Daily ESG Briefing: GRI launches latest reporting standards

The Global Reporting Initiative has released updated universal standards, and launched its first sector-specific standards, for the oil and gas industry. According to the GRI, the updated standards now “fully reflect due diligence expectations for sustainability impacts” including human rights, while the oil and gas standards are intended to facilitate the reporting of the impact from firms’ operations and how they are “supporting a just transition to a low-carbon economy”. Both revised standards will be in effect from January 2023.

Members of the European Parliament will vote this evening on two objections to the proposed rules setting out what will be climate-aligned under the EU Taxonomy. The Climate Delegated Act, outlining detailed criteria for economic activities contributing to climate change mitigation and adaptation, last week cleared a joint vote in two parliamentary committees but is now facing two objections that will be voted on in full Plenary. One objection, tabled on behalf of the centre-right European Conservatives and Reformists Group of MEPs, says the proposed rules are too binary, “resulting in an oversimplified good/bad perception of activities”. The other objection brought by MEPs in the far-right Identity and Democracy Group is pushing for the inclusion of gas and nuclear in the Taxonomy, arguing the latter is a “highly strategic sector in which the major world powers, as well as investors such as Bill Gates and Jeff Bezos, are investing in order to develop innovative solutions for the future”. 

The Australian Financial Security Authority has launched a consultation on climate change risk for superannuation funds. The consultation, which closes on the 15th of October, poses a number of questions on key climate risk issues which AFSA says will “influence its views”, including whether regulators are clear on their expectations regarding climate risk and whether 2050 Net Zero targets for superannuation funds are ambitious enough.

Climate risk is likely to have a major influence on bank loan quality, with a 20% increase in banks’ loan losses under the most disorderly climate scenarios, according to a new report from Moody’s. While banks are likely to transition to less carbon intensive exposures in future, even a small deviation from the Paris Agreement could result in higher loan losses for banks from businesses defaulting and loan collateral being destroyed by extreme weather events. According to the report, European banks are “probably not more exposed” to sectors vulnerable to transition risk than their global peers, with potential losses for banks with higher oil and gas exposure even greater.

Food and pet services titan Mars has set a science-based net zero target, and will “strongly link” executive pay to climate action. Mars will aim to hit net zero across its scope 1, 2 and 3 emissions, and said it will also engage with its suppliers to encourage them to set net zero targets.

Phoenix Group has announced interim decarbonisation targets for its £250bn portfolio. The UK-based insurer aims to reduce the emissions intensity of its investments by a quarter by 2025 and a half by 2030. Meanwhile, the Avon local authority pension fund and the Transport for London pension fund have set out interim targets for their portfolios. The TfL scheme seeks to hit net zero by 2045 and is targeting a 55% reduction by 2030, while the Avon fund aims to hit net zero by 2050 with an interim target of a 69% reduction by 2030.