ESG round-up: Sri Lanka launches green taxonomy with IFC

The latest developments in sustainable finance: UK launches consultation on green strategy; NGOs warn against Musk Twitter takeover; NYC focuses on board diversity.

Sri Lanka’s central bank has launched a green taxonomy in partnership with the International Finance Corporation. The taxonomy is the first to be developed using the EU International Platform on Sustainable Finance’s Common Ground Taxonomy, and also references the IFC’s blue finance guidelines and climate smart agriculture activities. Sri Lanka is one of the countries most at risk from extreme weather events, with World Bank estimates putting its annual GDP loss from climate change by 2050 at 1.2 percent, so the first phase of the taxonomy covers climate mitigation and adaptation as well as ecological conservation. The taxonomy does not mention nuclear power, but gas-fired power plants where the lifecycle emissions are lower than 100gCO2e/kWh are eligible. Sri Lanka is currently in talks with the IMF about a bailout following a balance of payments crisis. The UNDP has suggested it as a candidate for a “debt for nature swap”, which could see the sovereign receive some debt relief in exchange for committing to spend a fixed sum on nature conservation.

The UK government is seeking feedback on whether its green finance regulatory framework is “world-class” and whether it is capable of attracting global green finance flows. The consultation will inform an upcoming revision of the UK Green Finance Strategy, first published in 2019, which sets out policy commitments to align the domestic financial services sector to the UK’s climate goals and to mobilise green private finance. The consultation also addresses investing in nuclear energy, and transition finance. It closes on 22 June.

A coalition of NGOs has warned that Elon Musk’s proposed takeover of Twitter could pose “serious human rights risks for the hundreds of millions of people who depend on Twitter’s services globally.” The warning came in a letter to Wall Street banks which have committed to fund the acquisition. According to the group, positive strides made by Twitter on content moderation and user safety could be reversed by Musk, who has publicly championed free speech principles. This would “threaten the very policies that make Twitter a profitable platform”, the group said. Musk said on Friday that the deal was on hold.

Ford, BlackRock, JPMorgan Chase, Morgan Stanley and Goldman Sachs have entered into an agreement with the New York City pension funds to disclose to investors the gender and ethnic makeup of their boards, in addition to the relevant skill sets of directors. However, New York City comptroller Brad Lander noted that a sixth company – renewables provider NextEra Energy – had refused the request and would face a shareholder resolution on the topic.

Nine Austrian financial firms have adopted binding requirements to make their portfolios climate neutral as part of their membership of the government-backed Green Finance Alliance (GFA). The GFA is described as “one of the first state-run initiatives worldwide” and requires members to align their businesses with the Paris climate agreement, in addition to integrating environmental considerations into their operational activities. The members are: Allianz Elementar Versicherungs, BKS Bank, fair-finance Vorsorgekasse, HYPO Oberösterreich, Raiffeisenbank Gunskirchen eGen, UniCredit Bank Austria, UNIQA Insurance Group, VBV Pensionskasse and VBV Vorsorgekasse.

The Church of Ireland has confirmed that it no longer invests directly in fossil fuels and will have no indirect exposure to the sector by the end of this year. It comes as the church announced that its central investment fund had returned 21 percent in 2021, boosting assets to €239 million ($248 million).