Daily ESG Briefing: Calls for UK government to consider carbon offset rules

The UK’s Climate Change Committee has recommended that the government consult on regulatory “arrangements, rules and guidance” for the use of carbon offsets by UK corporates. In its annual progress report, the independent committee made more than 200 recommendations on climate policy, and said that government departments should work to avoid double-counting of offsets and negative outcomes for non-carbon objectives within offsetting programmes. The Committee also said that the green bond framework for the UK’s upcoming inaugural green gilt should “ensure that revenue is used to fund expenditure that will genuinely contribute to Net Zero and improved climate resilience”.

The World Bank Group has published its 2021-2025 climate change action plan, emphasising the importance of natural capital and biodiversity and promising to increase support for nature-based solutions. It also confirmed all its new financing flows will be Paris-aligned from July 2023, and it will work towards greening the financial market in emerging markets by working with central and development banks as well as private sector financial institutions. 

Moody’s has published carbon transition assessment scores for a number of rated car manufacturers and passenger airlines. Firms are given a rating of one to 10, based on current business profiles; policy, market and technology risk; medium term management and long term resilience. Tesla, Beijing Automotive Group and Renault are the best positioned car manufacturers for the carbon transition, with scores of 1, 3, and 3 respectively, while Spirit Airlines was the best placed airline with a score of 5. The median score for car manufacturers was 5, while the median for airlines was 7. 

Investors are now fully able to assess the impact of investment portfolios on nature, people and society, according to a new report by the WWF, which analyses available tools and services for assessing portfolio impact. The report assessed available tools by running a sample portfolio through them and analysed the strengths and limitations of each tool, giving suggestions for improving data and aligning terminology.

2° Investing Initiative has launched a new €1m research programme, which will aim to integrate future risks, especially those relating to environmental and social factors, into financial processes and regulations. The 1in100 initiative will focus on three streams: developing standards and metrics to define “long term investors and banks”; designing risk management tools and frameworks to quantify climate risk, biodiversity loss and social cohesion; and building capacity in financial institutions and supervisors for the mitigation and adaptation to future risks and challenges. 

Global practices for sustainability reporting and assurance vary wildly by jurisdiction, according to a new study from the International Federation of Accountants, and the the Association of International Certified Professional Accountants. The report found that half of companies which publish sustainability information are not subject to assurance, and that it is often provided by consultants instead of independent professional accountants.