Daily ESG Briefing: Japan’s FSA to launch study on mandatory climate reporting

The latest developments in sustainable finance

The Japanese Financial Services Agency is to launch a study on requiring mandatory reporting of climate change risks in the financial statements of around 4,000 listed and unlisted companies. A study group will be established within the Financial System Council to look at the impact of climate change on corporate activities and performance, with the mandatory disclosures introduced from March 2022 at the earliest.

Fidelity will vote against management where companies are not taking action to reduce their GHG emissions or making appropriate climate disclosures, according to its newly introduced sustainable voting policy. The asset manager will also consider voting against the management of developed market firms where the board is under 30% female and in emerging markets where the board is under 15% female.

Tobacco giant Phillip Morris has pledged to stop selling cigarettes in the UK within 10 years, as criticism mounts over the firm’s deal to buy asthma treatment manufacturer Vectura for £1bn. An AXA source told This Is Money that the asset manager was “stuck between a rock and a hard place” over accepting the deal, which the source said would be the best outcome for shareholders. AXA has signed the Tobacco-Free Finance Pledge. 

More than 70% of the European Central Bank’s Corporate Sector Purchase programme and Pandemic Emergency Purchase Programme portfolio is potentially contributing to key drivers of biodiversity loss, according to a new study from University College London. A quarter of the €310bn portfolio, which represents 20% of the euro-denominated corporate bond market, is potentially contributing to climate change and the emission of biodiversity negative pollutants, with 29% potentially linked to negative impacts on terrestrial and freshwater ecosystems.

The International Accounting Standards Board has proposed a new IFRS standard which would permit subsidiaries to apply reduced disclosure requirements when applying IFRS reporting standards. Unlisted subsidiaries whose parent companies prepare consolidated financial statements would be eligible, and IASB says that the proposed standard would save them both time and money. Comments are invited on the proposal until the end of January 2022.

Adani’s claims that using coal to manufacture PVC is less polluting than conventional methods are “unsupported”, and the use of coal in plastic production is “potentially far more polluting”, according to a new report from NGO Market Forces. In response to Adani’s claims, made after the Guardian revealed its plans to build a $4bn “coal-to-PVC” plant using imported Australian coal, Market Forces consulted Tim Forcey, an Energy Advisor with more than 40 years experience in the petrochemicals sector, who said that using coal to produce plastic was “old fashioned”.