ESG round-up: Swiss financial industry groups split on GFANZ recommendations

The latest developments in sustainable finance: China tightens rules for green bond issuance; ACCR expands 'greenwashing' lawsuit against Santos.

Swiss financial industry associations are split on whether to recommend that their members join the relevant GFANZ groups, as a report revealed that the country’s financial institutions are ahead of the curve on net-zero targets. Both the Swiss Bankers Association (SBA) and Swiss Asset Management Association (AMAS) recommend that their members sign up but a spokesperson for Swiss Insurance Association (SIA) said it informed members about the benefits but left the decision up to them.
Just over 60 percent of SBA and AMAS members have signed up to the Net-Zero Banking Alliance (NZBA) or Net Zero Asset Managers initiative (NZAMI), whereas just 44 percent of SIA members have signed up to the Net-Zero Asset Owner Alliance and 48 percent to the Net-Zero Insurance Alliance (NZIA). However, all associations are outperforming the global share of institutions signed up, which stands at 38 percent for the NZBA, 55 percent for the NZAMI and 11 percent for the NZIA. The report was prepared by PwC Switzerland, in association with the SBA, AMAS, SIA and Swiss Sustainable Finance.
China has tightened rules for green bond issuance by requiring the Shanghai and Shenzhen stock exchanges to align their rules with its recently published green bond principles, Reuters has reported. A Shanghai notice seen by Reuters asked underwriters to make sure future issuance complies with the rules, while the China Securities Regulatory Commission has told both exchanges to ensure their rules are updated. Climate Bonds Initiative CEO Sean Kidney said the update would allow Chinese green bonds greater international recognition, which could allow China to overtake the US as the largest single-country market for the product.
The Australasian Centre for Corporate Responsibility (ACCR) has expanded its “greenwashing” lawsuit against Santos, following “additional information” produced by the oil major in the litigation discovery process. “We allege that Santos misled investors and the public about its plan to achieve ‘net zero’ by 2040 and to produce ‘zero-emissions’ blue hydrogen, said Brynn O’Brien, executive director of the Aussie NGO. “The documents produced by Santos have heightened our concerns that these plans lacked sufficient detail to be put into the market.”
The Japanese FSA has published a report by Jakob Thomä, the outgoing CEO of 2° Investing Initiative (2DII) Germany, to assess the climate transition risk for domestic banks under a delayed transition scenario. The analysis applied the PACTA climate scenario analysis methodology, previously developed by 2DII, to assess the climate alignment of various economic sectors. It found that coal mining, upstream oil and gas, and segments of the automotive and power generation sectors were most at risk of deteriorating profitability. The results show the importance of not delaying measures to reduce financial institution exposure to at-risk sectors and helping clients transition, said Thomä. Only in gas-fired power generation and hybrid vehicle manufacturing were loan books aligned with climate scenario targets.
US sustainable investment body USSIF has launched a new webpage outlining why sustainable investing is “needed and here to stay”. comes as politically motivated attacks on the sector increase in the US.