Daily ESG Briefing: Aussie regulator to look at climate risk for big banks

The latest developments in sustainable finance

The Australian Prudential Regulation Authority revealed last week that it is developing a Climate Vulnerability Assessment “to both uplift the scenario analysis capability and strengthen the understanding and management of climate-related risks within the financial sector”. Starting with large banks in the country this year, the assessment will look at physical and transition climate risks in a bid to help the regulator in “understanding how the large authorised deposit-taking institutions might adjust their business models in response to different climate change scenarios”.

The Japanese Pension Fund Association for Local Government Officials has increased its holdings in domestic ESG stocks sixfold since last year, according to media reports. The increase takes the fund’s holdings from ¥130bn (€1bn) to ¥820bn, with ESG stocks now representing 13% of its Japanese equities portfolio. The fund tracks the investment strategy of the Government Pension Investment Fund. 

Transform to Net Zero, a group launched in 2020 by nine companies including Starbucks and Microsoft, has released an ‘action plan’, saying it wants “all Fortune Global 1000 companies to have targets backed up by transformation plans to achieve net zero no later than 2050” by 2025. The project aims to assist corporate net zero goals through collective action on the development of tools and resources, enabling business transformations, and pushing for capital market and policy reforms. 

The Abu Dhabi Investment Office has launched a new ESG policy aimed at ensuring that its “approach in its various programmes, including the Public-Private Partnership Programme and the Incentive Programme, contributes to the achievement of the United Arab Emirate’s ESG goals”, as well as improving the overall understanding of ESG in the UAE.

Institutional consultancy bfinance has released the findings of its ESG Asset Owner survey, which found that one third of investors said the pandemic had increased their focus on ESG issues. However, 84% of investors said that inconsistent reporting across asset managers and classes was a major challenge.

The Fossil Fuel Non-Proliferation Treaty Initiative has selected think tank Carbon Tracker and NGO Global Energy Monitor to develop a global registry of fossil fuels, which will track all existing, planned and potential oil, gas and coal production on associated emissions, the first database of its kind.