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Daily ESG Briefing: UKSIF names new CEO

The latest developments in sustainable finance

James Alexander, currently Director of the City Finance Programme at the C40 Cities Climate Leadership Group and Head of the C40 Cities Finance Facility, has been named to take over as CEO of the UK Sustainable Investment and Finance Association (UKSIF), succeeding Simon Howard.

ESG bond issuance in August totalled $22.9bn, falling in line with the pre-pandemic average issuance of $22.74bn from January and February, according to Morgan Stanley research. Last month also saw corporate issuance reaching its highest tally so far this year; Morgan Stanley’s work found this was mainly driven by a $5.75bn offering from Alphabet.

Alecta has invested SEK4.25bn (€413m) in the Swedish state’s first green bond, worth SEK 20bn. The bond, issued under the Swedish National Debt Office's Programme for Euro Medium Term Notes, will allow the pension fund, and other investors who buy it, to track which government spending the bond is linked to and what environmental and climate impacts the spending helps to achieve.

Brazilian eucalyptus pulp and paper producer Suzano, is raising funds in the international market for sustainable-linked bonds; these will be aligned with its Sustainability-Linked Securities Framework.

BNP Paribas may lose up to 50% of power clients as part of its commitment to exit coal worldwide by 2040; the bank also intends on issuing a global position on biodiversity before the end of this year, with a focus on deforestation. In an interview with S&P Global Market Intelligence, head of corporate social responsibility, Laurence Pessez said: “We have an ongoing dialogue with our clients. We've been talking about coal reduction, diversification, the need to fight climate change and align with the Paris Agreement for a long period of time. We are not the only ones.”

The Task Force on Responsible Investment, a collective led by the Global Reporting Initiative, has announced the signing of a declaration in favour of Responsible Investment in Colombia. The declaration emphasises the importance of promoting ESG criteria in corporate financial analysis and business strategies, reporting and disclosing ESG performances, and the promotion of the implementation of issues addressed by institutional investors and Colombian companies – these include human rights, the alignment with the Sustainable Development Goals (SDGs), and the Paris climate accord.

COVID-19 has continued to directly drive ESG-related rating and outlook actions, despite the acceleration of vaccine developments, according to S&P Global Ratings’ latest ESG Pulse. The credit rating agency’s found that in June, 300 additional rating and outlook actions occurred due directly to COVID-19, bringing the total direct ESG-driven actions over April-June to almost 1,500; sovereigns remain one of the most affected, with 20% of ratings affected, with governance factors also influencing rating or outlook changes. For the pharmaceutical industry, the effort to develop a vaccine is both an ESG opportunity and challenge; a successful vaccine could improve the industry's reputation, while accessibility presents an ethical challenge, requiring global coordination, and accessibility by all nations.

Mark Carney, UN Special Envoy for Climate Action and Finance Advisor to UK Prime Minister Boris Johnson for COP26, has launched The Taskforce on Scaling Voluntary Carbon Markets, a private sector-led initiative to begin scaling an effective, efficient, and functioning voluntary carbon market to help meet the goals of the Paris Climate Agreement. The Taskforce is chaired by Bill Winters, Group Chief Executive, Standard Chartered, sponsored by the Institute of International Finance, and features members from BlackRock, BNP Paribas, Bank of America, Goldman Sachs, and UBS. Former Bank of England Governor Carney said: “To achieve net zero, they [companies] will need to decarbonize and many will need to offset some emissions as part of the transition, creating a surge in demand for offsets. The financial sector can use their expertise in building market infrastructure to create a carbon offset market which connects this demand with supply.”

Luxembourg has become the first European state to adopt a reference framework for sustainable bonds; this will focus on green, social or sustainable bonds, combining ecological and social benefits. Revenues obtained will be invested in sustainability projects, including: the construction of green housing, the energy transition, the development of low CO2 emission transport, or more efficient water management. Additionally, proceeds will also be used to finance social projects in sectors like health, education, affordable housing, and the labour market.