Daily ESG Briefing: Investors urge EU not to let gas into taxonomy

Investors have signed a letter to the European Commission saying they are "very concerned that EU member states are pushing to deviate from the science-based recommendations of the Technical Expert Group on Sustainable Finance" when it comes to the development of the EU's green taxonomy. The statement has been convened by Kristina Jeromin, Head of Sustainability at Deutsche Börse Group and Managing Director of Germany's Green & Sustainable Finance Cluster, and MEPs Sven Giegold and Bas Eickhout. It comes amid rumours that the Commission is considering making conventional gas-fired power eligible under the taxonomy in response to political pressure. Signatories (who have signed in their personal capacity) include Georg Schürmann, Managing Director of Triodos Bank in Germany, Erhard Radatz, a portfolio manager at Invesco, and Tommy Piemonte, Head of Sustainable Investment Research at Germany's Church Bank.

Meanwhile a group of investors and policy experts has urged the EU to be more ambitious on climate in its reforms on the common agricultural policy (CAP). The €2tn investor group, whose members include Legal & General Investment Management, Robeco and BMO Global Asset Management, made four recommendations ahead of a discussion of CAP reform at a meeting of the EU’s Agriculture and Fisheries Council today. The recommendations include applying the Just Transition Mechanism to support farmers affected by CAP reform, and shifting away from incentives that prioritise yield over environmental impact.

Climate change is a significant factor in the investment policies of 73% of global investors, but only 17% have set a Net Zero target, according to research from Robeco. The Dutch asset manager’s 2021 Global Climate Survey covered 300 investors across Europe, North America and APAC, running $23.4tn. Other findings include that 44% of respondents viewed the lack of data and reporting as the biggest obstacle to implementing decarbonisation, and that 52% of investors expect to set a Net Zero target within the next five years.

If carbon emissions continue unabated, 63 countries will see their credit rating downgraded by more than one level by the end of the decade, says a report from economists at the University of Cambridge. Big economies like the US and Germany could fall up to three notches, the research said, as the public cost of pollution and climate reaches hundreds of billions. 

NGO ClientEarth is to expand its operations in Asia with the opening of a new office in Singapore. The expansion will be spearheaded by ClientEarth lawyer Peter Barnett, and will see the organisation’s lawyers work to support national governments and businesses to embed climate change considerations in their policy and decision making. 

Public perception of Japanese companies’ sustainability is lagging behind reality, according to Tomohiro Ikawa, Director of Engagement at Fidelity International. Ikawa said that misconceptions come from low levels of emissions reporting at top Japanese companies, but claims that Japan now has the largest number of TCFD supporters in the world, and that governance had greatly improved since the introduction of the Corporate Governance Code in 2015. However, Japanese firms still lag behind their peers on gender diversity and the gender pay gap – Japan has the second largest gender pay gap in the OECD, after Korea.