ESG round-up: Broaden remit of central banks to help boost nature markets, says report

The latest developments in sustainable finance: Few fossil fuel holdings likely to survive PGGM's divestment programme; TCFD disclosures on the rise in Australia.

Action should be taken to broaden the mandates of central banks and supervisors to require them “to ensure that actions by financial actors, markets and systems are aligned with relevant government and international policy commitments on nature and climate”, according to a report by the Taskforce on Nature Markets. The taskforce was established in April 2022 to support the development of nature markets that “deliver nature positive and equitable outcomes, and in so doing contribute to meeting climate goals”.

Published on Thursday, the initiative’s final report detailed seven key recommendations on how to embed nature and equity goals into global financial activity. In addition to the push for central bank action, these included aligning public sector finance with international nature commitments and securing improved economic benefits for nature’s stewards. The initiative is guided by 15 high-level members including Vian Sharif, head of sustainability at FNZ, and Rhian-Mari Thomas, CEO of the Green Finance Institute.

“Very few” fossil fuel holdings are likely to survive PGGM’s divestment programme, which assesses the credibility of climate transitions in the oil and gas industry, according to Anders van der Linden, the firm’s senior responsible investment adviser. The €229 billion asset manager for Dutch pension fund PFZW divested €303 million worth of fossil fuel shares in February after the companies failed to make a commitment to the Paris Climate Agreement.

Last November, the pension fund also divested €470 million worth of oil and gas shares from companies that indicated they had no plans to reduce emissions. PFZW is currently engaging with 94 fossil fuel energy firms. They are each being asked to set out a Paris-aligned energy transition strategy before the end of the year or risk being divested.

Three-quarters of Australia’s largest 200 companies (ASX200) are disclosing against the Taskforce on Climate-related Financial Disclosures (TCFD) framework, according to research by the Australian Council of Superannuation Investors (ACSI). The report – which is based on publicly reported information for the year to end-March – said this is up from 66 percent the previous year. Sixty-one percent of the index has also made net zero commitments, up from from 48 percent last year. Scenario analysis disclosure is up to 59 percent, a 15 percentage point increase year-on-year.

Commonwealth Bank of Australia has updated its climate policy to exclude financing for any new or expanded oil and gas extraction projects. From 2025, Australia’s largest lender will also stop funding any fossil fuel clients which do not have independently verified plans to cut all emissions – including from the end use of their coal, oil and gas – in line with the Paris Agreement.

European ESG debt issuance was down 23.9 percent year-on-year in Q2 to €151 billion, according to data from the Association for Financial Markets in Europe (AFME). Use-of-proceeds bonds represented the largest portion of total ESG debt issuance, amounting to €105 billion in Q2. Sustainability-linked and green-linked loans accounted for €40 billion, and sustainability-linked bonds the remaining €6 billion. Sustainability-linked bonds saw a sharp quarterly decline of 46.5 percent and a 16.3 percent year-on-year decrease. By jurisdiction, French borrowers again accounted for the largest proportion of total ESG debt issuance, followed by their German and Italian counterparts.

BlackRock has launched Europe’s first fixed maturity corporate bond ETFs. The funds – iShares iBonds Dec 2026 and iShares iBonds Dec 2028 – have been classified as Article 8 under SFDR as they will track Bloomberg indices which implement an ESG screening. The ETF range targets bonds maturing in a specific year – in this case 2026 and 2028 – and holds the underlying bonds until maturity when the fund liquidates.

Bloomberg has published a list of key performance indicators (KPIs) for its Gender-Equality Index. The KPIs address various leadership, talent pipeline, pay, and inclusive culture aspects. The deadline to be considered for inclusion in the index is 31 October.