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Daily ESG Briefing: EU launches ‘taxonomy compass’ to help with investor confusion

The latest developments in sustainable finance

The European Commission has launched a ‘taxonomy compass’ in a bid to provide a simplified explanation of eligible activities under the EU’s Taxonomy. 

Top Glove has been removed from the FTSE4Good Bursa Malaysia following allegations of forced labour. The controversial rubber glove maker was removed from the long-standing sustainability benchmark alongside three other companies during the latest review, while six firms, including Heineken Malaysia, were added. FTSE Russell has given a further 208 companies 12 months to meet tightened climate-performance standards or risk exclusion from its FTSE4Good indices. 

The move comes as JP Morgan announced it will remove Malaysian oil and gas giant Petronas and its Indonesian counterpart Petramina from its ESG-focused emerging market bond index at the end of the month, after they fell below the ESG scoring threshold required for inclusion.

US advocacy groups As You Sow and the Interfaith Center on Corporate Responsibility have launched legal proceedings against the Securities and Exchange Commission over Trump-era rules due to come into force next year, which would raise the share ownership thresholds for investors to file resolutions at company AGMs, as well as the support levels required to resubmit them. Several institutional investors, including New York City Comptroller Scott Stringer and Boston Trust Walden, have issued statements supporting the lawsuit.

UK pension schemes unanimously expect to have fully integrated climate risk into their business procedures by 2026, according to a poll by consultancy Willis Towers Watson. However, just 17% of the 70 schemes surveyed have implemented a ‘carbon journey plan’ for reducing climate risk. Schemes pointed to lack of data and poor institutional expertise among trustees as the biggest barriers to tackling climate risk.

Moody’s has warned that $10.3tn of debt across 28 sectors has moderate or higher exposure to natural capital risk, with $2.1tn facing high or very high risk. High risk sectors, including extractive industries, may cause damage to natural systems leading to material financial costs, according to the report. The loss of natural resources could also fuel socioeconomic instability due to impacts on health or disruptions to economies focused on natural capital income. 

Instinctif Partners has launched a digital tool which will allow businesses to measure their performance against ESG expectations. The ESGOptic tool covers six areas including ESG reporting, sustainability governance and ESG-related risk management.