ESG round-up: FRC issues call for evidence on ISSB standards

The latest developments in sustainable finance: Mauderer to push for inclusive transition as NGFS chair; UK businesses call on government to maintain net-zero commitment.

The Financial Reporting Council (FRC), in its role as secretariat to the UK sustainability disclosure technical advisory committee, has issued a call for evidence to inform the proposed endorsement of the IFRS sustainability disclosure standards in the UK. The International Sustainability Standards Board published its first two standards on sustainability disclosure and climate-related disclosures last month. The FRC is looking to understand whether the application of the standards in a UK context will result in disclosures which are relevant, reliable and comparable for investors. It is also considering technical feasibility, timeliness alongside financial reporting, and proportionality of costs to benefits. The deadline to submit responses is 11 October.

Bundesbank board member Sabine Mauderer has said she will “not relent” in pushing for an inclusive transition when she takes over as chair of influential central bank climate group the NGFS next year. In a speech to the Oxford Sustainable Finance Summit on Wednesday, Mauderer vowed to campaign “for an inclusive transition and an open dialogue, where all parties interact on an equal footing”.

More than 100 large UK businesses including Aviva Investors, Amazon and BP have called on the UK government to maintain its commitment to net zero. In a letter to prime minister Rishi Sunak, the companies said the consensus across the economy is that faster action from the government is needed and the policy environment should reflect this. They called for a renewed focus on and commitment to net zero, noting that companies are ready to invest but require leadership and commitment to the green economy from the government. The firms said they plan to invest billions in the low-carbon economy because “we know it is crucial for our future prosperity, and it is the right thing to do for the future of our planet”.

The New Zealand Financial Markets Authority (FMA) has published scenario analysis guidance for the climate-related disclosures regime. Under the requirements, climate reporting entities will have to undertake scenario analysis and disclose how the process was conducted in their annual climate statements. When the first climate statements are published in 2024, the FMA will take enforcement action where companies fail to produce a climate statement or where information is false or misleading. There will be criminal and civil penalties for those which do not comply.

The Banque de France plans to roll out its climate indicator to companies for free from next year. At a meeting with the French minister of finance Bruno Le Maire last week, the central bank was asked to define a national corporate climate indicator methodology and gradually implement it in the coming year. The indicator – which the bank has been working on with French agency for the ecological transition Ademe since last year – will have two quantitative dimensions linked to transition and physical risk, and will be validated by testing it on more than 500 companies across the country in the coming months.

The French socially responsible investment label committee has submitted its label revisions to Le Maire following 18 months of work and consultations. The revisions to the label were launched in 2021, when the French minister of finance asked the committee to redesign it in accordance with the evolutions to ESG. The final version of the label specifications is expected to be issued in September and become effective in January 2024. From the start of next year, new funds will have to fulfil the demands of the new label, while existing funds will have one year to comply with the rules.

India’s Pension Fund Regulatory and Development Authority said it will allow pension funds to invest in sovereign green bonds, according to local reports. The decision, announced by the regulator’s chair Deepak Mohanty on Tuesday, follows the government’s unveiling of plans to issue sovereign green bonds this year.

AXA Investment Managers has launched its first fixed income ETF, the Euro Credit PAB UCITS ETF. The Article 8 fund is actively managed against the ICE Bank of America Euro corporate Paris-aligned index, which aims to align its decarbonisation footprint with the carbon emission of the PAB parent index. The portfolio of the ETF is based on three pillars: credit selection, credit risk monitoring and an absolute carbon emissions target of the portfolio holdings below or equal to that of the PAB benchmark. At launch, the ETF will be available in Austria, Germany, Denmark, Finland, France, Italy, Luxembourg, Netherlands, Norway and Sweden.