ESG round-up: EU sustainable finance platform publishes report on market practices

The latest developments in sustainable finance: NA100 announces 10 new participants; Investors tell UK debt management office to build out yield curve for green gilts.

The EU Platform on Sustainable Finance has published a compendium of market practices analysing how the EU taxonomy and sustainable finance framework support financial and non-financial actors in transitioning to net zero. The announcement says the report shows that the EU taxonomy and “the other sustainable finance tools” are being used “for setting transition strategies, structuring financial transactions and reporting on sustainability efforts”.

The report builds on the European Commission’s 2023 recommendations on transition finance, the 2023 EU communication and the 2022 data and usability report. It spans three areas: the EU sustainable finance framework for business strategy and transition planning; finance and transactions; and reporting, monitoring and assurance. Building on the report, the Commission will work closely with the platform to monitor the uptake of the different sustainable finance tools and provide guidance to make the application of the framework as effective as possible.

HSBC Asset Management, Manulife Investment Management and Rest Super have joined Nature Action 100. In September, the collaborative engagement initiative announced its target firms and the initial 190 investor participants. Since then, the investor list on its website has been updated twice, taking the total investor cohort to 215. The 10 new joiners added this month also include Guy’s and St Thomas’ Foundation, Nia Impact Capital, Liontrust Investment Partners and Lærernes Pension.

Investors have told the UK’s debt management office that they would like the yield curve for green gilts built out. According to minutes of a consultation meeting ahead of the new remit for the DMO, support was expressed for five- and 20-year maturities by both investors and banks, with banks mentioning potential issuance of £10 billion ($12.7 billion; €11.7 billion) this year. The £10 billion sum would be a decline from the first year of green gilt issuance, when the government raised £16.1 billion, but broadly in line with the last two years.

The nature-related approaches taken by frameworks including CDP, ESRS, GRI, ISSB, SBTN, TNFD and the Natural Capital Protocol have been compared in a report by the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) and UNEP FI. Among other key findings, the report notes that the definition of materiality differs across the group, with some entities prescribing financial materiality or environmental and social materiality, and others being more flexible in their requirements. The report also found that, while most approaches aim to cover all areas, “their disclosure requirements and assessment guidance are often developed primarily with consideration of the land and freshwater realms, with less consideration of the ocean realm”.

The Financial Reporting Council has published guidance for applying the UK Corporate Governance Code, which was revised this month. The guide gives examples of good practice and questions to support boards in implementing the code’s principles. The FRC said the aim was to “start thoughtful discussions and decision-making, rather than prescribe mandatory actions”.

Legal & General Investment Management has completed a £25 million transaction with the National Trust, one of the UK’s largest charities, to help fund renewable energy projects on its estates. Proceeds from the transaction will be invested in the next generation of renewable energy hydro-electric and solar generation projects as a key part of the Trust achieving net zero across its estate by 2030.

S&P Dow Jones Indices has been selected by PenSam, one of Denmark’s largest labour market pension providers, to develop a bespoke climate-focused index for its exclusive use. The firms will collaborate on a version of one of S&P DJI’s carbon budget indices, an index family launched in 2022, which uses a defined level of carbon budget based on the findings of the UN’s Intergovernmental Panel on Climate Change estimate of worldwide emissions to limit temperature increases to 1.5C.

The Principles for Responsible Investment has appointed more than 40 new members to its 10 guidance advisory committees. Thirty-nine percent of the new appointees are asset owners and 20 percent are from emerging markets.