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Daily ESG Briefing: Study on ESG scores wins BNP Paribas award

The latest developments in sustainable finance

BNP Paribas Asset Management has awarded first place to a paper analysing the processes and ratings of six specialists at its annual Global Research Alliance for Sustainable Finance and Investment conference. The paper,  Aggregate Confusion: The Divergence of ESG Ratings was written by three researchers from the Massachusetts Institute of Technology’s Sloan School of Management: Florian Berg, Roberto Rigobon, and Julian Kölbel (who is also affiliated with the University of Zurich). They examine the factors included in each agency’s assessment, how those factors are measured and their weightings within the overall ESG score, concluding that the way each factor is measured is the main driver of difference between the ratings.  

The Global Impact Investing Network (GIIN) has released two more reports on how to evaluate impact performance. As part of an ongoing project on the topic called Understanding Impact Performance, the organisation has published documents on agricultural investments and financial inclusion. It produced similar studies on clean energy access and housing last year. 

Despite 87% of investors surveyed by Bruin Financial stating they had a "good level of understanding" of ESG, less than half feel they know how to create a measurable impact across different ESG criteria. In the recruitment firm’s survey of 112 individuals across the finance industry, there also a emerged a clear expectation that employers should integrate ESG into business practices, for example, 96% said it was important to work in an inclusive workplace, 86% stated that the company they work for should have a "formal commitment to the planet", and 76% believe management compensation should be tied to ESG criteria.

Northern Local Government Pension Scheme has become a Make My Money Matter pledge partner as part of its wider commitment to invest all assets in line with the Paris Agreement. The UK-based campaign was launched in July and aims to build a movement of individuals, organisations and pension funds to drive change in sustainable pension investment.

The first half of 2020 saw $250bn of sustainable debt issues, according to the Climate Bonds Initiative – a substantial increase from $341bn in the whole of 2019. The figure includes labelled green, sustainability, social and pandemic bonds. In Sustainable Debt Global State of the Market H1 2020, the NGO highlights the more even split between social and green issuance, bucking the trend for green bonds to dominate the asset class. CBI will launch its first social and sustainability bond database by the end of the year.