ESG round-up: Shell and ExxonMobil report record profits for 2022

The latest developments in sustainable finance: Australian treasurer calls for more green finance; Luxembourg regulator requests SFDR disclosures.

Shell recorded the highest profit in its 115-year history in 2022 after energy prices rose following Russia’s invasion of Ukraine. The company reported $39.9 billion in annual profit, more than double the figure for 2021. The oil and gas company, along with other energy companies, profited from the high prices of hydrocarbons amid disruption in energy markets. ExxonMobil also unveiled record profits for 2022 this week, at $55.7 billion.

Australian treasurer Jim Chalmers has called for Australia’s largest superannuation funds and investment consultants to channel more finance into environmentally sustainable energy projects. In a meeting organised by the Australian arm of the PRI on Wednesday, Chalmers said investing in sustainable finance was not a “left-wing fringe idea” but an opportunity for the country to upgrade its industrial base. Among those present were Responsible Investment Association Australasia, JANA, ACSI, AustralianSuper, CBUS and IFM Investors. The treasurer also revealed that the government will create a new sustainable finance roadmap this year, with a view to expanding the role of investment in social projects.

The Luxembourg securities regulator (CSSF) has made a formal request for SFDR disclosures from locally registered fund managers as it moves to enforce the incoming rules. Under the EU’s new disclosure regime, which is due to be applied in full as of 2023, asset managers must provide entity and fund-level disclosures on the integration of sustainability-related processes and objectives. The submission deadline is 2 March.

Norges Bank Investment Management reported negative returns for all equity sectors in 2022, with the exception of energy. The return on the pension fund’s share investments last year was -15.3 percent, versus 12.1 percent for interest investments and 0.1 percent for investments in unlisted property. The return on unlisted infrastructure for renewable energy was 5.1 percent.

More than 30 climate groups have referred Citi to US regulators – including the SEC, the Federal Reserve and the Office of the Comptroller of the Currency – over its involvement with GeoPark, a company in the Amazon accused of oil spills, working with terrorist-linked rebels, and leaving explosives behind on Indigenous lands. The groups – including Sierra Club, Amazon Watch and Friends of the Earth US – had written to Citi asking the bank to explain how it overlooked these alleged human rights and environmental breaches. The bank responded that it refused to address specific concerns for reasons of client confidentiality. Citi declined to comment.

Companies can expect increased ESG litigation focused on allegations of greenwashing and other aspects of liability including security laws, consumer protection legislation and fiduciary duty in 2023, according to Linklaters. The UK law firm has issued a guide covering key dispute resolution trends and notable cases across 16 jurisdictions including the US, China and the EU. Also expected to come under additional scrutiny this year is the personal responsibility of directors, senior officer holders and trustees for managing ESG-related risks.

Aviva has donated £38 million ($47 million; €43 million) to help restore British rainforests as part of a £100 million programme of nature-based projects across the UK and Ireland. Aviva has partnered with The Wildlife Trusts to re-establish the UK’s rare and biodiverse temperate rainforest by planning a combination of native tree species. In total, the project is expected to remove around 800,000 tonnes of carbon from the atmosphere. The donation builds on Aviva Ireland’s €5 million donation to Nature Trust to help accelerate its tree afforestation project. It will also contribute to Aviva’s net zero 2040 ambition.

Seven Gulf state exchanges have adopted a unified set of ESG metrics aligned with the UN SDGs and the GRI framework for voluntary corporate disclosures. The framework was developed by the GCC Exchanges Committee, which comprises the Bahrain Bourse, Boursa Kuwait, Qatar Stock Exchange, Muscat Stock Exchange, Saudi Exchange, Abu Dhabi Securities Exchange, Dubai Financial Market and committee chair the Saudi Exchange. The metrics address GHG emissions, energy usage, water usage, gender pay, employee turnover, gender diversity, data privacy and ethics. It is billed as “accounting for regional sensitivities”.

The Federal Trade Commission has extended the public comment period on potential updates to its green guides for the use of environmental marketing claims. The comment period was initially set to close on 21 February but has been extended by 60 days until 24 April following requests from several parties.

Moody’s has launched a “net zero underwriting module” to provide insurers and reinsurers with GHG emissions data associated with their underwriting portfolios. The product is designed for clients to meet the requirements of the PCAF accounting standard and the Net Zero Insurance Alliance target setting protocol.