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Daily ESG Briefing: Austria releases results of financial sector’s climate-alignment test

The latest developments in sustainable finance

Austrian financing of coal mining and non-electric vehicles must be "considerably" reduced, according to the results of the Austrian climate-alignment test released yesterday. 54 financial institutions including pension funds, insurers, asset managers and banks took part in the test, which used 2º Investing Initiative's PACTA methodology. The test found that while 70% of the institutions said they used coal exclusion criteria, all still had holdings in coal power or mining, and that the proportion of assets invested in oil extraction by Austrian firms was higher than the global average. ESG-oriented portfolios were comparatively better on climate, but not all of them are aligned with a two degree scenario.

South Africa’s national power utility firm, Eskom, is in talks with financial institutions including the World Bank and the African Development Bank to raise $10bn to fund its decarbonisation strategy. The strategy would see it shut the majority of its coal-fired plants by 2050 and embrace renewable energy, according to Reuters. "It's a lot of money, so what we are putting on the table is to say to funders: South Africa can offer you the biggest point source of carbon emissions reduction in the world," Mandy Rambharos, General Manager at Eskom's Just Energy Transition office, told the news outlet.

US Securities and Exchange Commissioner Hester Peirce has urged the International Financial Reporting Standards Foundation not to wade into sustainability standard-setting, saying such a move would improperly equate sustainability standards with financial reporting standards and raise governance concerns. The letter, published last week, comes as the foundation prepares to amend its constitution to create the International Sustainability Standards Board.

Glass Lewis has recommended shareholders vote against the reelection of Pranav Adani, a member of Adani Enterprises' risk committee. The move by the proxy advisory firm comes on the back of an Australian court in August finding that Adani Abbot Point Terminal Pty Ltd, a coal export terminal in the state of Queensland, engaged in monopolistic business practices. However, an Adani spokesperson countered the recommendation by stating the above is a separate company, so is not part of Adani Enterprises.

US banks are outperforming their UK counterparts when it comes to ESG practises, according to research by business intelligence firm alva. In two separate reports, the firm explored the ESG activities of 20 banks across the two geographies.

Vanguard has reportedly tripled its investment into the Xinjiang region of China since 2018, despite growing opposition to the treatment of its Uyghur population and other mostly-Muslim ethnic groups. Xinjiang is an autonomous region of the People’s Republic of China that has been at the centre of allegations of genocide and crimes against humanity, in part because of the use of internment camps and alleged forced labour. Such issues have prompted a number of European and North American investors to undertake engagement programmes with companies operating in the region.