ESG round-up: Belgian financial regulator awards ESG funds data contract to Morningstar

The latest developments in sustainable finance: Barclays expects investors to hold off using new UK fund labels; NZBA welcomes first Chinese bank.

Belgian financial regulator FSMA has awarded Morningstar a contract to provide fund data and ESG information on financial instruments and companies. According to the tender document, the FSMA wanted to purchase “data on funds at the aggregate level and at the level of the individual instruments in which the funds invest” and required “signalling information as well as specific ESG data”. MSCI ESG Research was the other named bidder for the four-year contract worth €370,000. Asked for more details, a spokesperson for the FSMA told RI that it does not comment on public tenders.

Barclays has said many investors will likely wait to label their funds under the UK’s new labelling regime, given their experiences with SFDR reclassifications. Firms can begin to use labels from the end of July, but Barclays analysts said in a research note that they expect investors to hold off. Given there is no requirement for funds that do not use the terms “sustainable”, “sustainability”, and “impact” in their names to apply a label, “investors have the ability to sit on the sidelines for now”, they said.

Most early movers will likely be Sustainability Focus funds, with Article 9 or stricter Article 8 funds “most easily” able to take on the label in the UK due to its clear requirements. But the analysts expect most funds will ultimately apply the Improvers or Mixed Goals labels as these have broader eligibility for investments.

The Net-Zero Banking Alliance (NZBA) has welcomed its first Chinese member, the Bank of East Asia, taking its total membership to 140 banks across 45 countries. In 2023, the NZBA also welcomed its first members from Pakistan and Greece. Banks in the alliance commit to science-based target setting that aligns their lending and investment with limiting global warming to 1.5C. They also commit to transparently report on progress towards their targets.

Staying with NZBA, Blue Ridge Bank has left the alliance, having joined in December 2021. The NZBA updated its members page on Wednesday to say that Blue Ridge Bank had decided to withdraw from the alliance.

The Voluntary Carbon Markets Integrity Initiative (VCMI) and the Carbon Markets Association of India (CMAI) have announced a partnership aimed at boosting India’s participation in high-integrity international carbon markets. The collaboration seeks to address barriers to implementation and enable finance flows to India.

The EFRAG and the Taskforce on Nature-related Financial Disclosures (TNFD) have signed a co-operation agreement to further advance nature-related reporting. The collaboration builds on the European Sustainability Reporting Standards (ESRS), adopted by the European Commission last July, which are aligned with the TNFD’s recommended disclosures. The EFRAG and the TNFD are currently working on the finalisation of interoperability mapping, expected to be published imminently.

The Belgian presidency of the Council of the European Union has announced the green and Just Transition as one of its six key priorities. The presidency started on 1 January and will run for six months. In a statement, it said it will place the energy and climate transition “at the heart of its priorities”, adding that it will look to enhance the EU’s circular economy and promote sustainable water management.