Daily ESG Briefing: UK regulator weighs in on ESG data providers

The UK Financial Conduct Authority (FCA) has said it will gather market intelligence on “how well firms are supported by service providers, such as ESG ratings providers”. In its 2021/22 business plan it outlines the ESG-related outcomes it wants to achieve and how to do so. The regulator wants to promote integrity in the market for ESG-labelled securities and ensure high quality climate- and sustainability-related disclosures.

The EU carbon border adjustment mechanism (CBAM) will not only become more expensive than anticipated but will likely fall short of its aim to restore a level playing field for industries heavily exposed to carbon pricing, Allianz Research has claimed. In EU CBAM: Well intended is not necessarily well done, it argues for example that the mechanism “invites greenwashing” as there are ways for non-EU based companies to mitigate or get around the impact of the mechanism.  

Targeted security selection is more impactful than abandoning an industry altogether in achieving the 1.5°C pathway, according to Swiss Re’s third Responsible Investments publication. The reinsurance firm also detailed that by 2020 it had engaged with 48% of its portfolio companies, and aims to engage with the top 20 emitters at least once a year to support them in aligning their business models towards the pathway.

PG Impact Investments has been rebranded Blue Earth Capital, in order to reflect its move to greater independence. The impact investment firm was established in 2015 with the support of the Wietlisbach Foundation and Switzerland-based asset manager Partners Group. Moving forward, it will gradually take over the support functions that have been outsourced to Partners Group and will move into its own headquarters in Baar in October. 

SASB’s Standards Board will initiate a standard-setting project related to renewable energy in the Electric Utilities & Power Generators industry. The project is set to be launched during a webinar on  27 July.

The Spatial Finance Initiative has launched a new report exploring how spatial finance technologies are being applied in insurance, supply chain monitoring, and climate risk management. In addition, the Initiative, which is part of the UK Centre for Greening Finance and Investment (CGFI), has launched two open, global asset-level databases for the cement and steel industries. “These new asset-level databases will allow detailed geospatial analysis of these sectors, helping to understand their exposure to climate-related risks and whether companies have credible Net Zero transition plans,” said Ben Caldecott, Director of CGFI and Director of the Oxford Sustainable Finance Programme.

Although pension trustees overwhelmingly agree that aligning investments with ESG principles is important, only 40% believe their scheme’s investment strategy reflects their preferred approach to sustainable investment, research by UK pensions consultancy XPS Pensions Group has found. The survey of more than 200 trustees across 80 pension schemes, also saw 83% of trustees saying stewardship plays an important role in how schemes’ assets are managed.