ESG round-up: Japanese government mulls ESG initiatives for food sector

The latest developments in sustainable finance: US insurers to align with TCFD, Chinese central bank lending facility cuts emissions, BofA backs carbon price.

The Japanese government is looking at the feasibility of various measures aimed at improving the ESG performance of its domestic food sector, including preferential treatment in the award of government contracts or subsidies for ESG leaders, collecting and disseminating data on ESG issues to improve awareness and participating in global efforts to develop ESG standards. The proposals were featured in a new government-commissioned report exploring the ESG issues facing the sector.

US insurers will be required to report the climate-related risks they face, in alignment with the TCFD, beginning this year. This follows the publication of a new TCFD-aligned insurer survey – developed by a taskforce of state insurance commissioners over the past 14 months – which will replace the annual state-led survey for insurers that has been in place since 2010. Fifteen US states have so far committed to utilise the survey for insurance companies in their jurisdictions, representing nearly 80 percent of the US insurance market. Around 400 insurers are expected to report against the TCFD as a result of the move, a massive rise from the 28 firms which made TCFD-aligned disclosures in 2021.

Bank of America (BofA) has come out in favour of the SEC’s proposal to make US-listed companies disclose climate-related risks and their carbon footprint, and is supporting a price on carbon. According to Reuters, BofA sustainability head Paul Donofrio said the SEC’s proposals would improve transparency and the efficiency of asset allocation within the market, while a carbon price would reflect “its true cost to society”.

Large companies, listed companies, banks and insurers in the UK will be required to make their first mandatory TCFD-aligned disclosures from this month. The UK is the first G20 country to make TCFD reporting mandatory, and is set to require financial institutions and listed companies to publish net-zero transition plans in 2023 detailing how they will decarbonise as part of efforts to make the country a “net-zero-aligned financial centre”.

The Chinese central bank has facilitated commitments to cut 28.8 million tons of annual carbon emissions within a month of the launch of a new lending facility, according to a report by climate think tank IEEFA. The facility offers competitive bank funding, conditional on loans extended to borrowers able to produce proven, audited and consistent decarbonisation results. “This is a strong start, but the [facility’s] real test will come as emission reduction results come through, third-party audits are conducted and the People’s Bank of China assesses both for rollover,” said IEEFA.