ESG round-up: CDP sees record participation by FIs in disclosure campaign

The latest developments in sustainable finance: Renewables account for just 7% of banks' energy financing, study finds; ESMA calls for feedback on ESG terms proposal.

A record number of financial institutions have participated in CDP’s 2022 non-disclosure campaign, calling on around 1,500 companies to disclose their environmental data. A total of 260 financial companies, with £30 trillion ($36.8 trillion; €33.9 trillion) in collective assets, participated in 2022 – a 56 percent increase on 2021. The companies – including HSBC and Schroders – engaged 1,466 firms to report on climate change, forests and water security. Of these, 26 percent responded. CDP’s research found that companies were 2.3 times more likely to answer when directly engaged by financial institutions. Companies which disclosed for the first time included Levi Strauss, Mitsubishi Logistics Corporation, Costco, Honda and Samsung.

Just 7 percent of global banks’ energy financing went to renewables between 2016 and 2022, according to data compiled by Profundo. For JPMorgan Chase, Citi and Barclays the figure was 2 percent. At Mizuho, renewables accounted for 4 percent of energy financing, with HSBC and BNP Paribas on 5 and 7 percent respectively. The research was commissioned by Sierra Club, Rainforest Action Network, BankTrack and Fair Finance International.

A spokesperson for GFANZ said: “This report does not provide a comprehensive view of clean energy investment. For example, the report excludes 70 percent of power generation companies, the bulk of which accounts for most of the world’s wind and solar power. This year, GFANZ members will detail how they are financing the transition of the energy sector when they publish their interim targets and transition plans. This will allow government, investors and civil society organisations to track progress towards our shared goals.”

EU watchdog ESMA has again called for market feedback on its proposal to introduce quantitative thresholds for investment funds that include ESG or sustainability-related terms in their title. Whether or not there should be a “specific provision” for funds making transition claims was something the regulator was also keen to hear about, Davide Tassi, policy officer at ESMA, said in a Q&A session on Monday. The draft guidelines, which are open for consultation until 20 February, would include an 80 percent threshold for funds with ESG terms in their name and 50 percent for those featuring sustainability-related terms.

The World Benchmarking Alliance has highlighted a lack of action from oil and gas companies to identify and mitigate the social impacts of their low-carbon strategies. In a statement addressed to the sector, the WBA said that millions of workers risk being made unemployed due to a “lack of accountability and action”. The statement – which has been signed by more than 50 investors – calls on companies to engage in dialogue and anticipate how decarbonisation will affect people and communities.

The American Legislative Exchange Council’s (ALEC) board has voted to send a model bill requiring states to stop doing business with companies considered to be boycotting fossil fuels and other related industries back to the group’s energy task force for additional review. ALEC made the move following advocacy by the American Bankers Association, state bankers associations and others, who argued that it “undermined the organisation’s own commitment to free markets and limited government”.

Disclosure from Japanese companies on TCFD has increased in all categories since November 2021, according to a survey by the Japan Exchange Group. Companies are mostly disclosing on risks and opportunities, number three of the TCFD’s recommended disclosures. The second most common disclosure was on board oversight (66 percent) and on Scope 1 and 2 emissions (55 percent). The categories with the lowest level of disclosure were “description of resilience of strategy based on scenarios” and “integration of assessing and managing risks into overall risk management”.

Ninety three percent of businesses have a corporate sustainability strategy either in place or underway, according to research from Boston consulting group Inverto. The study found that 60 percent of businesses already have a corporate sustainability strategy in place, with 33 percent in the process of implementing one. Despite this, the study also found that 39 percent of businesses have yet to implement a procurement sustainability strategy.

The UK is falling behind on climate spending, according to a report from the Confederation of British Industry (CBI). The UK has committed 1.2 percent of its total GDP to national spending on climate, compared with 2.2 percent for France and 4.9 percent for Germany. CBI director-general Tony Danker said Britain needs to launch a new green strategy to keep up with the EU on green growth.

Danske Bank has published a climate action plan mapping the group’s direct and indirect carbon emissions. The bank has reduced investments in and lending to oil and gas production by 37 percent and 50 percent respectively since 2020. The climate plan maps Danske Bank’s total carbon emissions, direct as well as indirect, ensuring that the bank will reduce carbon emissions in line with the goals of the Paris Agreement.

The University of Oxford has launched an asset owner sustainability leadership programme to support pension funds, sovereign wealth funds, endowments and foundations. The programme, which was co-designed with the International Centre for Pension Management, will take place on 21-23 June. It will cover the latest science on climate change and biodiversity, legal contexts and fiduciary duty, how asset owners can be sustainable leaders and opportunities for investing in nature and ESG integration.

Hargreaves Lansdown has launched an online share voting service to allow investors to place an online vote on their UK and European shares. The proxy voting service, launched in partnership with Broadridge, is available to all clients with shares via the Hargreaves Lansdown platform.

In a series of updates, the Global ESG Benchmark for Real Assets (GRESB) has released standards and reference guides ahead of its 2023 assessments. The guides have been written to support real estate disclosure, which is required under SFDR from this year. The organisation has also announced that it will soon form the first GRESB real estate and infrastructure net zero working groups, and will be accepting applications until 26 January.