Daily ESG Briefing: Fitch seeks feedback on plans to assess ‘ESG vulnerability’ to 2050

The latest developments in sustainable finance

Fitch Ratings is asking for feedback on an assessment of how ESG could impact issuers’ creditworthiness to 2050. The ratings agency has launched a “pilot report” for its new ESG Vulnerability Scores, which currently cover 29 utilities sub-sectors. The assessments “illustrate the vulnerability of creditworthiness to an ESG-focused stress scenario, which includes policy changes required to achieve a transition to a low-carbon economy by 2050,” Fitch said in a statement. “The level of vulnerability is assessed at five-year intervals throughout 2025-2050. If this pilot report is well received, Fitch intends to expand coverage to other corporate and infrastructure sectors, entities and their debt.”

Wealth manager Brewin Dolphin has hired BMO Global Asset Management as its engagement partner. The engagement mandate will cover directly-held equities, which account for around 25% of Brewin Dolphin’s £46.7bn assets. BMO GAM will engage with investee companies on behalf of Brewin Dolphin on ESG issues, and sustainability risks and opportunities.

Private wealth holders and family offices are set to almost double their allocation to impact investing by 2025, according to research from Barclays Private Bank, Campden Wealth and Global Impact Solutions Today. Interviews with investors worth a combined $264bn showed that 69% have altered their view of investing and the economy because of the Covid-19 crisis. More than half view climate change as the greatest threat to the world, with 87% saying it now influences their investment choices. The results come from more than 300 respondents from 41 countries, with an average net worth of $876m.

UK proxy house and ESG advisor Minerva has raised concerns over the “dearth of asset owners” on the new EU Sustainable Finance Platform, which will guide future developments on sustainable finance in Europe.  Out of the 57 members – 50 of whom were selected through an open application process – “the only two representatives of asset owners on the platform are Dutch pension investor PGGM and the European Insurance and Occupational Pensions Authority,” the firm said in a note. “The world’s 100 largest pension funds and sovereign wealth funds have over $19trn of assets under management, according to figures from Willis Tower Watson, so the EU seems to have really missed a major section of the market.”

The Actuaries for Transformational Change initiative has launched its charter this week, committing it to working on sustainability, risk modelling, ‘systems thinking’ and regulation. The UK-based body, which first got together last year, said in a statement today that it had met 24 times online since the COVID crisis, in a bid to accelerate its work on “how the actuarial profession can revive its spirit of thought leadership” and “leverage the understanding of future uncertainty and emergent risks which lies at the soul of the actuarial profession” to help with sustainable development. The group will publish its first paper this week. 

The COP26 Presidency wants financial institutions to make climate commitments to mark the Green Horizon Summit next month. Public and private bodies are being encouraged to make pledges around achieving net zero, phasing out coal, disclosing on climate change, and making innovations in developing markets. The event is hosted by the Lord Mayor of London from 9-13 November.