Daily ESG Briefing: Canada wants to host International Sustainability Standards Board

The latest developments in sustainable finance

Canada is reportedly putting together a bid to become the host of the International Sustainability Standards Board, with both Montreal and Toronto under consideration. Canadian news site The Logic reported that Toronto Finance International, Montreal International and Finance Montreal are leading the bids for their respective cities to host the new board, which is being established by the International Financial Reporting Standards Foundation and will set international standards for ESG reporting. 

Implied temperature rises (ITRs) cannot be meaningfully calculated on the level of an entire financial institution, and it is too soon to tell whether they incentivise real-world emissions reductions, according to 2 Degrees Investing Initiative. In its response to a consultation by the Taskforce on Climate-related Financial Disclosures on measuring portfolio alignment, the think tank said that ITRs were mostly of value in supporting high-level disclosures, and that alignment metrics should distinguish between improvements due to investee emission reductions, and portfolio composition changes.

Investors should encourage businesses to incorporate the Just Transition into remuneration, according to a report by the Grantham Research Institute on Climate Change and the Environment and the ESRC Centre for Climate Change Economics and Policy at the London School of Economics and Political Science. Investors should also ensure companies apply labour, human rights and environmental due diligence and policies along the supply chain – particularly in developing countries – the report said. 

Most UK fiduciary managers are not effectively incorporating ESG risks into investments, according to a survey by XPS Pensions Group. While 84% of the fiduciary managers surveyed for the study said they monitor the voting and engagement activity of underlying managers, only 58% incorporate KPIs or remuneration policies that refer to ESG, and 68% have no explicit climate-related requirements for asset managers and are unable to conduct scenario analysis or stress tests of client portfolios.