Daily ESG Briefing: Asian insurer AIA exits coal

The latest developments in sustainable finance

AIA, the largest pan-Asian life insurance group,  has divested from coal mining and coal-fired power business in its listed equity and fixed income portfolio, seven years ahead of schedule, and will make no new investments in businesses directly involved in coal mining or generating electricity from coal. It has also committed to setting a Net Zero goal certified by the Science Based Targets Initiative.   

The European Insurance and Occupational Pensions Authority (EIOPA), the EU’s insurance regulator, has published a three-year plan to integrate sustainable finance across its work. From 2022-2024,  it will develop proposals for supervisory reporting of climate risks in Solvency II, analyse prudential treatment under Solvency II of assets and activities associated with environmental and social objectives and promoting sustainability disclosures. RI previously reported that European Commission has mandated EIOPA to review the prudential treatment of investments with environmental and/or social objectives as well as the risk profile of environmentally or socially harmful investments – seen as a potential resurrection of the idea of a 'brown' penalising factor – and report back no later than 2023.  

Only 38% of ASX200 companies disclosed information about their interactions with and impacts on First Nations people in 2020, according to a report by Australian Council of Superannuation Investors (ACSI). The report aims to help investors and companies identify good practices in engagement, risk management and disclosure related to First Nations, highlighting that nearly half of extractive company operations globally are on First Nations land. “Investors ultimately bear costs and financial risk when First Nations engagement is inadequate, misaligned with societal expectations or where there is a discrepancy between what a company says it will do and what actually transpires,” said ACSI CEO Louise Davidson.   

The Amman Stock Exchange (ASE) in Jordan has said it will introduce mandatory sustainability reporting requirements for companies in the ASE20 for the year 2022, aiming to expand this to all listed companies in 2023. 

Local Pensions Partnership Investments (LPPI) has appointed consultancy  Chronos Sustainability to help it achieve Net Zero Portfolio Emissions by 2050.   

Moody’s has expanded its coverage of ESG issuer profiles and credit impact scores to hundreds morel issuers globally across sectors including financial institutions, telecoms and multilateral development banks. Issuer profile scores assess an issuer's exposure to ESG considerations that could be material to credit risk, while credit impact scores communicate the impact those ESG considerations have on an issuer's credit rating.   

The price of carbon in Europe (EUAs) is likely to rise to EUR 100/tonne before Christmas due to “winter risks”,  SEB’s Chief Commodities Analyst Bjarne Schieldrop estimates.  In a research note he said a continued price rally could play out “before de-risking of the current extremely high winter natural gas prices kicks in”. He also estimates the average EUA price at EUR 85/tonne over the coming nine years.