ESG round-up: Balancing ESG assurance goals with shareholder profit expectations a challenge, warn companies

More than half (51 percent) of companies “less ready” for ESG assurance believe that it will be a challenge to “balance their ESG assurance goals with profit expectations of shareholders”, according to a new report by KPMG. The consultant’s inaugural ESG Assurance Maturity Index polled 750 companies globally, revealing an immature landscape, with only 25 percent of companies feeling “they have the ESG policies, skills, and systems in place to be ready for ESG assurance”. KPMG noted that even its designation “leaders” was “very much a relative” one. Reporting against the EU’s corporate sustainability reporting regime, CSRD, comes into effect in 2024 for the bloc’s largest companies and requires mandatory assurance for the first time.

The Principles for Responsible Investment (PRI) has developed a stewardship tool for asset owners to evaluate and compare managers’ stewardship practices and sustainability outcomes, as well as a due diligence questionnaire which can be used for discussing stewardship practices with managers. The tool will support asset owners with articulating their position and priorities on sustainability issues; evaluate managers’ approaches to sustainability; and assess stewardship strategies. The PRI said the guidance aims to complement other due diligence questionnaires and stewardship codes.

Hesta CEO Debby Blakey has written to the chairs and CEOs of the ASX 300 outlining the super fund’s four key expectations for the upcoming AGM season. Hesta’s priority active ownership themes include climate change, gender equality, decent work and natural capital and biodiversity loss. Its expectations on climate change include working towards halving GHG emissions by 2030 and achieving net zero by 2050, in line with the Paris goals. The letter added that Hesta will “consider progress” in these areas and whether board skills and composition “demonstrate preparedness for the low carbon transition”. On gender representation, the super fund said it will vote against select director re/elections at companies where the board has less than 30 percent female representation, and against board chairs of companies employing single gender executive leadership teams.

The International Finance Corporation (IFC) and Reserve Bank of Fiji (RBF) have partnered to develop a green finance taxonomy for the country. The agreement, supported by the Australian government, will see the IFC and RBF collaborate to develop guidelines and parameters to “clearly define green assets”, with the aim of encouraging more lending and investment opportunity to support the country’s climate adaption goals and create green jobs. There will be a consultative approach to obtain input from key stakeholders in considering the design of the framework. IFC will also support the bank in integrating ESG standards in its financial market operations and encouraging their adoption by businesses and financial institutions.

The Partnership for Carbon Accounting Financials (PCAF) has created a global core team to lead the development of new accounting standards. Members include ING sustainability manager Giel Linthorst; Morgan Stanley net-zero climate strategy lead Jamie Mattison; Investec group climate and sustainable finance lead Melanie Janse van Vuuren; Nordea climate specialist Stefan Henningsson and Yu Takita of Mizuho Financial Group. The group is chaired by Hetal Patel, head of climate investment risk at Phoenix Group. The team’s first priority will be to select areas for further GHG accounting methodology development in 2024.