ESG round-up: SBTi delays report on corporate net-zero targets

The latest developments in sustainable finance: International Energy Agency appoints advisory group on coal emissions, Danish regulator warns asset managers against greenwashing.

The Science-Based Targets initiative (SBTi) has postponed publication of its third progress report to 12 May after identifying “the need to make adjustments to ensure complete accuracy”. Due to be published today, the report is expected to announce a record year for approved climate targets despite underrepresentation from emerging markets, according to an earlier copy seen by RI. SBTi has emerged as the de facto body for certifying corporate net zero targets since its 2015 formation by the UN Global Compact, World Resources Institute, WWF and CDP.

The Network for Greening the Financial System (NGFS), has stated that taxonomies and climate transition frameworks are “most effective” when backed by “clear objectives, and science-based net zero targets”. The group, which is composed of 114 central banking and supervisory members, made the observation in a new report entitled Enhancing Market Transparency in Green and Transition Finance. NGFS also highlighted the “real need” to “enhance comparability and interoperability of taxonomies and transition frameworks” and referenced the work of the International Platform on Sustainable Finance’s work on a Common Ground Taxonomy as a “key milestone”. 

The International Energy Agency (IEA) has appointed a “high-level advisory group” of global energy, climate and finance leaders to provide strategic input for a forthcoming special report exploring ways “to put the world’s coal emissions on a path toward net zero”. The group will be chaired by UN Special Envoy Michael Bloomberg. The report – Coal in the Global Net Zero Transition: Strategies for Rapid, Secure and People-Centred Change – is due to be published in the fourth quarter of 2022.

Denmark’s financial regulator has warned asset managers in the country that they should not market funds as more sustainable than they actually are. In a statement to local financial newspaper Børsen, the regulator said that while there were no formal rules on fund labelling, it encouraged managers to “focus on coordinating the communication about the product and the underlying sustainability of the product, so that customers actually have the opportunity to make a choice between different degrees of sustainability and understand what they buy”. There must be a connection between how sustainable a financial product really is and how it is marketed, the regulator added.

Physical climate risk could expose up to 4.5 percent of global GDP to economic loss by 2050, according to a new report from S&P Global. South Asian sovereigns are most affected, with between 10 and 18 percent of GDP at risk, while central Asia, MENA and sub-Saharan Africa will also be badly affected. The report found that 96 percent of Japanese GDP was in some way exposed to physical climate risk, with the country receiving a readiness rating of one out of six. The US also received a readiness rating of one, with 44 percent of its GDP exposed to physical climate risk.

Asset manager Robeco has published its sustainability report for 2021 – the first under the leadership of recently appointed CEO Karin van Baardwijk. Robeco’s sustainable investing strategy this year will focus on climate change, biodiversity and human rights. In 2021, Robeco voted in 54 percent of meetings against management and added 326 companies to its exclusion list.