ESG round-up: EFRAG told to deprioritise sector reporting standards

The European Commission has called on EFRAG to prioritise producing additional guidance on draft corporate sustainability reporting standards ahead of preparatory work on sector-specific standards. Published in November, EFRAG’s first set of draft EU sustainability reporting standards (ESRS) covered general principles and sector-agnostic standards. “Prioritising EFRAG’s efforts on the first set of standards over preparatory work for the sector standards will avoid overlapping consultations and ease the burden on all stakeholders wanting to contribute to this busy agenda,” EU commissioner Mairead McGuinness said last week in a speech.

The largest 150 Indian listed companies will face mandatory requirements to obtain “reasonable assurance” for their corporate sustainability reports from 2023-24. This will be gradually extended to the top 1,000 listed entities by 2026-27, and enforced on a comply or explain basis for the next largest 100 companies. Reasonable assurance is the highest assurance level on par with those which are applied in a financial statement audit. Disclosures which meet these requirements will feed into a new class of India-specific ESG ratings products which take into account local ESG challenges. In addition, local media reported that ESG funds will be required to invest 65 percent of their assets in listed entities where assurance is undertaken. The rules were approved by market regulator the Securities and Exchange Board of India in a board meeting yesterday.

The UK Financial Reporting Council has updated its actuarial standards to include climate change as a potential risk. Actuaries will be required to identify material factors, including climate change, and communicate any limitations and uncertainties related to this.

Brazilian mining company Vale has agreed to pay $55.9 million to settle charges brought against it last April by the Securities and Exchange Commission. The US regulator accused the mining company of false and misleading disclosures about the safety of its dams prior to the January 2019 collapse of the Brumadinho dam, which killed 270 people. The complaint alleged that, for years, the dam did not meet internationally recognised safety standards despite assurances in Vale’s public sustainability reports that its dams were certified as stable. Vale said that “without or admitting or denying the settled claims” it will make the payment, adding that the SEC will not oppose the firm’s motion to dismiss all claims that it acted with fraudulent or reckless intent regarding its disclosures. The settlement remains subject to approval by the US District Court for the Eastern District of New York.

Policy inaction, particularly on carbon emission pricing, is the biggest factor preventing the transition to net zero, according to research by Legal & General Investment Management. The report said financial institutions and investors are underestimating the long-term impact of the ongoing delay on transitioning to net zero, with the window to achieve 1.5C of global warming rapidly closing. It said the biggest policy lever available to help guide the transition is carbon pricing.

ABN AMRO and Navigator Gas have finalised their $200 million sustainability and gender diversity-linked loan. The deal incorporates KPIs linked to the environmental performance of the liquefied gas shipping company, as well as the number of women holding leadership roles at Navigator.

Insure Our Future has written to 30 insurers and reinsurers – including Allianz, AXA, Chubb, Generali, Lloyd’s of London and Munich Re – asking them to immediately cease insuring new and expanded coal, oil and gas projects. The NGO’s annual letter also urged the firms to stop insuring any new fossil fuel companies that are not aligned with a credible 1.5C pathways, as well as ending relationships with unaligned existing clients. Other requests include the adoption of binding targets for reducing insured emissions in line with a 1.5C pathway by July. The NGO has asked firms to respond by 15 July, adding that this will form the basis of its annual scorecard for 2023.