Daily ESG Briefing: Basel Committee mulling climate risk, reveals Fed Executive Vice President

The latest developments in sustainable finance

The Basel Committee’s climate risk taskforce “will consider the extent to which climate-related financial risks are incorporated in the existing Basel Framework, and identify effective supervisory practices to mitigate such risks”, according to Kevin Stiroh, Executive Vice President at New York’s Federal Reserve Bank and co-chair of the Basel Committee’s Task Force on Climate-related Financial Risks (TFCR). Stiroh, who co-chairs that taskforce alongside Frank Elderson of the Dutch central bank DNB, made the announcement in a speech last week, and added that the “TFCR does not currently have a view on potential prudential treatments or supervisory expectations related to the mitigation of climate-related financial risks”. 

Apollo Global Management has signed up to the IFC’s Operating Principles for Impact Management, and will apply to its Apollo Impact platform. The Principles, launched in April 2019, are an industry framework for investors to ensure that impact considerations are purposefully integrated throughout the investment lifecycle.

ESG risk exposure dynamics will determine future performance, according to work by Asteria Investment Managers, REYL Group's impact investing affiliate. Does it pay to love the angels and hate the sinners? argues that, although there is no real return difference for companies subject to either high or low ESG controversy risk, those whose ESG credentials are improving tend to achieve higher returns than companies with deteriorating ESG credentials. 

LGBT+ diversity and inclusion organisation, LGBT Great, has launched a survey calling on the LGBT+ community and its allies to give their view on how investment and savings firms should manage their money. The results of the survey will inform engagement with investment institutions to support the development of an LGBT+ lens investing agenda.

Carbon taxes in the US would result in economy-wide energy reductions of up to 41%, according to a report by Columbia University’s Center on Global Energy Policy and Rhodium Group. Even low carbon taxes would lead a 33% cut against 2005 levels by 2030, says Expanding the Reach of a Carbon Tax: Emissions Impacts of Pricing Combined with Additional Climate Actions.  The two research organisations explained that, although 10 carbon tax bills have been proposed in the 116th US Congress, to reach net-zero emissions by 2050, systemic change will be required.

Boardroom Alpha has launched an ESG analytics platform that assesses public company directors, officers and corporate governance. Through the corporate performance firm’s new initiative, users will be able to access ratings and analytics for all US publicly-traded company directors, CEOs and CFOs over the course of their careers. It will also provide company-level insights into governance, diversity, compensation, shareholder voting, and other measurable practices.

Japan’s Ministry of Foreign Affairs has announced its National Action Plan of Business and Human Rights to promote responsible corporate behaviour and the human rights of those who are adversely affected by corporate activities. The plan, which was first announced in 2016 and is based on the UN Guiding Principles on Business and Human Rights, explains that companies are expected to identify, prevent and mitigate human rights in corporate activities; to deal with them, to share information, and to promote the introduction of human rights due diligence.

IHS Markit has released a report titled Corporate US Renewable Procurement Outlook: Optimism Amid a Pessimistic Year, in which it claims Power Purchase Agreements from corporates for renewable energy “have now reached a tipping point”. Anna Shpitsberg, Director of Global Power and Renewables at IHS Markit, said that: “Fuelled by shareholder and consumer activism, the opportunity to hedge power costs and corporate renewable targets, companies are increasingly making the connection between a specific project and a specific facility’s power demand.”