ESG round-up: GTAG publishes final report on UK green taxonomy

The Green Technical Advisory Group (GTAG) has published its final report as adviser to the UK government on the implementation of a green taxonomy. The report completes the suite of nine papers which the group has published since its inception in June 2021. The final recommendations include for the government to establish an advisory body to support the implementation of the taxonomy in the next three to six months. It suggests that this could either be achieved by providing addition funding to an existing body, such as the Financial Reporting Council (FRC) or the Audit, Reporting and Governance Authority (ARGA), or if not by creating a new entity, such as GTAG 2.0.

Switzerland has launched a stewardship code for investors in the country, with the aim of promoting active shareholder rights, transparency and comparability. The code – designed by Swiss Sustainable Finance and Asset Management Association Switzerland – will require signatories to produce one stewardship report per year. It will cover nine principles including governance, policies, voting, engagement, escalation and transparency.

Data provider RepRisk has reported a 70 percent increase in the number of “climate-related greenwashing incidents” in the banking and financial services sector in the 12 months to 23 September versus the previous year. More than half of these “either mentioned fossil fuels or linked a financial institution to a company in the oil and gas sector”, RepRisk said. The report also looked at “social washing”, which it found to be present if not as prominent as greenwashing. Companies linked to greenwashing were more likely to social wash, it added.

Two-thirds of asset owners believe ESG has become more material to investment policy in the past five years, according to Morningstar’s second annual survey. The report – which analysed responses from 500 asset owners with $10.7 trillion in AUM – found climate was the driving force behind asset owners’ environmental considerations, with DE&I topping the list on the social front. Other key factors included energy management, sustainable food/ agriculture, and customer privacy and data security. The research also found that regulatory confusion presents a “significant challenge” for asset owners, with the lack of clarity and rising costs cited as particular problems.

In response to a consultation on the Australian Exposure Draft of the Superannuation Bill, the Responsible Investment Association Australasia (RIAA) has called on the Treasury to further develop the term “sustainable” in the bill. RIAA said the term should be strengthened to “reflect sustainability challenges” – such as climate change – which risk having “outsized impacts” on the quality of retirement for Australians. It recommended that the definition of “sustainable” within the legislation and supporting explanatory memorandum should be broadened to include the consideration of those external social and environmental sustainability challenges.

The Principles for Responsible Investment (PRI) is to launch a Reynolds-Gifford Grant. Named after long-serving former CEO Fiona Reynolds and founding executive director James Gifford, the grant will fund PhDs in sustainable finance for students from underrepresented communities. The initiative was launched by outgoing PRI chair Martin Skancke on the last day of PRI in Person in Tokyo today. The PRI also announced that its 2024 annual conference will take place in Toronto from 8-10 October.

Norges Bank Investment Management (NBIM) has revoked an exclusion on Thoresen Thai Agencies. The measure was put in place in 2018 due to the firm’s practice of sending decommissioned vessels to be broken up for scrap in Bangladesh, where working conditions are extremely poor. The company has not sent more vessels since 2018, so the Council of Ethics recommended that it be removed from the exclusion list. The council has also ended the observation of Hyundai Glovis following the company’s introduction of a policy for responsible disposal of decommissioned vessels.

More than two-thirds (68 percent) of CEOs are concerned that their progress on ESG is not strong enough to withstand stakeholder scrutiny, according to a KPMG report. The research found that delivering on ESG commitments is currently a critical concern, with 69 percent of CEOs saying they have embedded ESG into their business for “value creation”. The survey also found that just over one third said they have changed the language they use to refer to ESG, both internally and externally.

Green central banking group NGFS has published a “conceptual note” on short-term climate scenarios, laying out its thinking on the topic and a roadmap for the analytical work it plans to undertake. The 50-page paper, which was released on Wednesday, introduces the types of “scenario narratives” the network intends to develop, with a commentary on modelling options.

ISS ESG has launched an EBA Pillar 3 ESG Solution for banks. The solution leverages the service provider’s climate and regulatory solutions to provide a comprehensive set of data points to help EU banks meet the disclosure requirements of EBA Pillar 3. The European Banking Authority’s reporting framework features a set of 10 quantitative templates requiring banks to disclose climate-related risks, activities to mitigate those risks and their exposure to green assets, as well as information on sustainability risk management.

ESG data house Clarity AI has introduced its first SFDR-aligned index methodology. The sustainable investment methodology is being used in indices that target companies at the forefront of key industries – such as electric vehicles and sustainable infrastructure – and ETFs based on those indices. It can also be applied to broader market indices and funds where investors want to integrate sustainable objectives. Financial institutions can use the methodology to determine how companies perform on sustainable investment, including setting thresholds on the SDGs, EU taxonomy contribution, and PAIs.

The Toronto and Montreal Stock Exchange (TMX) has created an ESG data hub to support ESG integration into investment decision-making processes. This includes tracking climate action plans, quantifying impact, screening companies and controversies, following news and events, and performing corporate peer analysis.