German regulator BaFin has said that sustainability is one of its core focuses for the years 2022 to 2025, in a document outlining its medium-term objectives. “BaFin considers issues of sustainability in its supervisory activities. Its focus in this respect is on the analysis and mitigation of financial risks for the supervised companies and on their compliance with disclosure requirements,” it wrote, adding: “In order to protect consumers, BaFin combats misleading marketing practices (‘greenwashing’)”. In August, the regulator launched consultation on proposed guidelines for sustainable funds, to “protect investors from greenwashing”, telling RI earlier this month that it plans to introduce the guidelines before the end of this year.
The IKEA Foundation has awarded £4.5m to projects being run by the University of Oxford’s Sustainable Finance Group. The money, to be released over the next three years, will support four initiatives: the Future of Engagement Project, which will develop and pilot “new and more impactful” methods of climate stewardship; the Public and Third Sector Academy for Sustainable Finance, created to help non-profit organisations design effective policies and campaigns; the Spatial Finance Initiative, focused on asset-level data collection; and the Energy Transition Risk and Cost of Capital Project, which will track changes in the cost of capital for polluting companies and factors driving those changes.
Membership body the Association for Financial Markets in Europe has teamed up with law firm Linklaters to produce an overview of sustainable finance regulation in Europe and explain how the banking sector is impacted. The report also recommends that policymakers in Europe, the UK and Switzerland ensure disclosure frameworks are finalised, ESG risks “are effectively integrated into banks’ risk management”, and initiatives are compatible with each other.
The European Securities and Markets Authority has published a preliminary report outlining the financial regulatory environment for the carbon markets and assessing pricing and volatility of Europe’s carbon credits under the EU Emissions Trading System. Next, the influential EU supervisor will conduct in-depth analysis of the system, to be delivered to European policymakers early next year. The findings of the analysis will help the European Commission decide whether “there is a need for targeted actions in the EU carbon market”.
More than 80% of asset owners responding to a survey by Aviva have said that the environmental pressures of investing in new infrastructure is off-putting. In its annual real asset survey of 1,100 “decision makers”, Aviva said that 87% of respondents from the insurance world and 85% of pension funds rating such investments as “either very or slightly discouraging”. Nearly half cited transparent reporting and environmental target setting as a “very encouraging factor” when it comes to improving green credentials. 35% of insurers and 37% of pension funds said physical climate risk indicators were the most important when it came to real assets.