Daily ESG Briefing: Do No Significant Harm ‘handbook’ launched

The latest developments in sustainable finance

A ‘Do No Significant Harm Handbook’ has been launched by academics, lawyers and consultants to help investors evaluate new EU requirements preventing business activities that undermine any of the bloc’s environmental objectives from being classified as sustainable. The rules, which are a central pillar of the EU Green Taxonomy, have been problematic for investors so far – in part due to the lack of relevant data. “The overarching aim of the DNSH Handbook is to assist financial market participants to evaluate DNSH criteria applied to the EU Taxonomy and to instil awareness amongst actors in the economy of the benefits of sharing DNSH data early-on,” said the authors of the report. The FS-UNEP Collaborating Centre for Climate & Sustainable Energy Finance – a partnership between the Frankfurt School and the UN – has created the guidance in collaboration with law firm Maples Group and consultancy ELS Europe. 

Dutch investment house Robeco has insisted that Royal Dutch Shell’s plans to move its headquarters from The Netherlands to the UK “will not change the focus and scope of the joint climate engagement with Shell via Climate Action 100+”. The oil major announced this week that it would ask shareholders for permission to ditch its current UK/Netherlands dual listing structure in favour of a London HQ, and change its name to Shell Plc. Chairman Andrew Mackenzie said at the time: “The simplification is designed to strengthen Shell’s competitiveness and accelerate both shareholder distributions and the delivery of its strategy to become a net zero emissions business,” although it is unclear how the move will bolster the firm’s climate plans – especially as much of the pressure on the company has come from Dutch investors and courts. In May, the district court in the Hague ordered Shell to decarbonise by 45% by 2030, based on its 2019 emissions – five years earlier than it had planned – in a ruling Shell said it would appeal. ABP recently announced it will sell its shares in the company on climate grounds. ESG specialist Robeco is one of the investors leading CA100+’s shareholder engagement with Shell, and a spokesperson told RI: “For now, the ongoing engagement on the company’s climate strategy is something we expect to continue with the same objectives. Some details remain to be seen, and we will use the coming period to get a better understanding [of] what the proposed shift in location means for shareholders”.

Danish pension giant PKA will review the tax its portfolio companies pay, as part of its latest ESG push. The scheme, which is responsible for four pension funds totally some €41bn, is assessing its largest holdings as a starting point, but will extend the review to smaller companies over time. Those that do not meet PKA’s expectations will be subject to engagement. Earlier this year, Norges Bank Investment Management, divested seven undisclosed companies over their tax policies, in the first move of its kind by the influential Norwegian investor. Investors group Shareholders for Change is also targeting firms on tax transparency and integrity. 

The New York State Department of Financial Services claims to have become “the first US financial regulator to issue a holistic set of expectations on managing the financial risks from climate change”. Following public consultations earlier this year, it has published final guidance for insurers on integrating climate considerations into their governance frameworks, business strategies, risk management processes, scenario analysis and disclosures. “DFS intends to monitor insurers’ progress in implementing the expectations in the guidance, which requires insurers to implement the expectations relating to board governance, and to have specific plans in place to implement the expectations relating to organizational structure, by August 15, 2022,” it said in a statement, adding that it would issue “further guidance on the timing for implementation of the more complex expectations outlined in the guidance”. 

Campaign group Market Forces has said that two more major insurers have ruled out underwriting the controversial Carmichael coal project in Australia. RSA Insurance Group reportedly confirmed in an email that its climate policy “means we would not provide cover to the Adani Carmichael thermal coal project" while Conduit Re’s CEO, Trevor Carney, is quoted as saying: "We note and support the responses by a number of our peers regarding their involvement as insurers of the Adani Carmichael Coal Mining project… Conduit Re does not insure the Adani Carmichael Mining project and has no intention of doing so in the future". It is estimated that 42 insurance companies have distanced themselves from the project, which suffered further embarrassment this week when it was reported that the train transporting its first shipment of coal broke down on the way to the port.