ESG Daily Briefing: TCFD missing from Canada’s bailout documents

The latest developments in sustainable finance

Explicit reference to the TCFD has not been included in guidance documents for Canada’s corporate Covid bailout scheme, despite its government announcing last month that large companies would be required to report against the Financial Stability Board’s influential climate disclosure framework as part of the programme – a move that has been widely praised. The Large Employer Emergency Financing Facility (LEEFF) factsheet does, however, include a condition that companies publish “an annual climate‑related financial disclosure report, highlighting how corporate governance, strategies, policies and practices will help manage climate-related risks and opportunities; and contribute to achieving Canada’s commitments under the Paris Agreement and goal of net zero by 2050”. A spokesperson for the Canadian government told RI that it “remains the expectation” that disclosures will follow the TCFD's recommendations. She added that more details will be provided in the future – including whether scenario analysis, which isn’t mentioned in the factsheet, but is a key part of the TCFD, will be required in corporate disclosures.

The Diverse Alternative Investment Industry, a coalition of some of America’s largest investment managers, has issued a call to action to build a system that ensures African American and LatinX businesses gain greater access to institutional capital. Signatories include: A.J Patton from 548 Capital, Marcus Bodet from B.I.G Capital LLC, Joseph J. Haslip from Valor Equity Partners, and Ted Yun from NexPhase Capital. In a statement, the group says: “This is a time of grief and anger for Americans of all races and backgrounds. Now we must turn our anger and pain into action. While the pain we are feeling is still quite raw, each of us is actively engaged in conversations internally with our teams, as well as externally with our investors and the companies in which we invest.”

The Principles for Responsible Investment has released a new five-part framework for signatories to take action on the Sustainable Development Goals. The PRI argues that investors can look beyond financially material ESG issues and consider taking on societal and environmental issues on a systemic level as part of their investment strategies and wider collaborative actions, to support achievement of the SDGs by 2030.

Greener companies are seeing higher profit margins than their peers, according to research by the London School of Economics’ Grantham Research Institute on Climate Change and the Environment. However, the organisation found the former do not have higher profitability when using accounting rate of return. Lower operating efficiency of assets may explain why higher profit margins do not translate into higher return on investment. 

The Global Reporting Initiative has expressed full support for the European Commission’s plans to revise the Non-Financial Reporting Directive in its response to the public consultation, which closed last week. The organisation focused on the need for the European standards to leverage existing frameworks to minimise the reporting burden on companies. 

Students from leading UK universities will pitch innovative climate investment solutions to industry experts, in a bid to win a prize worth £7,500 at the final stage of the Climate Investment Challenge. The top five teams, consisting of MBA and Masters students from Imperial College Business School, University of Cambridge and the University of Edinburgh, will battle for the top spot in a live event hosted by Imperial College Business School via zoom on Wednesday. The proposed business ideas being put forward include a carbon-positive timber real estate investment trust and a sustainable cattle farming fund. The competition is sponsored by Candriam Investors Group, Standard Chartered, and Quinbrook Infrastructure Partners.