Daily ESG Briefing: Bank of England puts climate stress tests on ice

The latest developments in sustainable finance

The Bank of England has confirmed it will postpone its long-awaited climate stress test for UK banks in recognition of “current pressures on firms,” over COVID-19. It also cited “the responses to the December 2019 Discussion Paper on the Climate Biennial Exploratory Scenario”, but did not elaborate further on the feedback. The stress tests will be put on hold until at least the middle of next year. “This delay reflects a desire to maintain the ambitious scope of the exercise, whilst giving firms enough time to invest sufficiently in their capabilities to allow them to deliver to a high standard” the bank said in a statement today.

Royal London Asset Management has said it will expand its ESG engagement focuses to cover financial and social inclusion, innovation and technology and the circular economy. It will continue engagement on climate risk, governance and diversity it said. On the latter, it believes there will be a greater focus on ethnicity, on the back of the Parker Review – a UK report on the topic released in February. 

Hong Kong saw $2.6bn in green bond issuance last year, according to a Hong Kong Green Bond Market Briefing released by the Climate Bonds Initiative – 5% down on 2018. Six issuers came to market, with a heavy focus on low-carbon buildings. $10bn of green bonds were arranged and issued by Hong Kong as a financial centre over the same period. 

The Islamic Finance Council UK, in partnership with the Malaysia-based International Shari’ah Research Academy for Islamic Finance, has launched the first report in a “thought leadership” series promoting investment in line with the Sustainable Development Goals (SDGs) by the Islamic finance sector.

The Good Economy, Peabody and Centrus have published an ESG and social housing white paper for consultation. Developed as a collaboration between investors and housing associations, the new consultation paper identifies 10 themes and 45 metrics for investors to measure the ESG performance of the UK social housing sector. 

Morgan Stanley has identified 183 firms that “are expected to have a positive transition between 2020 and 2022” in relation to climate change. The bank's long-standing Sustainable Solutions Interactive project, which was updated this week, now includes estimated revenue/EBITDA exposure in both 2020 and 2022, to establish which companies are upping their exposure to key climate themes. “European stocks are particularly prevalent as transition stories,” the report said. “From a sector perspective, the consumer discretionary sector dominates.”