Daily ESG Briefing: Fitch warns of taxonomy ‘data shortfalls’ for banks

The latest developments in sustainable finance

Fitch expects EU banks to encounter “data shortfalls” when attempting to comply with new green taxonomy disclosure requirements which are provisionally set to come into force by the end of 2022. In a report released today, the credit ratings agency suggests putting off the new rules until the EU’s Corporate Sustainability Reporting Directive comes into force in 2023, to ensure that banks have access to the underlying data needed to assess their alignment to the taxonomy.

The US Federal Reserve is privately asking large banks to detail their climate measures, according to a Reuters report, which claims officials have pressed banks to conduct internal risk assessments of their exposures to climate change and make the results of the exercises available to the Fed.

US green banks mobilised $1.7bn worth of investments for clean energy and energy-efficient projects in 2020 bringing cumulative green bank investment to $7bn, according to an annual industry report by the Coalition for Green Capital and subsidiary body the American Green Bank Consortium. The Consortium noted that five new green banks joined the body last year, and that 22 states were actively exploring measures to develop green banking.

London CIV, one of the eight local authority pension pools in the UK, has hired EOS at Federated Hermes to lead its voting and engagement for listed equities and fixed income assets. Earlier this week, inaugural analysis of London CIV’s listed equity and bond portfolios revealed a smaller carbon footprint than the MSCI World across all carbon intensity metrics due to the portfolio’s lower exposure to utilities.

Schroders’ annual US Retirement Survey has revealed that 90% of respondents with defined contribution workplace pension plans selected ESG-related investments when given the option to do so. Further, nearly 70% said they would or might increase their overall contribution rate if offered ESG options, while 31% said they would not.

Software company GoldenSource has announced a new product called GoldenSource ESG Impact which will allow buy and sell-side firms to compare and assess the quality of ESG metrics provided by its data partners, in addition to enabling portfolio screening.

Current TCFD disclosures do not allow investors to meaningfully compare companies, according to new research by HSBC. The report suggests that disclosures should have a higher descriptive level, checked against an assurance system in order to improve comparability. The report also says that other countries may follow the UK’s lead in implementation methods and guidelines as disclosure levels increase globally.

Global unions are withdrawing from the Bangladesh Accord’s worker stakeholder scheme saying clothing brands involved want to develop a new framework that would lessen the safety of workers. UNI Global Union and IndustriALL Global Union said the RMG Sustainability Council – created through the Accord to include factory workers as stakeholders – will lack credibility without a new legally-binding agreement between unions and brands after the current Accord expires in May.