ESG round-up: ESMA consults on CSRD regulatory supervision draft guidelines

The latest developments in sustainable finance: EBA proposes introduction of voluntary EU label for green loans; Swiss listed companies to submit sustainability reports to shareholder vote.

EU financial watchdog ESMA has put out draft guidelines on the supervision of the bloc’s corporate sustainability reporting regime, the Corporate Sustainability Reporting Directive (CSRD), by national regulators. The main aim of the guidelines, which is out for consultation until 15 March, is to ensure that national competent authorities supervise corporate reporting in a “converged manner”. ESMA aims to publish a final version in Q3 2024.

The European Banking Authority has proposed the introduction of a voluntary EU label for green loans. In response to the European Commission’s call for advice on green loans and mortgages, the banking regulator said that such a label could “facilitate a more active participation by banks in the green loans market”. It added that, while based on the EU’s “green” taxonomy, the label should “incorporate a degree of flexibility to facilitate market participants’ credible efforts in contributing to environmental objectives”.

The Ethos Foundation has published voting guidelines for the 2024 proxy season. The organisation, which comprises 252 Swiss pension funds and public utility foundations, said it will be more demanding with board member expectations next year. This will include opposing re-election if a company does not have a sustainability committee, does not provide a vote on the climate report, or fails to implement a “convincing” climate strategy. It will also oppose the re-election of a board chair who has failed to make improvements following a strong shareholder protest at a previous AGM.

Ethos also clarified guidance issued last year on sustainability reports. For a report to be approved, the organisation said it should be drawn up with a recognised standard, such as the Global Reporting Initiative, and key indicators must be verified by an independent third party, with at least limited assurance. It added that the largest Swiss greenhouse gas emitters should no longer limit themselves to a single vote on sustainability but should organise two separate votes, one on the sustainability report and the other on the climate report or roadmap.

In 2024, Switzerland’s largest companies will for the first time be required to produce sustainability reports and submit them to a shareholder vote. Specific requirements for climate reporting will come into force the following year.

A coalition of pension funds, endowments and wealth managers with more that £250 billion ($317 billion; €290 billion) in assets has issued an open letter “urgently” calling for increased adoption of pass-through voting by asset managers. The letter has been signed by several asset owners including London CIV, Scottish Widows, and Guy’s and St Thomas’ Foundation. The letter notes that, globally, the three largest fund managers currently cast approximately 23 percent of the votes at companies in the S&P 500, a percentage projected to rise to 40 percent by the mid-2030s if current trends continue.

Tax transparency shareholder proposals have once again been filed at US oil majors ExxonMobil, Chevron and ConocoPhillips by Oxfam America. The resolution, which requests that each adopt the Global Reporting Initiative’s (GRI) tax reporting standard, achieved 14 percent support this year at ExxonMobil, 15 percent at Chevron and 17 percent at ConocoPhillips. This month, more than one-fifth of Microsoft shareholders (21 percent) backed proposals on tax transparency.

Australian Ethical Investment’s transition plan shareholder resolution, co-filed at banking giants NAB and Westpac, respectively received 28.4 percent and 21.5 percent support last week. The support at Westpac was double the level seen last year. The super fund filed the proposal based on concerns with the banks’ climate transition plan requirements for their customers.

The Australian Council of Superannuation Investors (ACSI) has been appointed to the Federal Government’s inaugural modern slavery expert advisory group. ACSI joins 19 other representatives from business, civil society, unions and academia in the group. It will advise on the operation of the Modern Slavery Act 2018 and the practical implementation of measures to strengthen the act, which the government is considering following the Modern Slavery Act Review.