Daily ESG Briefing: US Democrats make climate recommendations to SEC and Fed

The latest developments in sustainable finance

US Democrats want the Securities and Exchange Commission (SEC) to require climate risk to be embedded into the core methodologies of ratings agencies, they have said in a report by the US Senate Democrats’ Special Committee on the Climate Crisis. In addition, the group says the SEC should update disclosure rules and penalise companies that fail to report adequately on climate risk. It also urges the Fed and other regulators to “immediately join their international counterparts, who are already engaged in an effort to understand climate financial risks”, and to “take the lead” on stress testing for climate, and developing tools for climate scenario analysis. It says the Financial Stability Oversight Council should assess risks to the financial system as a whole, while the Federal Insurance Office should advise state commissioners on the insurance industry’s exposure to climate risk. “The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation and the National Credit Union Administration should improve their supervisory practices to incorporate climate risks,” it added.  

The EU Emissions Trading System has not triggered the substantial adoption of carbon-reduction technology, according to a report entitled ‘Adopt or Innovate: Understanding Technological Responses to Cap-and-Trade’. Georgetown University economist Raphael Cale, who authored the report, also found that firms under EU ETS increased carbon dioxide output by 20.7%. However, some surveyed firms have undertaken more R&D into low-carbon technology as a result of the carbon market. 

Korea Investment & Securities will divest its investments in coal, it has said. The brokerage firm, part of Korea Investment Holdings Group, said the move is in line with the South Korean government’s Green New Deal.

Malaysia’s RAM Sustainability has been given Approved Verifier status under the Climate Bonds Standard & Certification Scheme. This means the financial services group, a subsidiary of RAM Holdings Berhad, will be able to certify green bonds, sukuk or loans as meeting the Climate Bonds Initiative’s expectations on climate integrity, management of proceeds and transparency for labelled issuance. 

The EU’s methane strategy, a draft of which is due next month, will not impose binding standards on natural gas sold in the bloc, according to Reuters. Currently, the EU is the world’s largest importer of natural gas and is facing mounting pressure from investors, climate campaigners and some fossil fuel companies to limit emissions links to the technology. 

Oxfam Novib, PAX, Amnesty International, and Save the Children have called on the Dutch Government to introduce legislation forcing banks to disclose on human rights, following an evaluation by the Independent Monitoring Committee of the Dutch Banking Sector Agreement on Human Rights (DBA). The review concluded it was uncertain “whether and, if so, how the DBA has led to real change on the ground for individuals and communities”.