Daily ESG Briefing: Swiss regulator to require large banks and insurers to disclose climate risks

The latest developments in sustainable finance

Swiss financial regulator FINMA has said it will require large banks and insurance companies to provide qualitative and quantitative information about climate risks. FINMA says it is clarifying its supervisory practice in the area of the disclosure on climate-related financial risks to fulfil “its strategic goal of contributing to sustainable development”. The requirement will enter into force from 1 July. FINMA has based its disclosure rules on the recommendations of the TCFD. The move comes just two weeks ahead of a public vote in Switzerland on a revised CO2 act.

The Investment Association – which represents the UK’s £8.5 trillion investment management industry – has called on G7 leaders to support the IFRS’ work on standardising climate reporting standards and implement economy-wide TCFD reporting. In a letter sent to Ambassadors and High Commissioners ahead of the G7 summit in Cornwall this month, the group also urged G7 leaders to issue common reporting standards for sovereign green bonds and produce sector by sector guidance on Paris-aligned goals.

Korea’s National Pension Service has announced it will adopt “investment restriction strategies” for coal mining and power generation. The $783bn fund will rule out investing in the construction of any new coal fired power plants, and develop a negative screening strategy in the second half of this year.

Investors should make sure that oil and gas companies’ net zero goals are not overly reliant on carbon capture or negative emissions technologies, according to a report from Carbon Tracker. The NGO ranked ten oil and gas companies’ climate targets, with Eni at the top of the list and Exxon at the bottom. Only three of the companies included a 2030 interim target in their emissions reduction plans.

Iberdrola has laid out plans to make its board of directors responsible for producing and approving regular reports on its climate action plan, to allow it to achieve Net Zero. Shareholders will be given a vote on the amended articles of association at Iberdrola’s AGM on the 18th. 

Private equity investment has been filling the financing gap for thermal coal as public investors divest under activist pressure, according to a recent report by Fitch. The rising price of thermal coal and continued reliance of China on coal for its energy production makes it an attractive investment for private equity firms. The report also found private equity financing of oil, gas and coal projects over the last decade was $150bn, compared to just $40bn for solar and wind. Of the 431 private equity signatories to the PRI, only 16 disclosed the impact of ESG factors on their financial returns.