Daily ESG Briefing: Brazil to issue sovereign ESG bonds

Brazil is preparing to issue its first ESG bonds, according to Reuters, with a debut deal possible later this year. The move comes as institutional investors and sovereign bond buyers step up engagement with President Jair Bolsonaro’s government over its environmental policies, especially in regard to the Amazon rainforest.

Investment manager Candriam has updated its methodology for assessing sovereign sustainability, placing heavier emphasis on countries’ natural capital, as opposed to their human, social and economic capital. The highest ranked countries under the new model are Switzerland, Denmark and Finland, with the Netherlands falling eight places to 12th due to its reliance on fossil fuel energy and exposure to risk from rising sea levels.

A report by non-profit CDP has found that companies are facing up to $120bn in costs from environmental risks to their supply chains within the next five years. The manufacturing and food industries are most at risk of rising costs from supply chain disruption.

The International Forum of Sovereign Wealth Funds has released the findings of its first survey of Sovereign Wealth Funds’ attitudes to climate change. 94% of those surveyed said that climate change was a risk or opportunity for their portfolios. However, only a third of respondents currently have a formal climate change strategy in place.

Real estate investors will be the hardest hit by the new EU taxonomy, claims a report by Bloomberg Intelligence. Few buildings built before 2021 will be eligible under the proposed new rules, and asset managers will face increased costs from investment in ESG data and research, it stated. 

The European Fund and Asset Management Association has published its response to the European Commission’s plans to introduce stronger corporate due diligence rules on human rights and environmental breaches in supply chains. The Association supported the initiative in its feedback to a consultation that closed yesterday, but strongly objected to the characterisation of shareholders as being exclusively interested in short-term financial returns.