ESG round-up: German ethical lender quits Net-Zero Banking Alliance

Germany’s GLS Bank has quit the Net-Zero Banking Alliance, saying it no longer wants to be part of a group where members continue to finance oil, gas and coal projects. A spokesperson for GLS said in a statement: “As a decidedly sustainable bank, GLS Bank acknowledges the need to comply with the binding Paris climate targets. Climate initiatives from within the financial sector, such as the NZBA, can be a useful way to accelerate the financial sector’s shift towards climate neutrality. However, the success of such initiatives depends on the willingness of most members to adopt new approaches towards climate-friendly business models.” GLS is a co-operative bank based in Bochum. It was founded in 1974 as an ethical lender. NZBA declined to comment.

Norges Bank Investment Management (NBIM) has called on directors to address the climate crisis and social issues, including human rights abuses and boardroom diversity, warning that it will vote against the re-election of those which fail to do so. Carine Smith Ihenacho, chief governance and compliance officer at NBIM, said the fund was preparing to vote against the re-election of around 80 company boards should they fail to set or achieve environmental or social targets.

Inclusive Development International and several US-based human rights and environmental groups have filed a complaint alleging that Marsh McLennan is violating OECD guidelines for responsible business conduct by serving as insurance broker for the East African Crude Oil Pipeline (EACOP). The complaint alleges that the insurance broker is contributing to the serious harm that the project has already caused or is expected to cause, including improper land acquisition processes, human rights abuses, inadequate consultation with affected communities, threats to natural resources relied upon by communities, and irreversible harm to local ecosystems. The groups have called for Marsh to drop its insurance brokerage role for the EACOP.

A spokesperson for the insurance broker said: “Marsh McLennan is committed to helping businesses develop low-carbon business models and manage risks associated with the transition from fossil fuels to renewable energy. As we do our part to accelerate this transition, we recognise that a secure energy supply is crucial for the global economy and society as a whole – this is particularly true in the context of today’s geopolitical environment.”

South Korean companies have identified the EU’s upcoming due diligence directive as their biggest ESG concern, with more than 40 percent saying heightened regulations could pose a direct threat to export-driven companies that are not yet fully ready for its implementation. More than 30 percent also highlighted mandatory ESG disclosures, which will start in South Korea in 2025, as a key issue for this year. The survey of 300 companies affiliated with the Korea Chamber of Commerce and Industry found that nearly 50 percent of companies have no tangible plans for how to respond to the Corporate Sustainability Due Diligence Directive.

The Australian Petroleum Production and Exploration Association (APPEA) has advised the Australian government to use this year’s budget to support investment in increasing gas supply and emissions reduction measures. The association wants the government to focus on keeping gas prices low, delivering energy security and speeding up the path to net zero. APPEA has also called for a national carbon capture utilisation and storage roadmap to provide clear policy direction, identify and progress priority hubs for low emissions projects, and promote Australia as a regional carbon storage leader.

Aviva Investors has set out its stewardship priorities for 2023, advising companies not to sacrifice long-term sustainability goals in response to current challenges posed by energy shocks, supply chain disruption, high inflation and recession risks. It plans to focus this year on the cost of living crisis, transitioning to a low-carbon economy, and reversing nature loss. The asset manager said it expects companies to develop “robust and viable climate transition plans” to support decarbonisation in an inclusive way, and to begin reporting against the Taskforce on Nature-related Financial Disclosures. Aviva voted against the re-election of directors at more than 100 companies for lack of progress on ethnic diversity last year, and has also voted against directors at more than 70 companies for insufficient policies on biodiversity.

Phoenix Group has joined the Transition Pathway Initiative’s (TPI) asset owner-led board. The savings provider has committed to using the TPI tool to assess how prepared companies are for the transition to a low carbon economy. This addition brings the assets under management and advice of TPI’s investor support above $50 trillion. The TPI board comprises asset owners from Europe, the US and Australasia.

The G20 Sustainable Finance Working Group (SWG) has announced plans to develop a sustainable finance technical assistance action plan to address challenges including mechanisation of timely and adequate resources for climate finance, enabling finance for the Sustainable Development Goals, and capacity building of the ecosystem for financing towards sustainable development. The plan, which was discussed at SWG’s meeting last week, will include identification and analysis of existing capacity-building activities, as well as identifying the existing sustainable finance skill gaps.

Hong Kong Exchanges and Clearing (HKEX) has signed a memorandum of understanding with the Saudi Tadawul Group, the stock exchange operator in Saudi Arabia. Under the MoU, HKEX and Saudi Tadawul Group will explore co-operation opportunities in areas including fintech, ESG and cross listings.