing banks re: market volatility:

  • BICRA Economic and Industry Risk: Banking Industry Country Risk Assessments (BICRAs) cover the entire financial system of a country by considering the relationship of the banking industry with the whole financial system.

  • Bank-specific Risks: Credit analysts should use forecasts to capture the uncertainty and shock caused by COVID-19 on financial ratios, based on a sound financial forecasting model.

  • Business Position: Business position measures the strength of a bank’s business operations. It is the combination of specific features of the bank’s business operations that add to or mitigate its operating environment.

  • Capital and Earnings: Capital and earnings measure a bank’s ability to absorb losses. The short-term impact of COVID-19 related relaxation of various bank regulations gives banks more flexibility in the prudential treatment of loans backed by public support measures.

  • Risk Position: The assessment is designed to capture the specific characteristics of a particular bank and enhance the conclusions of the standard capital and earning analysis. The analysis of risk position within the S&P Global Market Intelligence Banks Scorecard is largely based on the assessment of banks’ asset quality.

  • Funding and Liquidity: How a bank funds its business and the direct link between a stable deposit base and confidence affects its ability to maintain business volumes and to meet obligations in adverse circumstances.

Investopedia: Why Climate Literacy is Critical to Green Investing

  • The EPA released a draft white paper that is a first look at the possible requirements the agency might include in a new rule that seeks to rein in climate warming emissions from natural gas power plants, the nation's leading source of electricity.

  • Many of the carbon capture technologies have been criticized by climate activists who say they aren't as effective as proponents claim and distract from the more important task of transitioning away from fossil fuels altogether.

  • According to a report by Redfin more than 80% of homeowners who have flood insurance are set to see rates climb in the coming years.

  • Expect more clashes as it relates to climate goals and sustainable investing inside shareholder meetings in 2022 because proxy advisors are joining the battle.

  • ISS has urged investors in Occidental Petroleum and the refiner Valero Energy to back proposals to align the company's targets for cutting greenhouse gas emissions and, according to Bloomberg, ISS is likely to issue the same recommendation for eight other major oil companies.

Companies and Industries

Forbes: When It Comes To ESG Reporting, Fortune Favors The Bold

  • The recent SEC proposals for mandatory ESG disclosure from public companies is the first step toward federal agencies insisting that companies incorporate ESG principles into their core structure and foundation.

  • Within the cannabis industry, which is uniquely connected to a history of environmental and social issues, the Regennabis movement is working to build a disruptive and innovative community driven by alignment with the UN SDGs.

  • Both companies and regulators are scrambling to develop and express their positioning on ESG issues, and the cannabis industry boasts several companies taking leadership in the space.

  • As ‘cannabusinesses’ evolve, they will need to distinguish themselves, and to do this, it is essential to embrace the principles of ESG. Commercial cannabis has a unique opportunity to make environmental and social impact, create jobs, and be long-standing corporate citizens.

Journal of Accountancy: Smart strategies that prepared these firms for a tough labor market

  • The flexibility of remote work and virtual recruitment has helped accounting firms to attract and retain talent. Firms that still face hiring challenges have been focusing on recruiting more interns and entry-level accountants from colleges to remain competitive. Accounting firms have also been considering ways to improve diversity.

  • Competitive compensation is typically a top incentive. Firms in smaller cities face more wage pressures against individuals working for employers based out of Chicago or New York City. Some try to address this issue with attractive sign-on bonuses.

  • As employees seek flexibility and balanced work/life, leaders have been shifting mindsets to respect the reality of and need for life outside of work.

Women’s Wear Daily: To Succeed, ESG Practices Must Take a ‘Management Approach’

  • Accenture, the Responsible Business Coalition, Fashion Makes Changes and Women’s Wear Daily collaborated to create a playbook for the fashion industry on ESG practices with a management approach that involves clearly defined goals and actions.

  • The report is free and called, “Scaling ESG Solutions in Fashion: A Pragmatic Sustainability Playbook.” The playbook includes seven high-impact priorities and ESG solutions for the fashion industry: raw materials, climate, chemicals, fair labor, sustainability measurement, innovation and circularity, and consumer engagement.

ESG Today: Moody’s Pledges to Cut Scope 1, 2, and 3 Emissions by 90% by 2040

  • Moody’s Corporation announced Wednesday a new commitment to cut greenhouse gas (GHG) emissions across its operations and value chain by 90% by 2040.

  • Moody's stated that it's become one of the first companies to have its near- and long-term net zero targets validated by the Science Based Targets initiative (SBTi).

  • Moody's has already achieved a 92% reduction in absolute scope one and scope 2 GHG emissions and a 95% reduction in scope 3 from a 2019 base year in 2021. The company has set a target for 60% of its suppliers buy spend to have science-based target commitments by 2025.

ESG Today: AXA IM Unveils “Three Strikes and You’re Out” Engagement Policy to Divest from Climate Laggards

  • Global asset management firm AXA Investment Managers (AXA IM) announced the introduction of a strengthened voting policy aimed at urging portfolio companies to consider environmental and social issues. It now includes a timeline to divest from climate laggards that fail to make sufficient progress, and requirements for senior management incentive to pay to ESG and climate elements.

  • For 2022, AXA IM identified priority engagement areas including climate, biodiversity, just transition, and human rights. Its voting policy also promotes the integration of ESG elements in companies pay policies, pushing companies to add “tangible, relevant, meaningful key performance indicators” aligned with sustainable business strategies and executive remuneration plans.

Fitch Ratings: Cement Most Vulnerable to Climate Risk Among Building Materials

  • Within the building materials and construction sector, Fitch Ratings finds cement to be the most vulnerable to long-term climate risks due to the carbon emissions from the industry that require expensive decarbonization technologies to abate.

  • Cement production accounts for 8% of global carbon emissions, mostly from the manufacturing process. Reducing emissions will require major changes to production methods and costly technological investments that can disrupt current business models.

  • Other building materials and companies are usually linked to cement through the value chain, so climate vulnerability and decarbonization in the sector will depend on responsible sourcing and attention to Scope 3 emissions.

GlobalData: ESG-related job postings are steadily increasing as companies develop their sustainability initiatives, finds GlobalData

  • Job postings related to climate, carbon, renewables, ESG, and sustainability have increased from around 960 jobs in March 2021 to 1,400 jobs in March 2022, according to GlobalData.

  • GlobalData notes, “Firms are developing their sustainability initiatives and incorporating climate risk and carbon footprint measures. Companies are looking at equal opportunities, diverse hiring and inclusion to do this.”

Lexology: Cyber Risk in the World of Renewable Energy & Climate Change

  • Due to a growing awareness and interest in ESG factors there has also been rapid growth in the demand by consumers for sources of renewable energy and the desire by organizations and private households to transition to a more ‘green’ society.

  • An example that demonstrates the risks posed to renewable energy suppliers and the technologies employed by them is in relation to a cyber-attack which took place earlier this in 2022, which affected Viasat, a satellite communications company.

  • A company’s preparedness for cyber risks needs to take account of the physical risks of climate change as well.

  • Physical damage to network infrastructure due to a climate event can allow opportunities for cyber criminals to hack a company’s system.

NRN: ESG: What it is and how restaurant operators can adopt

  • Addressing ESG criteria has the potential to deliver long-term value to environmental, social and governance issues, and improve the struggles that restaurant operators face daily.

  • According to NRN, here are three things with both present and future benefits to consider when creating an ESG report for a restaurant:

1. Cutting back on food waste with inventory management and sales forecasting

  • U.S. restaurants generate an estimated 22-33 billion pounds of food waste each year, with much of this waste being perfectly edible and nutritious.

  • The key to reducing food waste lies in prevention.

2. Turning to hybrid and four-day work week models

  • The four-day work week is touted to increase employee satisfaction, attract talent, and improve employee retention.

  • Cross-training employees to do multiple tasks can also allow for a four-day work week.

3. Offering employee incentives like tuition reimbursement

  • Employee incentives within the restaurant industry have skyrocketed among the shortage in workers since the start of COVID-19.

Government Policy


Bloomberg Law: What’s Next for SEC’s Proposed Climate Disclosure Regulation?

  • Shivaram Rajgopal and Bruce Usher, Columbia Business School professors, discuss the SEC’s proposed climate disclosure rules, noting that if the proposed rules are finalized, companies may improve voluntary climate risk disclosures and increase investment in technologies that reduce emissions.

  • With possible opposition from Republican lawmakers, a more conservative U.S. Supreme Court, and state attorneys, the proposed rules may never be enacted. However, corporations may remain on track to disclose climate-related risks and act on their strategies. Three promising areas of action are:

  • Businesses may be encouraged to change strategy, such as moving capital from fossil fuels to renewable technologies and other solutions to climate change.

  • Companies may add climate experts to their organization or refer to accounting firms for climate auditing.

  • As climate literacy develops so will scrutiny of green claims, then capital will be more likely to flow to truly sustainable projects and decrease greenwashing.

ESG Today: Biden Allocates Over $3 Billion to Develop Domestic EV Battery Supply Chain and Production

  • The U.S. Department of Energy (DOE) announced Monday the funding of more than $3 billion to support domestic battery production, supply chain development and recycling, all aimed at boosting the Biden administration's goal to significantly ramp vehicle electrification in the U.S.

  • The new funding is being made available under the Bipartisan Infrastructure Law. The advancement of clean mobility has been a key focus area for the Biden administration, with an executive order signed last year mandating that zero emissions vehicles make up half of new vehicle sales in the U.S by 2030.

Reuters: Global regulators call for external checks on bank climate data

  • According to the Financial Stability Board (FSB) Regulators could require banks and other financial firms to hire external auditors to check the accuracy of their climate data.

  • Financial firms are being required to be more transparent about how climate change is affecting their business as part of the government’s efforts to meet net-zero economy targets over the coming decades.

  • Regulators have also become increasingly worried about greenwashing after trillions of dollars globally have flowed into ESG related investments based on several unrelated disclosures and checks.

  • The FSB noted, "As climate change is likely to represent a systemic risk for the financial sector, potential macroprudential tools or approaches would complement microprudential instruments.”