ESG round-up: Singapore launches final green taxonomy consultation

The latest developments in sustainable finance: IOSCO welcomes ISSB reporting standards timeline; AllianzGI to vote against high exec pay.

Singapore has launched its third and final green taxonomy consultation. Stakeholders have been asked to comment on the technical screening criteria for five high-impact sectors and the need for a potential Do No Significant Harm criteria. The island state has proposed a traffic light approach for its taxonomy to integrate transition activities for ESG financing. A final taxonomy is due to be published in the first half of 2023 covering eight high-impact sectors.

The International Organisation of Securities Commissions (IOSCO) has welcomed the International Sustainability Standards Board’s approval of its inaugural corporate sustainability reporting standards. The chairman of IOSCO, Jean-Paul Servais, noted the importance of the ISSB confirming that its standards will be ready for implementation as early as January 2024, and added that they will “meet an urgent need in financial markets to get away from the current fragmented situation” regarding sustainability disclosures.

Allianz Global Investors is the latest asset manager to say it will vote against both “overly generous” executive pay packages, as well as hold directors accountable if the company does not have credible net-zero targets in place. The European manager also revealed that it supported 70 out of 87 shareholder proposals on climate in 2022, and said it expects high emitters to implement a net-zero strategy and then offer investors a Say on Climate vote on it.

The quantity and quality of disclosures for Scope 3 emissions are increasing more quickly than those of Scopes 1 and 2, according to analysis from Sustainalytics. For 2021, almost 40 percent of companies in Sustainalytics’ global ESG universe reported Scope 1 and 2 data – 7 percentage points more than 2020. By contrast, Scope 3 disclosures for the same cohort rose 19 percent over the same period to 24 percent in 2021. Overall, however, 60 percent of Scope 1 and 2 emissions data and over 75 percent of Scope 3 emissions data were left unreported.

Earlier this month, the European Commission published its awaited feasibility study on the introduction of minimum standards for ESG benchmarks, an ESG equivalent to its climate transition and Paris aligned benchmarks. The report, which was published by the EU’s financial services unit, DG FISMA, with auditor PwC, explored options for introducing a mandatory minimum standard for all ESG benchmarks, or a voluntary label that would function like the EU’s existing climate benchmark categories, launched in 2021. A survey conducted as part of the study found that there was support for the introduction of rules around ESG benchmarks but “strong pushback” against the idea of a mandatory standard. The report also suggested that any rules introduced should be positioned as “automatic routes to qualifying as disclosure under SFDR [Sustainable Finance Disclosure Regulation] Article 8 and 9 respectively, rather than as the only routes.”

Vanguard CEO Tim Buckley has defended the asset manager’s decision to leave the Net Zero Asset Managers initiative back in December, telling the Financial Times that the company’s “voice was being drowned out or confused” within the industry-wide climate change alliance. He added that Vanguard has not altered its approach to managing climate change risks, mainly focusing on company disclosure standards.

Over half of international firms are still doing business with Russia almost one year on after Russia’s invasion of Ukraine, according to data from the Kyiv School of Economics. B4Ukraine – an international coalition of more than 80 civil society organisation – has called on the G7, European Union and Swiss governments to do more to encourage companies to cut ties with Russia. Companies across France, Germany, Italy and Japan currently have worst records of the G7 countries for withdrawing activity from Russia.

NatureAlpha has collaborated with MSCI to launch solutions for investors seeking to track biodiversity and nature risks, footprints and dependencies of their investments. The index provider will distribute the biodiversity analytics company’s data and analytical tools to the global investment community. The data will cover the full list of constituents of the MSCI ACWI Index.