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Daily ESG Briefing: ClimateCare and Natural Capital Partners merge

The latest developments in sustainable finance

Voluntary carbon offsetting firms ClimateCare and Natural Capital Partners have announced a merger, arranged and funded by private equity house Averna Capital. Initially, both firms will continue to operate under their existing brands. The merged group will have a client base of more than 500 companies and access to more than 600 carbon reduction projects. Last month, impact investor Lightright took a 10% stake in Europe’s other major offsetting house, South Pole. 

Higher levels of ESG disclosure lead to increased divergence between ESG ratings from different providers, according to research from Harvard. The study found that differences in ESG scores from Sustainalytics, MSCI and Thomson Reuters were most pronounced in companies with high levels of ESG disclosure. It suggested that the more information available on a company’s ESG activities, the greater the subjectivity when judging them. It also found that firms with higher levels of ratings inconsistency were less likely to raise external financing.

President of the Bundesbank, Jens Weidmann, has said that the Eurosystem should examine the idea of only using ratings which incorporate climate-related financial risks. In a reply to an open letter from climate activists, Weidmann said that central banks “should do more to address climate-related risk” and said that the Eurosystem should only purchase securities if issuers meet climate-related reporting obligations.

Aegon Asset Management carried out 575 engagements in 2020, and it says that it has seen encouraging progress from companies on diversity issues. As it released its 2020 stewardship report, the asset manager said that US companies in particular had become more willing to talk about diversity, and highlighted the progress of software firm AVEVA, which now has a programme to retain women in India who leave to start families.  

Meanwhile, 57% of UK pension savers expect companies to report on ethnicity pay gaps, according to a survey carried out by PensionBee. This figure rose to 72% among female respondents, with 66% of all savers expecting companies to have representative levels of diversity in their workforce. Gender pay gap reporting was made mandatory in the UK in 2017, and a petition in 2020 calling for this to be extended to ethnicity pay gaps gained 130,000 signatures.

Swiss Sustainable Finance has joined Eurosif, Europe’s Sustainable Investment Forum. The alliance of over 170 members joins sustainable investment associations from countries including the UK, Italy, France and Germany as a member of the Pan-european association.

Physical climate risk is broadly credit negative for sovereigns, particularly for emerging markets in sub-Saharan Africa, APAC and the Carribean, according to a new report from Moody’s. Advanced economies such as the Netherlands and Denmark tend to be more at risk from rising sea levels, and three quarters of the sovereigns rated by Moody’s have a moderate to high negative physical climate risk score. The analysis found that while adaptation measures can mitigate physical climate exposure, their effectiveness is yet to be widely tested.