ESG round-up: South Korea launches taskforce to help develop ESG fund disclosure standards

The latest developments in sustainable finance: DWS publishes coal policy; Chile central bank finds around 40% of real estate valuations exposed to climate risks.

Korean financial regulator the Financial Supervisory Service (FSS) has announced a taskforce to develop ESG fund disclosure standards. The framework will cover ESG investment targets, manager capabilities and performance, and will be released in the first half of 2023. The taskforce will include seven unnamed asset managers (selected based on the size of their ESG funds), industry trade group the Korea Financial Investment Association and the government-backed research body the Korea Capital Market Institute.

DWS has implemented a new policy on investments in thermal coal. The German manager will divest all companies developing or buying new thermal coal assets, as well as those with a revenue share above 25 percent, including green bonds issued by these companies. It will end investment in firms with more than 5 percent revenue share in the EU/OECD by 2030 and 2040 elsewhere, and will continue to engage with these companies, considering voting against management or divestment if they fail to publish a transition plan by the end of 2025. The policy was welcomed as “quite robust” by Reclaim Finance and the restriction on new coal was praised as a strong market signal by German NGO Urgewald. The policy will not apply to physically replicating passive funds and existing illiquid alternatives funds.

Research from the Chilean central bank has found that just under 40 percent of real estate valuations in the country are vulnerable to climate risks. These consist of exposures of 20.2 percent, 6.7 percent, 6.1 percent and 5.4 percent for the risks of flooding, drought, wildfire and coastal deterioration, respectively. The Bank of Italy has separately published research on the impact of climate change on its economy.

The Romanian Sustainable Investment and Finance Association (RoSIF) has published Romania’s sustainable finance roadmap with the aim of prompting corporate issuers to report more meaningfully on ESG and look at deploying capital towards sustainable projects. The report covers Romanian corporate and investor practices shaped by EU regulation, the UK net zero timeline and its implication for the financial sector, and examines the strength of Romanian ESG corporate disclosures. On climate reporting, companies have been advised to disclose their Scope 1, 2 and 3 emissions, and for the top 20 companies to commit to a net zero 2050 investment plan and transition pathway to 1.5C.

The UK Financial Conduct Authority (FCA) has announced that it will be among 13 international regulators taking part in the Global Financial Innovation Network’s first greenwashing techsprint. The techsprint’s objective is to develop a tool or solution that can help regulators and the market tackle greenwashing risks in financial services. UK-based firms can apply to take part from 17 April. The application window will remain open for four weeks.