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ESG Weekly News Update: November 12, 2021

General ESG News

The New York Times: Friday Highlights of the Climate Summit

  • Last Friday, Greta Thunberg referred to the climate talks as a “failure” and “greenwash campaign” due to the lack of new/substantive methods proposed for solving the climate crisis.

  • Thunberg and other activists have dismissed many of the new climate-related commitments made by governments and companies as being insufficient. Thunberg also scolded the media for “erasing the voices of activists, especially the most affected people from the most affected areas.”

  • Ugandan activist Vanessa Nakate highlighted the fact that Africa is only responsible for 3% of global emissions, but Africans suffer from some of the most brutal climate impacts.

  • Some experts note that the activists’ immediate negative response benefits the fossil fuel executives who want to discredit the concept of unified climate action. The dissonance between environmental activists and the nations and corporations trying to take action ultimately serves to undermine the broader cause.

  • John Kerry, President Biden’s special envoy on climate change, emphasized the progress made at the summit but also warns, “Job not done.”

Vox: The world’s progress on climate change

  • There is some genuinely good news in the midst of the climate crisis discussions: the world has made real progress. Before the 2015 Paris Agreement, the world was on track for a temperature increase of four degrees Celsius. Today, it is on track for three degrees. While this is not enough, it is something.

  • Much of the progress has been (unsurprisingly) fueled by financial drivers – prices for renewables and batteries are falling, so it makes economic sense to decarbonize.

  • Unfortunately, even if all of the world’s leaders meet their existing climate commitments, the planet will still warm by two to 2.4 degrees Celsius by 2100. The purpose of the COP26 conference has been to develop a plan for getting as close as possible to the goal of limiting climate change to 1.5 degrees Celsius, since the consequences of failure are dire and already being seen.

  • More good news is that President Biden’s Build Back Better proposal would allocate $555 billion toward furthering progress on climate goals. This may not be enough to reach the U.S. goal of cutting GHG emissions in half by 2030, it is a major step.

Greenbiz: What the new era of ESG means for corporate leaders

  • The evolution from CSR to ESG can be broken down into the following transformations: o From message to meaning o From silos to systems

  • From cost savings to value creation

  • ESG considerations are at the top of the agenda for key stakeholders (especially millennials), and organizations that fail to embrace this new “era” risk getting left behind.

  • Corporate leaders must evaluate how they are managing their sustainability programs, as well as if and how their purpose is integrated into their business strategy.

Yahoo! Finance: Blue Skyre IBE Introduces ESG Focus to Help Companies Make Informed Environmental, Social and Governance Decisions

  • In partnership with Allovance, Blue Skyre IBE has launched its ESG Focus, which is a proprietary SaaS tool that helps organizations make complex decisions and implement plans based on detailed data parameters.

  • The tool helps identify ESG objectives and priority initiatives based on company goals and in alignment with the Un Sustainable Development Goals. Companies can then develop an ESG program based on their desired impact & budget.

Yahoo! Finance: What Does the ‘S’ in ESG Mean? Explaining Social Criteria for Today’s Businesses

  • Social responsibility is difficult to measure because it is contextual and constantly evolving; the following five areas are those that are most commonly addressed: o Relationships (with employees, suppliers, customers, and shareholders) o Community relations and human rights o Workplace health and safety o Diversity, equity, and inclusion o Political ties

  • Social considerations matter to investors, and social measurements can give them confidence that the company they choose to invest in will not likely fall prey to inherent risks.

Reuters: ESG and supply chain: rethinking contracts

  • Currently, according to McKinsey, about two-thirds of the average company's ESG footprint lies with its suppliers. The challenge is that supply chains are made to maximize the value of product over their costs, and what the end consumer will pay ultimately depends minimally on the ESG impact of the product.

  • Experts now argue that supply chains will not be driven toward ESG objectives by supplier demands or incentive programs. There needs to be a transition away from “check box”/compliance-driven supply chain management, and ESG metrics and measurements must be built into supply chain contracts.

  • Additionally, the new contracts must account for the fact that suppliers are for-profit businesses that may not value ESG objectives on their own.

CNN: Humanity needs to ditch coal to save itself. It also needs to keep the lights on.

  • At the G20 meeting in Rome, world leaders failed to specify how they would phase out coal, though they did agree to stop financing coal projects by the end of this year.

  • At the COP26 summit in Glasgow, leaders have intensified their efforts to put an “end date” on coal use.

  • Reliance on coal in the U.S. and Europe has fallen drastically in recent years and is on track to end entirely. Around the world, proposals for new coal plants are being canceled. However, coal plants are still on the rise in much of Asia – a true global transition away from coal will depend almost exclusively on China, which consumes more coal than the rest of the world combined.

  • To reduce coal reliance, it will be crucial to develop new efficiencies that can increase the capacity and reliability of new energy sources while reducing their costs. For example, coal is currently integral to the production of steel and cement, but there is potential to eventually use green hydrogen as an alternative.

Brand Equity: ESG-Risk management and brand identity are closely interlinked

  • Ineffectual management of ESG erodes a brand’s value, while a structured and integrated approach to ESG improves reputation. There are examples of both sides of this narrative dating back multiple decades, especially the notable scandals of Foxconn, Enron, and Satyam.

  • An effective approach to managing material ESG concerns means involvement at the leadership level to “set the tone.” Departments like HR, finance, and marketing can no longer operate in silos, and the future of reputation management will rely on the management of ESG risks.

NPR: This is what the world looks like if we pass the crucial 1.5-degree climate threshold.

  • The recent pledges by over 100 countries including the U.S. joined a global pact to cut methane emissions and India’s first-time pledge to be carbon neutral by 2070, won’t be enough to keep us below 1.5-degree Celsius Paris Climate Agreement.

  • The consequences of the man-made climate change and rising temp of seawater has caused massive coral beaching which can lead to the death of large amounts of corals.

  • Since, coral reefs are key indicators of global ecosystem health, marine biologists like Ove Hoegh-Guldberg says “We need to act and we need to act decisively, without question and solve this problem”. o Hotter atmosphere means a wetter atmosphere and since warmer air can hold more water this will cause more and more extreme weather/storms. o Even a small shift in average temperature leads to a big increase in the number of extreme weather events. o Sea level rise is another effect of man-made climate change. Sea levels could rise 1-3 feet by 2100 according to a recent IPCC report but by limiting the temp increase to 1.5 degrees Celsius we could halve the amount of sea level rise. o Millions/billions of people who live along the coastlines in the US and around the world, will be at risk of the higher sea levels, storm surges and higher tides.

  • Professor Gabriel Vecchi, professor of geosciences at Princeton University, says “There are feasible pathways forward, it is not an inevitable future. There are reasons for hope; and despair I think, is counterproductive.”

ESG Today: Global Pledge to Slash Methane Emissions Grows to Over 100 Countries, 70% of World Economy

  • The Global Methane Pledge launched at the COP26 conference, and more than 100 countries have now committed to drastically reduce their methane emissions. This is critical to limiting global warming and having near-term impacts, since methane is incredibly potent and has a short lifetime in the atmosphere.

  • President Biden announced some of the new initiatives launched in the U.S. to reduce methane emissions, including introducing new rules to reduce methane losses from oil and gas pipelines, as well as efforts to reduce leaks from natural gas pipelines.

ESG Today: IFRS Foundation Announces Official Launch of International Sustainability Standards Board

  • The International Financial Reporting Standards Foundation (IFRS) announced the official launch of the International Sustainability Standards Board (ISSB) at COP26. The ISSB aims to focus on material topics (starting with climate-related issues) to create a set of unified ESG disclosure standards.

  • The IFRS Foundation also announced that the Climate Disclosure Standards Board (CDSB) and the Value Reporting Foundation will be consolidated into the IFRS Foundation by June of 2022.

  • The ISSB has already published two prototype disclosure-focused documents – one specifically for climate-related disclosure, and another for general sustainability disclosure.

Yahoo News: COP26 Where things stand 1 week into the U.N. Climate Change Conference in Glasgow, Scotland

  • More than 100 nations signed an agreement to cut methane emissions by 30% by 2030 as well as to end foreign development of new coal fired power plants.

  • President Biden and John Kerry former secretary of state now climate envoy, are scheduled to begin work on reducing the US greenhouse gas (GHG) emissions by 50% by 2030.

Reuters: World heading for 2.4C of Warming after latest climate pledges-analysts

  • Climate Action Tracker (CAT) said on Tuesday that the promises by countries attending the U.N. summit in Glasgow to cut greenhouse gas emissions by 2030 would still allow the Earth to heat up far beyond the United Nations target by 2100.

  • CAT continues on to say: “Even with all new Glasgow pledges for 2030, we will emit roughly twice as much in 2030 as required for 1.5°C," referring to the aspirational goal for warming since pre-industrial levels set down in the 2015 Paris Agreement.

GREENBIZ: The ESG landscape is changing-it's time to evolve

  • Organizations that have embedded sustainability principles into their strategy ahead of potential industry regulations benefit from better financing, reputation and talent retention.

  • ESGeo’s Sustainability Intelligence platform is a software application that enables companies to collect quantitative and qualitative data as well as measure and compare business impacts of ESG initiatives.

  • Reporting is only one part of the journey to developing a strong ESG Identity. Although 90% of companies in the S&P 500 index published sustainability reports in 2019, not all of those have set targets on how they will reduce their negative impacts. Setting targets and actions to mitigate negative ESG impacts is becoming increasingly important and is the next inevitable step.

AXIOS: What the $1.2tn infrastructure bill means for climate change

  • The bill included massive investments in roads, bridges, transit and billions for electric vehicle charging stations.

  • $47 billion goes towards climate resilience measures that will allow us to anticipate and prepare for/adapt to as well as absorb and recover from the impacts of climate change/extreme weather.

  • The bill also contains innovation policy investments that can help drive improvement in technologies like clean hydrogen, carbon capture, advanced nuclear, geothermal and long duration energy storage technologies

D Magazine: 3 Reasons to Implement ESG Efforts Now

  • It is the right thing to do if you care about future generations and the environment.

  • The ability to raise capital will depend on your focus on ESG issues.

  • Your customers/clients will need your cooperation with ESG initiatives in order to fulfill their carbon emission/sustainability goals.

Cause Artist: The Next Economy is Being Built by Allocating Capital Into Regenerative Natural Resources

  • Provincial Capital Group, PCG is a financial services firm focused on allocating capital into regenerative natural resources sector: fiber, farming, forestry.

  • Adrian Rodrigues the guest speaker on Investing in Impact podcast #35 and is co-founder of PCG and member of the Investor Resource Council of J.E.D.I. Collaborative whose goal it is to help businesses embed equity, justice, diversity and inclusion into the entire food ecosystem.

Reuters: At COP26 talks, 45 nations pledge to protect nature in climate change fight

  • 45 nations pledged urgent action and investment to protect nature and shift to more sustainable ways of farming. The test of these agriculture commitments will come in the form of adding them to their formal/public climate action plans and tracking progress.

  • UK Environment Secretary, George Eustice said “To keep 1.5 alive, we need action from every part of society, including an urgent transformation in the way we manage ecosystems and grow produce and consume food on a global scale”. #Keep1point5alive

The Washington Post: At COP26, 100,000 march for climate justice

  • Activists slammed COP26 as ‘conference of polluters’, with pent up frustration over lack of climate progress and doubt toward the actions and conscience of some politicians.

  • Roz Foyer, general secretary for Scottish Trades Union congress stated “The fight for climate justice and fight for social justice must go hand in hand” echoing and reinforcing the chants of the many indigenous climate activists present and protesting in the street outside the COP26 convention.

Greenbiz: The stars are aligning for sustainable business

  • There are two main ways that a business is accountable: o Businesses are accountable to investors for the creation of enterprise value. o Businesses are accountable to Society at large for impacts on people and the environment.

  • It is widely being understood that the modern system of business needs to be reformed. We need to prove we can address the climate crisis and create sustainable business.

Lexology: ESG strategies are mission critical for sustainability

  • Driving ESG in the supply chain can be a dynamic force for positive change and growth but it might not be easy. The risk of getting ESG wrong is increasing reputational damage, compliance costs and the potential loss of business.

  • Karin Reiter, Global head of ESG and sustainability at Adecco Group says all three ESG criteria are interrelated but governance is the still the bedrock on which sustainable value creation is built.

Bloomberg: The Startups That Could Close the Greenwashing Loopholes

  • The process of measuring carbon emissions or carbon accounting as it is referred to is complex but fintech startups like Normative and Persefoni have come to the rescue.

  • Nearly ¾ of the world's emissions are Scope 3 emissions. Scope 3 emissions are the ones that come from the actions of others in the supply chain. o Scope 1 are emissions are direct emissions from your own factories/offices. o Scope 2 are indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by the company. o Scope 3 include all other indirect emissions that occur in the company value/supply chain.

  • The Securities and Exchange Commission is expected to set new rules for companies to report Scope 3 emissions.

Financial Express: Good Banking: The role of banking in driving ESG goals

  • Banks have an opportunity as well as a responsibility to provide banking services to the unbanked and underbanked population across the globe. o Inclusive financing entails a systemic mandate to encourage access to finance for underserved populations. o Embracing sustainable operation and ESG initiatives helps banks to streamline internal operations, innovate and adopt new technologies.

ESG Disclosures, Standards, Rankings, and Reporting

Reuters: Slowly, European regulators are turning up the heat on greenwashing

  • With the lack of consensus around what “green” and “greenwashing” mean, and with trillions of dollars flowing into “sustainable” funds in recent years, watchdog organizations have difficulty proving the exaggeration of ESG claims.

  • To help combat this, IOSCO recently published recommendations to help member firms identify cases of misleading ESG investment claims.

  • Regulators, especially in Europe but also in the U.S., have begun launching investigations into allegations of inflated ESG claims, and regulatory risks are now high on company agendas.

  • European watchdogs are also moving beyond the EU SFDR and demanding that firms provide information to back up their ESG claims or drop the label.

  • To date, regulators have focused on publishing guidance and engaging fund managers, and proving deliberate mis-selling of funds is difficult. Some doubt the success of prosecuting cases under the current regulatory framework, since poor disclosure does not necessarily mean any rules have been broken.

The CPA Journal: The ESG Reporting Journey: Take the first steps...before it’s too late

  • ESG engagement must be embedded into a company’s strategy and purpose to keep them from losing attention and investment and to ensure they create lasting change and value. Four steps leaders can take to improve their ESG commitments are: o Developing a strategy o Operationalizing plans o Measuring, reporting, and assuring ESG plans o Growing/transforming with ESG in mind

  • Boards, management, and auditors must all be aligned on how to drive business model operations to meet ESG objectives. Auditors, specifically, are well-positioned to support ESG reporting and data verification.

  • Companies should be wary of jumping to action and reporting without first determining how to integrate ESG into the broader corporate strategy, and contextual awareness is key.

Yahoo! Finance: ESG Disclosure Standards Go Global With ISSB Launch

  • The International Sustainability Standards Board (ISSB) was officially launched at COP26 this week, with 38 governments (including the U.S.) expressing their support. IOSCO will oversee the ISSB, and it will be managed by the IFRS in Germany.

  • Concerns still remain around how the ISSB will enforce its materiality-based principles and standards (which will be published in 2022, implemented in 2023, and reported in 2024). The European Commissions is already working with regulatory bodies to make ISSB and other ESG reporting mandatory for public companies.

The Globe and Mail: Greenwashing is real as companies and funds ride the ESG express. The goal is to make it rare

  • Criticisms about greenwashing have been increasing and were present at the COP26 summit. Many of these criticisms are justified – offloading oil and gas assets does nothing to reduce overall carbon emissions, and countries and firms that are setting net-zero targets are still paying subsidies to and investing in fossil fuels.

  • With ESG as a relatively vague term with undefined parameters, weighting scales, and disclosure regulations, it is easy to “game” the system.

  • Greenwashing will never disappear entirely. However, as transparency improves from the increased attention from regulatory bodies and standard-setting organizations, investors will find disclosures more useful and instances of greenwashing will be easier to identify.

Financier Worldwide: Material issues: ESG in the age of activism

  • In PWC’s 2021 ESG Consumer Intelligence Series polling consumers, employees and business leaders concerning expectations surrounding ESG issues: o 83% of consumers think companies should be actively shaping ESG best practices. o 86% percent of employees prefer to support or work for companies that care about the same issues they do. o 91% percent of business leaders believe their company has a responsibility to act on ESG issues.

  • A move by the Securities and Exchange Commission (SEC) has made it mandatory for public companies to disclose their greenhouse gas (GHG) emissions and impact on climate change in their annual 10-K filings.

  • Robert Blood founder of UK-based SIGWATCH, which tracks and analyses the behavior of NGOs, says “As the need for action on climate change makes financial links to oil and gas majors increasingly risky, activists have been able to convince investors and shareholders of the need to act on ESG concerns.”

Central Banking: Should ESG reporting be made mandatory?

  • Central banks and stock exchanges have been among the first to take action toward making ESG requirements mandatory and updating risk management frameworks. Questions remain about whether ESG reporting should be mandatory and, if so, how to enforce it.

  • Additionally, imposing mandatory ESG or climate-related disclosures will require an internationally recognized framework. Efforts are currently underway to develop this.

  • The shift from voluntary toward mandatory ESG reporting is happening in several regions, especially the European Union, New Zealand, and parts of Asia.

  • The new International Sustainability Standards Board is expected to play a major role in improving issuers’ ESG-related disclosures.

  • There are also questions about what will happen once countries hit their net-zero targets – if mandatory reporting pressures will become more lenient, or if the mindset shift will result in lasting change.

Bloomberg Law: ESG Debt Scores Are Inconsistent, Unreliable, JPMorgan Says

  • New research from JPMorgan indicates that reliable data does not exist for evaluating how well a firm is adhering to ESG protocols, and scores for ESG bonds are largely subjective.

  • Among three ESG score providers on the Bloomberg Terminal, JPMorgan found that scores overlapped just 18% of the time. This lack of consistency becomes a problem for developing ESG indexes.

ESG Today: Singapore Financial Regulator to Launch ESG Disclosure and Data Platforms

  • The Monetary Authority of Singapore (MAS) has launched an initiative to partner with financial technology providers and finance industry participants to develop ESG-focused data platforms.

  • The new initiative is part of the MAS Project Greenprint, which aims to help mobilize capital for sustainable finance through technology and data. The country is positioning itself as a hub for ESG-focused data providers and financial services companies.

  • The proposed platforms would include the Greenprint Common Disclosure Portal, Greenprint Data Orchestrator, Greenprint ESG Registry, and the Greenprint Marketplace.

Bloomberg law: Analysis:Corporate Reputation Is What Drives ESG Disclosures

  • Head of Securities and Exchange Commission, Gary Gensler has made it clear that improving corporate ESG disclosure is a SEC priority.

  • Bloomberg law recently surveyed lawyers who work in the ESG space: o 83% chose company reputation as the primary driver of the decisions to make ESG disclosures. o Another survey found the most common challenges to advising clients on ESG matters included lack of clarity around voluntary standards and frameworks (53%) and rapidly changing regulatory landscape (51%).

Investment Trends

Corporate Knights: Are financial regulators keeping pace in the race to green?

  • There is an explosion of serious concerns about climate change and social inequities led predominately by retail investors.

  • Many are expectantly waiting for the new global ESG standards to weed out the “greenwashed."

  • When it comes to verifiable ESG investing the “buyer beware” attitude is paramount.

Opinion Markets Insight: Bonds are an ESG blind spot in investing

  • Equity funds with Socially responsible investing (SRI) or ESG mandates have attracted twice as much money in the year to data as their counterparts without then, according to data provider EPFR.

  • In late 2020 the BVA Global Markets Research estimated the stock of green, social and sustainable bonds to reach $1tn out of a market total of $128tn.

  • John Plender, British financial journalist observes that the great majority of the global bond market is still ethically value free. For example: In 2020, The non-profit responsible investment research group, ShareAction discovered that 84% of asset managers had no public policy against purchasing sovereign bonds form countries under international sanction for human rights abuses.

  • Many of the big emitters of greenhouse gasses (GHG) are state owned or private and are not beholden to institutional investors push for net-zero initiatives. It is thought that the transfer of dirty assets from public to private equity will be a difficult battle due to tougher regulations soon to take effect.

Bloomberg: BlackRock ETF With $8 Billion in Outflows Gets an ESG Twin

  • BlackRock’s new iShares ESG MSCI USA Min Vol Factor ETF (ESMV) aims to capitalize on the trend of investors moving toward both low-volatility and ESG-related funds.

  • The fund’s non-ESG counterpart (USMV) gained more than 16% this year and cash has flooded into ESG ETFs at an unprecedented rate.

  • Recently, BlackRock has been reaping the benefits of socially responsible investing, with $32 billion (of its total $98 billion in long-term net flows) going to sustainability-related funds.

JDSUPRA: How is ESG Regulation Influencing Investor Behavior

  • In a report issued in April 2021, Citigroup Inc. stated that 20–40% of U.S. collateralized loan obligation (CLO) managers will incorporate ESG factors into new issue CLOs in 2022 and 2023, propelled by growing demand from investors.

  • There is a convergence happening between ESG and securitized products in the capital markets. ESG and CLOs have been getting closer since the advent to ESG negative screening in 2019.

  • In the sustainability-linked loan market in Europe, companies include incentives and performance indicators (KPI) in loan documentation, reducing borrowing costs when sustainability goals and performance indicators (KPI) are met.

The Financial: Companies failing to act on ESG issues risk losing investors, finds new PwC survey

  • New research from PwC finds that 49% of investors are willing to divest from companies taking insufficient ESG action, and more than half say this type of shortcoming would make them likely to vote against an executive pay agreement. Nearly 80% say that a company’s ESG risk management practices are an important factor in their investment decisions.

  • Despite these findings, the vast majority of investors also indicate that they do not want ESG actions to significantly impact their investment returns.

  • Furthermore, 83% of investors surveyed said they want ESG disclosure to provide detailed information about progress toward ESG goals, and they are seeking a set of unified ESG reporting standards.

  • Climate and greenhouse gas emissions are top ESG priorities for investors, followed by workforce health and safety and employee and executive diversity.

The Herald: David Thomson: COP26 takes centre stage as returns from ESG portfolios start to increase

  • Despite the increasing interest in ESG investing, there is still little regulation/standardization around the terms being used to manage and rate ESG products.

  • Investors are seeking companies that have positive environmental impacts, that support the human rights of those affected by its business, and that offer products and services that help provide access to some of the world’s most basic rights. Some investors only want to invest in companies that meet all of these criteria, while others operate in a more “grey” area.

  • Investors need to consider the implications of adopting an ESG investment strategy, as risk inherently increases for ESG portfolios due to the decrease in diversification and increased scrutiny.

  • Despite the increased risk, the increasing popularity of ESG investments is also leading to outperformance of companies that meet the ESG criteria.

Pensions & Investments: ESG adoption remains on the rise among U.S. institutional investors

  • In the latest survey from Callan it was discovered that 49% of institutional investors incorporate ESG factors into investment decisions.

  • Reasons for incorporating ESG factors include: o 55% To align their portfolio with their values o 54% To improved risk profile o 34% For higher long-term returns o 18% To utilize their investment pool to make an impact.

ESG Today: Moody’s Sees $45 Trillion Investment Opportunity from Carbon Transition

  • Moody’s has published new reports exploring the anticipated climate-related impacts to companies in different sectors and regions over the coming decades, and the research found that some sectors like automotive and utilities have already taken significant steps toward decarbonization, while oil and gas lag behind.

  • The research also found that nearly all sectors face significant exposure to heat and water stress, and sectors like real estate and construction face major exposure to weather-related disasters and fires.

Advisor Perspectives: ESG Shareholder Engagement Reduces Downside Risk

  • Authors of the 2019 “Foundations of ESG investing: How ESG Affects Equity Valuation, Risk and Performance” study say:

  • High ESG-rated companies suffer less frequently from severe incidents such as fraud, embezzlement, corruption or litigation cases.

  • Authors of 2021 “ESG Shareholder Engagement and Downside Risk” study examined whether ESG engagements are associated with reductions in downside risk at portfolio firms concluding: o Engagement over environmental topics (primarily over climate change) delivered the highest benefits in terms of downside‐risk reduction.

ESG Today: London Stock Exchange to Launch Market for Carbon Funds

  • The London Stock Exchange (LSE) plans to develop a market solution for voluntary carbon markets, with the aim of enhancing investment in global carbon mitigation projects and providing capital for projects that reduce greenhouse gas emissions and remove carbon from the atmosphere.

  • The new solution will be created using the LSE’s existing market infrastructure and will be supplemented by requirements relevant to carbon credit projects.

The Motley Fool: What is an ESG Rating

  • A “GOOD” ESG rating means a company is managing its environment, social and governance risks well relative to its peers.

  • A “BAD” ESG rating means that the company is not managing its environment, social and governance risks well relative to its peers and has a higher exposure to ESG risks.

  • One widely referenced ESG rating systems is the Morgan Stanley Capital International, MSCI. The MSCI ESG score considers risk areas across 10 categories within environment, social and governance.

  • Companies are scored on 35 key issues, identified by the specific company industry. Anyone can use ESG rating to supplement financial analysis, to use as tool to screen companies or investments or use ratings to gain insight into companies you are already involved with.

IRISH TIMES: Companies failing to act responsible may lose investors, report says

  • Nearly half of investors surveyed by PwC say they are willing to divest from companies that are not felt to be taking sufficient action on ESG factors.

  • Somewhat contradictory to the larger issues driving ESG, 49% report they are unwilling to accept any reduction in returns for pursuit of ESG goals and 81% of investors say they will accept no more than one percentage point less in investment returns.

ESG Today: JPMorgan, Neuberger Berman Among $11 trillion New AUM Joining Initiative Committed to Net Zero Investing

  • The Net Zero Asset Managers (NZAM) initiative has added more than 90 new firms as signatories committed to net zero investing, including JPMorgan Asset Management, Rockefeller Asset Management, and Neuberger Berman.

  • NZAM also announced an expansion in its Asian member base, including Mitsubishi UFJ Trust and Banking, Nikko Asset Management, and Nomura Asset Management.

  • Signatories commit to a series of actions like setting interim targets for the proportion of assets to be managed in line with net-zero emissions by 2050, prioritizing the achievement of real emissions reductions, facilitating increased investment in climate solutions, supporting policy advocacy, and more.

  • According to NZAM, 43 of its signatories have announced their interim targets, covering 35% of the reported AUM.

Companies and Industries

Canadian Mining Journal: Mining executives see ESG and decarbonization as the top risks facing their business heading into the new year.

  • The Top Ten business risks and opportunities for mining and metals in 2011 survey showed: o #1 Environmental and Social Issues o #2 Decarbonization o #3 License to operate (LTO), License to Operate had been the #1 for three years in a row.

  • Many in this industry committed to net-zero goals by 2050 but few have worked out what it actually means for their business or allocated capital to achieve it.

  • Mineral substitutions/technology shifts are disrupting the mining industry and survey respondents feel this may be time for the introduction of shared value or circular business models.

Bloomberg: Should Central Banks Be Responsible for Saving the World

  • The world’s central banks are being increasingly expected to solve problems like climate change, income inequality, inflation, and more while also being placed in the middle of political disputes in some countries.

  • Experts note that while banks should not be expected to “save the world,” they can use their influence to urge politicians to act.

BBC News: Climate change: The US state taking on an oil giant for greenwashing

  • The state of Massachusetts is taking on ExxonMobil in court using consumer protection laws alleging that the company is deceiving the state’s consumers and investors about the damage caused by its oil and gas products.

  • Exxon denies the allegations and has tried (and failed) to get the whole case dismissed on the grounds that the ads were not made in or directed at MA residents. In response, the state argues that the specific climate change impacts affecting residents (especially fishermen) justify the case.

  • Beyond MA, 21 states are taking fossil fuel giants to court for alleged greenwashing and spreading disinformation about the effects of climate change.

  • The MA case is particularly important because it could continue for years, but it has so far progressed the furthest and could potentially meant he payment of billions of dollars in compensation. Unsurprisingly, all companies strongly deny all accusations.

CNBC: How a focus on ESG is driving a credit crunch for oil and gas companies

  • Americans currently get about 80% of their energy from fossil fuels, and demands are expected to increase, but major institutional investors are promising to focus more on renewable and clean energy sources.

  • Aswath Damodaran, a professor at NYU, argues that ESG is “promising the cake with no calories.” Prices for green energy raw materials are soaring, causing the stock prices for producers to increase drastically as well. However, job losses from oil and gas mines and companies are also on the rise.

  • Many argue that these short-term losses will be offset by the rise in low-carbon sectors and decreasing costs of renewables, balancing the overall cost of energy.

ESG Today: BNP Paribas AM Announces Series of Senior Sustainable Investing Hires & Appointments

  • BNP Paribas has made a series of new hires and promotions within its Sustainability Centre, which provides investment teams with research, ESG data, analysis, and regulatory support.

  • The new appointments center around the strategic themes of accelerating the energy transition, protecting the environment, and achieving equality and inclusive growth.

  • The new hires include Rachel Crossley as Head of Stewardship – Europe, Malika Takhtayeva as Sustainable Fixed Income Lead – EMEA, Thibaud Clisson as Climate Change Lead, Robert-Alexandre Poujade as Biodiversity Lead, and Delphine Riou as Inclusive Growth Lead.

ESG Today: Carbon Accounting Platform Persefoni Expands into UK as Climate Disclosure Requirements Grow

  • Persefoni has established a UK team, and its SaaS platform helps enterprises and institutional investors measure, plan, and report on their carbon footprints by leveraging AI technology.

  • The expansion comes at a time when the UK government has launched plans to introduce legislation that makes climate-related financial disclosures mandatory for the country’s largest public companies.

  • Anne Reaney has been appointed as Co-Founder of Persefoni UK and Head of Sales, EMEA, and she will be responsible for leading the organization’s growth across all channels.

ESG Today: SBTi Launched Guidance for Private Equity Firms to Align Portfolios with Global Climate Goals

  • To date, six private equity firms representing 133 billion Euros AUM have SBTi-approved climate targets, even after the organization tightened its criteria for approved climate targets this year. Additional firms have committed to having their targets approved within two years.

  • SBTi has now launched new guidance to help PE firms align their investment portfolios with climate goals. The guidance is tailored to the unique business models of PE firms and helps them address the challenges they face in creating and achieving their goals.

Government Policy

ESG Today: Global National Climate Targets Not Aligned with Paris Agreement Goals: FTSE Russell

  • New research from FTSE Russell in its Net Zero Atlas Report indicates that the climate commitments from G20 countries are not sufficient to meet Paris Agreement goals, and their interim goals are even worse.

  • The report notes that the current state of national net-zero targets (pre-COP26) would lead to a temperature increase of 2.1 degrees Celsius. The commitments from the U.S. and Canada were found to be the farthest out of alignment with the 1.5-degree scenario.

ESG Today: UK to Institute Mandatory Disclosure of Net Zero Transition Plans

  • At COP26, UK Chancellor of the Exchequer Rishi Sunak announced the next step in the country’s plan for sustainability reporting, specifically that the country will introduce requirements for mandatory net-zero transition plan disclosure from UK financial institutions and public companies.

  • A new Transition Plan Taskforce will be convened to develop a “gold standard” for transition plans in order to guard against greenwashing.

  • Sustainable investment-focused groups like Ceres support the UK’s plans.

Bloomberg law: ESG Proxy Proposals Land on Easier Path for Vote After SEC Change

  • The Securities and Exchange Commission will be cracking down on common ballot-battle tactics that companies have used to quash shareholder proposals on ESG issues.

  • In early Nov the SEC clarified that it does not support the notion that ESG policies are “inappropriately intrusive” or would interfere with “ordinary business” operations as has been argued in the past.

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