Daily ESG Briefing: ECB to permit EU taxonomy- and SDG-aligned bonds as collateral

The latest developments in sustainable finance

The European Central Bank will accept sustainability-linked bonds based on the EU taxonomy or the SDGs as central bank collateral, it has said. Notes with coupons tied to performance targets “referring to one or more of the environmental objectives set out in the EU Taxonomy Regulation and/or to one or more of the United Nations Sustainable Development Goals relating to climate change or environmental degradation” will be eligible as collateral for Eurosystem credit operations and outright purchases for monetary policy purposes, according to a statement. Bonds will have to comply with all other eligibility criteria too, it said, adding that the decision – which applies from January 2021 – “signals the Eurosystem’s support for innovation in the area of sustainable finance”. 

New York insurers will have to start integrating climate risk into their governance frameworks, risk management processes, and business strategies, according to the New York State Department of Financial Services. The body said in new guidance that it expects insurers to consider engaging with the Task Force for Climate-related Financial Disclosures and other initiatives when developing thinking on such disclosure.

Vodafone Group says that 20% of its evaluation criteria for suppliers will now be focused on “purpose” – namely their commitments to diversity, inclusion and the environment. From next month, the new evaluation approach will be part of ‘Request For Quotations’ when tendering for new work for all products or services. 

The UK’s Green Finance Institute has partnered with non-profits Rocky Mountain Institute and Natural Resources Defense Council to develop a template to help governments and institutions to set up green investment banks. The Green Bank Design Platform comes ahead of the launch of a report titled ‘State of Green Banks 2020’ in November, which will review green banks worldwide and guide the Platform’s development.

The mayors of London, Los Angeles, Berlin, New York City, Cape Town, Oslo, Vancouver, New Orleans, Durban, Pittsburgh, Milan and Bristol have all committed to divest their cities from fossil fuel companies, and invest in green and just recovery from COVID-19.

Southern Company has laid out plans to achieve net-zero emissions by 2020, after negotiations with shareholders over recent months. Earlier this year, As You Sow withdrew a proposal at the US utility asking it to disclose more on the risks of its natural gas assets being ‘stranded’, because it agreed to do so. However, Lila Holzman, Energy Programme Manager at As You Sow, warned that “while Southern refers to concepts like ‘Renewable Natural Gas’, hydrogen, and carbon capture [in its new plans], the company leaves out specifics that would help investors understand the impacts, costs, and likelihood that such technologies are anything beyond wishful thinking”.