Daily ESG Briefing: European development finance institutions to go fossil free

The latest developments in sustainable finance

The Association of European Development Finance Institutions (EDFI), which has a combined $50bn under management in emerging and frontier markets, has announced that its 15 members will phase out fossil fuel investments by 2030. The group of publicly-owned institutions said it will align all new financing decisions with the objectives of the Paris Agreement by 2022 and will ensure that their portfolios achieve net zero emissions by 2050 at the latest. The EDFI group will immediately cease new coal or fuel oil financing and will limit other fossil fuels. The new commitment includes direct investments, indirect investments made through other funds and dedicated lending via financial institutions.

The Sustainable Shipping Initiative and the Institute for Human Rights and Business (IHRB), have launched a new project focusing on seafarers’ labour and human rights; this follows 300,000+ seafarers being stranded at sea due to crew-change restrictions because of COVID-19, as well as growing demand for sustainable supply chains. Delivering on seafarers’ rights aims to develop a human rights code of conduct for charterers, and a roadmap for tackling systemic challenges which create human rights risks for seafarers – a widely-recognised gap in catalysing industry-wide policy and practice.

Fintech firm Avaloq has developed an ESG investment solution for banks and wealth managers that allows them to build tailored, personalised ESG-compliant portfolios for clients. It uses third-party data feeds and advisors can match client needs through filters and tools, for example, standardised scorecards, “green” benchmarks, exclusions, norms-based screening such as the UN Global Compact or the OECD Guidelines and thematic investments.

Sir Ed Davey, the UK’s former Climate Secretary and leader of the Liberal Democrats, has said he will support a proposed Responsible Investment Bill that would compel fiduciary investors to consider ESG factors as part of their legal duty to beneficiaries. Sir Ed, who also chairs a parliamentary group focused on sustainable finance, said: “Government and regulatory action are needed to help us achieve our international climate commitments and to place the financial services sector on a more sustainable footing.” The Bill, put together by NGO ShareAction, will be presented to UK MPs today.

The founding partners of the Investor Agenda, which include the Principles for Responsible Investment, CDP, and Ceres, have called for the US to re-enter into the Paris Accord following its exit earlier this week; the investor led network, which aims to accelerate action to tackle climate change, also stated that all signatories of the Paris Agreement need to step up their climate ambitions to secure a sustainable global economic recovery and net-zero emissions future. In another statement the nations of Chile, France, Italy, and the UK, alongside the United Nations Climate Change convention, expressed their “regret” that the US had left, but promised to remain committed to working with all US stakeholders and partners to accelerate climate action, and with all signatories to ensure the full implementation of the Paris Agreement.

Adani is changing the name of its Australian mining business to Bravus Mining & Resources; the Indian multinational has received criticism due to its controversial Carmichael mine in central Queensland – most recently, Lloyd’s of London syndicate, Apollo said it will not continue to provide insurance to the project after their current construction terminates. The firm’s chief executive, David Boshof, explained the change was to mark the ten years since it started operations in Australia; “'Bravus' was chosen because it was the Latin word for brave”, Boshof said.