Daily ESG Briefing: ESG factors have influenced nearly 2,300 rating actions – S&P

The latest developments in sustainable finance

ESG factors have influenced nearly 2,300 rating actions, of which more than 900 were downgrades, over the last eight months, according to S&P Global Ratings. Specifically, in ESG Pulse: Reimagining Accounting To Measure Climate Change Risks, the credit rating agency explained that ESG-related actions accounted for as much as three-quarters of actions on sovereign/international public finance entities and one-third of U.S. public finance actions. In addition, for corporate and infrastructure entities, ESG factors contributed to one in three rating actions, and in structured finance, it influenced about one in four. 

Asian securities trade body ASIFMA and the UN-backed Future of Sustainable Data Alliance (FOSDA) have released the final report of a year-long review into the challenges facing ESG data in the Asia Pacific region. The report recommends better harmonisation between ESG standards and frameworks, and exploring potential regulations for ESG ratings providers among others.

En+ Group, the world’s leading producer of low-carbon aluminium and largest private sector generator of hydropower, has joined the UN Global Compact’s first ever SDG Ambition accelerator. En+ will establish a pathway to embed its eight priority UN Sustainable Development Goals (SDGs) into its sustainability strategy.

Royal London Asset Management and Friends Provident Foundation have called for energy utility companies to put in place formal Just Transition strategies, to address the human and economic impact of the transition towards a low carbon economy by November 2021. Carlota Garcia-Manas, senior responsible investment analyst at RLAM said there are “real risks of social backlash to the transition” – which may deter it from happening or decelerate its pace. 

The US Department of Justice has filed a nationwide lawsuit against retail giant Walmart for violating the Controlled Substances Act. The DOJ alleges Walmart “unlawfully dispensed controlled substances” from pharmacies it operated and unlawfully distributed controlled substances to those pharmacies throughout the height of the prescription opioid crisis. Walmart was quoted as saying by the New York Times that the Justice Department was “putting pharmacists and pharmacies between a rock and a hard place”.

The European Confederation of Directors Associations (ecoDa) has partnered with governance intelligence and monitoring solutions provider Ethics & Boards to strengthen its position on corporate governance. Brussels-based ecoDa represents the main national institutes of directors in Europe. 

Australia’s Federal Resources Minister, Keith Pitt, has warned parliament’s joint standing committee on trade and investment growth to “do its job” after the group deferred a decision on whether to conduct a contested inquiry into the climate policies of banks and insurers. In particular, Pitt, along with the committee’s Chair George Christensen, wants the body to grill the Australian Securities and Investments Commission and the Australian Prudential Regulation Authority, as well as the banks, over plans to pull back on lending or insuring mining projects because of climate change.

Boohoo is selling clothes made by Pakistani factory employees, who work in appalling conditions and earn as little as 29p (€0.32)an hour, according to an investigation by The Guardian. When the fast-fashion giant was approached by the newspaper regarding the findings, the company suspended a supplier, JD Fashion Ltd, and a factory, AH Fashion, from its supply chain while it investigated the claims. This is the latest controversy regarding Boohoo’s practises; in July, it emerged that its Leicester suppliers were forcing workers to continue in cramped conditions during the first Covid lockdown and paid below minimum wage.