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Daily ESG Briefing: Global climate reporting standard could be ready in 12 months

The latest developments in sustainable finance

A global climate reporting standard could be ready within the next 12 months, according to a timeline published by global regulatory association the International Organisation of Securities Commissions. The disclosure standard is currently being developed by international accountancy body the IFRS Foundation, and will be released for public feedback ahead of its finalisation. Subsequently, the IFRS Foundation will decide whether to expand the ‘climate first’ standard to incorporate other ESG information by November 2021.

A group of lawyers has established an environmental network to support in-house lawyers in helping their companies deliver on climate change commitments. The Executive Director of the new group, called Lawyers for Net Zero, is Adam Woodhall, a ‘Strategic Storyteller’ for consultancy Inspiring Sustainably.  Paul Watchman, a Senior Legal Advisor at the UN Environment Programme Finance Initiative, will chair its advisory board. 

The ‘warming potential’ of AXA Group’s investment portfolio is 2.7°C, well below the market average of 3.2°C, according to its 2021 climate report. The report says that the carbon emissions from AXA’s investments continue to decline, and it is on track to meet its -20% by 2025 target. The proportion of green investments in AXA’s portfolio is increasing, it said, with €25bn in green investments planned by 2023. 

A shareholder resolution filed by Kiko Network, Market Forces, 350 Japan and the Rainforest Action Network calling on MUFG to align its financing and investments with the Paris agreement has failed to reach the two thirds majority required to pass at its AGM, despite strong support from investors including EOS at Federated Hermes. While the bank made a commitment to reach net zero financed emissions by 2050, the filers of the resolution criticised its lack of commitments on fossil fuels, Scope 3 disclosure and interim targets.

A group of Catholic financial institutions which launched engagement with the Brazilian government in March over indigenous rights and protection of the Amazon has announced further engagement with FUNAI, the Government agency responsible for indigenous affairs. The group, which includes the Bank für Kirche und Caritas, are seeking the withdrawal of a number of legislative proposals which would negatively affect indigenous peoples in the Amazon. 

The newly launched Nasdaq ESG Data Hub will provide Nasdaq clients access to ESG data from seven providers across a range of areas mapped to the UN SDGs, including gender diversity (Equileap), reputational risk (RepRisk), climate (Munich Re) and biodiversity (Ecogain). Additional data partners will be added continuously, Nasdaq said.

The Investor Group on Climate Change, PRI and Climate Disclosure Project have released a joint roadmap for the adoption of mandatory climate-related financial disclosure in Australia. Thus far, only 60 of the ASX200 report against the TCFD framework, and the IIGCC, PRI and CDP said that investors reported that the “quality and consistency of these company disclosures is severely lacking”. The roadmap includes steps for Australian regulators to establish clear mandatory disclosures and guidance, as well as recommendations on increasing minimum reporting expectations over time. Reporting would initially be established under an “if not, why not” approach but would become mandatory by 2024.

A lawsuit brought against British American Tobacco and Imperial by 7000 Malawian farmers will continue after the UK High Court dismissed an application to have it struck out. The farmers claim that BAT and Imperial facilitate unlawful and dangerous working conditions by purchasing tobacco from the farms they work at. Martyn Day, a Senior Partner at Leigh Day, who are representing the farmers, said: “BAT and Imperial make millions of pounds in profit each year and our clients believe much of this profit is down to the awful conditions that are present in their supply chains which use impoverished families to farm the tobacco and pay them a pittance to do so.” Both firms deny the allegations. 

The UN Sustainable Stock Exchanges initiative has launched a new action plan on climate resilience in markets and model guidance on climate disclosure. Both publications are intended to assist stock exchanges in guiding issuers on climate-related disclosures, and leading the transition to more climate-resilient markets.

Planet Tracker has launched a blue recovery bond dashboard, which allows investors to visualise the impact of blue recovery bonds, where fishing companies reduce their catch to allow fish stocks to recover, with investors financing the decreased income. Once stocks have recovered, companies can increase their catch levels again and repay the investor financing with a coupon linked to wild-catch volumes.