ESG round-up: NGOs raise alarm over GFANZ groups’ Race to Zero commitment

The latest developments in sustainable finance: Shell appoints new CEO, IGGCC proposes climate resilience framework.

NGOs led by ShareAction, BankTrack and Reclaim Finance have called on members of the Net Zero Banking Alliance to restrict their financing of fossil fuel projects in order to align with recently strengthened Race to Zero criteria. The UN-backed campaign, of which the NZBA is a partner, updated its criteria for members in June. The 16 civil society groups are alarmed by reports that a UNEP-FI spokesperson has said it is unlikely that individual alliances under the GFANZ umbrella will need to update their core commitments ahead of the June 2023 deadline for compliance with the new rules. In a letter to UNEP-FI and the NZBA steering committee, the NGOs have warned that this undermines the credibility of UNEP-FI’s net-zero commitment and its role as convener of three of the GFANZ member alliances. They have demanded an urgent response from the NZBA with an outline of their timeline and process for updating its guidelines to maintain its accreditation, as well as an accountability mechanism to ensure compliance with their obligations.

Shell has announced that Wael Sawan will replace Ben van Beurden as CEO when the latter steps down at the end of this year. Sawan is currently director of integrated gas, renewables and energy at the British multinational, a role he took on in November 2021. Prior to that, he had held several positions during his 15-year career at Shell, including upstream director and vice-president deepwater. Van Beurden, a Shell lifer, has held the top job for 10 years. Under his leadership, Shell became in 2017 the first oil and gas major to commit to cutting Scope 3 emissions. More recently, the firm lost a legal case brought against it by environmental groups and local citizens in the Netherlands. In a landmark ruling in May 2021, a civil court ruled that Shell must cut its CO2 emissions by 45 percent versus 2019 levels by 2030. Shell is appealing the ruling.

The Institutional Investors Group on Climate Change (IIGCC) has published a paper on climate resilience that proposes a framework to help investors better understand their exposure to physical climate risk and promote investor action on climate resilience. The proposed structure for the framework covers five key areas, including governance and strategy, targets and objectives, strategic asset allocation, asset class alignment, and policy advocacy and market engagement. The IIGCC is calling for feedback from any interested parties with a deadline of 14 October to develop the framework further.

The Climate Bonds Initiative is launching a social and sustainability bond database to provide transparency on global social and sustainability debt, ranging from individual deal-level analysis to the identification of general market developments and trends. The CBI, which already has a database of green bonds, said the new data will provide investors and policymakers with access to credible analysis of sustainability and social bond issuances.

The Kingdom of Belgium has raised €4.5 billion from its second green bond. BNP Paribas, Crédit Agricole CIB, HSBC and JPMorgan were lead managers on the deal, which attracted €31 billion of orders from 200 investors. The new bond is due to mature in April 2039 and carries an annual coupon of 2.75 percent.

In other green bond news, New Zealand has launched a green bond framework ahead of a possible issuance later this year. Eligible expenditures include restoring and protecting the country’s natural environment, and recovering and preserving species. A second-party opinion was provided by Sustainalytics.

ISS ESG has launched a Biodiversity Impact Assessment Tool to support investors who are looking to align their portfolios with evolving biodiversity disclosure frameworks in the lead-up to Climate Week New York 2022 and COP15. The tool will help investors measure the impact of their investment portfolios on biodiversity and also support relevant disclosure and reporting requirements. Two main biodiversity indicators will be provided: potential disappeared fraction of species and mean species abundance. The tool will cover 7,400 issuers, the same as ISS ESG’s corporate rating universe.