Daily ESG Briefing: HSBC launches ESG reporting service for investors’ portfolios

The latest developments in sustainable finance

HSBC has launched an ESG reporting service for investors, offering them “independent measurement of how focused their listed-asset investments are on environmental, social and corporate governance issues”. Using scores and ratings from MSCI, Sustainalytics and Vigeo Eiris – with more providers to be added over time – the service can be used on ESG and non-ESG portfolios, according to a statement. “We expect this product to appeal to asset owners who are seeking independent reporting on the ESG profile of their investments,” said Chris Johnson, HSBC’s Director of Market Data for Securities Services at HSBC. “It will enable them to discuss ESG aspects of large positions in their funds with their managers. Asset manager clients, who already have an in-house ESG capability, could use the report to compare with their own research.”

Morgan Stanley has announced it will become the first major American bank to track and report the greenhouse gas emissions from its loans and investments, through joining the Partnership for Carbon Accounting Financials’ (PCAF) Steering Committee. Alongside the Committee, the investment bank will provide expertise to assist the network, whose 66 formal members represent $5.3trn in assets, in developing a global accounting standard that can be used by all financial institutions to measure and reduce their climate impact. Between 2016-2019, Morgan Stanley invested more than $91bn in fossil fuels; the bank has faced growing pressure to account for their contribution to the climate crisis and withdraw their support for fossil fuels.

Sustainable investing does not have a significant role in solving global sustainability problems as it currently stands, according to researchers affiliated with MIT, Harvard Kennedy School, University of Zurich and the University of Hamburg. The bulk of ‘sustainable’ or ‘impact’ investments currently rely on impact mechanisms that promise only modest impact, according to a new research paper entitled Can Sustainable Investing Save the World? Reviewing the Mechanisms of Investor Impact. The research looks at the mechanisms: shareholder engagement, capital allocation and indirect impact. It concludes that the impact of shareholder engagement is well supported in academic literature, the impact of capital allocation only partially, and indirect impacts lack empirical support.

At least 18% of Brazil’s annual exports to the EU are potentially exposed to illegal deforestation, according to a peer-reviewed study. The Rotten Apples of Brazil’s Agribusiness also identifies laggards among soy and beef producers. The 12 authors, from Brazil, Germany and the US, developed software to analyse 815,000 rural properties in order to assess where illegal deforestation associated with soy and beef production was taking place and how much of those products were reaching the EU.

Federated Hermes has achieved an A grade score from ratings firm Real Impact Tracker – the highest score in the history of its certification. With this, the investment manager has joined Real Impact Tracker’s certified community, for which around only 5%-10% of fund managers are eligible to qualify.