In the Loop: COP quotes, SLB shortfall and RI’s net zero survey

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COP27: Views from Dubai

Dubai (Image: Getty)

Responsible Investor was not on the ground Dubai this year, having blown our travel budget for H2 on Climate Week in New York and PRI in Person in Tokyo.

We are hoping to make it to COP29 next year, but that may depend on where the event eventually lands.

Russia’s veto of any EU countries in the Eastern Europe bloc has caused a organisational headache for the UNFCCC and raised the prospect of tiny Moldova taking the presidency (although not the conference, which Chisinau does not have the capacity for).

The recent conflict between Azerbaijan and Armenia had appeared to rule out either as COP host. However, in a joint statement on Thursday, the countries’ respective governments indicated that Armenia had agreed to support Azerbaijan’s bid as part of a broader package of goodwill measures.

That would make COP29 the third in a row under the auspices of an authoritarian regime, and the second in a petrostate. Still, Baku is a storied city with good infrastructure, and it would be the first COP in the Caucasus/Central Asia.

So maybe we will be enjoying a view of the Caspian Sea next November. In the meantime, here are a few comments that caught our eye from this year’s event.

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“At the end of next week, we need COP to deliver a bullet train to speed up climate action. We currently have an old caboose chugging over rickety tracks”
Simon Stiell, UN Climate Change Executive Secretary

“Overshadowing the discussion on transition plans – a cornerstone of the COP28 finance discussion – is the question of their execution: they materially depend on the presence of government action and technological development. And for financial institutions, it depends even more on their clients and investees’ ability to implement their own plans. While transition plans are important, we need to be very realistic about the material exogenous factors impacting their success”
Victor van Hoorn, managing director and head of Brussels office, ICI Global

“It’s been a busy few days, running around a colossal site. Similar levels of size, walking, and sleep deprivation to Glastonbury. But I think it was worth it”
Alex Michie, GFANZ, likens COP28 to a music festival

“I sometimes feel that we speak too little about transition finance”
Mairead McGuinness, European Commissioner for Financial Stability

“The problem is what we expect from these events. Of course we should not expect it to be a silver bullet, but it’s an opportunity to take stock and try to launch new initiatives”
Philippe Zaouati, CEO at Mirova

SLBs fail the ICMA test

Just as scepticism around sustainability-linked bonds (SLBs) seemed to be waning, with ICMA analysis finding a declining trend in deal-specific controversies and the first coupon step-ups showing the maturity of the market, a new controversy has raised its head.

Analysts at Sustainable Fitch have claimed that one in 10 outstanding SLBs is not aligned with the ICMA Sustainability-linked Bond Principles – in many cases despite being based on frameworks with second-party opinions.

Nneka Chike-Obi, Sustainable Fitch’s head of APAC ESG ratings and research, told RI that it is possible to have an SLB framework that is ICMA-aligned but issue a bond under the framework that is not ICMA-aligned.

The main reasons for a bond failing the Fitch alignment test, she said, were placing its measurement date too close to maturity or failure to publish post-issuance verification of target performance on time.

All the failing bonds are from European issuers, although Chike-Obi noted that this may reflect the jurisdictional skew of the rated universe.

While non-alignment with the principles under an aligned framework may be problematic, Chike-Obi said that fixed income investors tend to be more advanced in their sustainability assessments.

“We do not observe a trend of fixed income investors relying on SPOs alone as a way to assess the sustainability quality of any bond, SLB or otherwise,” she said.

Quote of the week

“Now more than ever, America needs fewer Pinocchios and more Honest Abes”

Larry Fink struck a folksy note in a lament on LinkedIn about attacks on BlackRock during the latest Republican presidential debate

The week in RI

The editorial team may not have been in Dubai, but we were following events at COP28 closely. We flagged key developments for investors and gathered feedback from industry leaders on the first week of the conference.

In other climate news, Singapore’s central bank unveiled the first coal phase-out project to be funded by carbon credits, green lenders in Europe gave the Net Zero Banking Alliance another chance to prove itself and the Dutch central bank announced a move to active management of its reserve portfolio to improve Paris alignment.

On the biodiversity front, we revealed plans by MDBs to launch common principles for nature-positive finance during COP28 and spoke to GRI about updates to its biodiversity standard, which are due to be approved next week.

ESG ratings and data were also in focus this week. Singapore’s MAS launched a code of conduct for the sector, while in Europe MEPs asked ESMA to manage conflict-of-interest rules for ratings providers.

Also in the EU, the European Supervisory Authorities removed a mandatory social indicator in their final report setting out proposed changes to the SFDR delegated regulation.

And in other regulatory news, the Australian Sustainable Finance Institute (ASFI) announced a six-month consultation next year, starting in late March, on its ongoing taxonomy work.

In Germany, we reported on the risks to the local sustainable fund label – fortunately averted – and the chaos at the country’s SIF.

Finally, our ESG resolution round-up flagged a pioneering AI proposal at Microsoft’s AGM, which many see as a sign of things to come for next year’s proxy season.

RI survey: Net zero stock take

The New Year is approaching fast, and with it comes the inevitable setting of ambitious resolutions, driven by sincerity and earnest intent.

Yet it is almost part of the ritual that these pledges will go unfulfilled.

Far more demanding than any post-Christmas fitness goal, investors’ interim net zero targets are looming, and the transition is far from keeping pace. Are these climate pledges set to go the same way?

Two years on from COP26, we want to hear from investors how their experience of and thinking about net zero has evolved since the launch of GFANZ and the proliferation of commitments.

We appreciate that this is a sensitive topic, so our survey is fully anonymised. It is also free-to-access, to encourage input from across the industry, so please feel free to share it with other investors.

May the task force be with you!

Image: Getty

Responsible Investor is pleased to bring you a global exclusive.

The number of sustainability-related task forces – or taskforces: the jury is out on the spelling – across the world has been rising almost as quickly as global emissions after the development of industrialised coal mining.

The sector’s seemingly unstoppable momentum took a hit when the Taskforce for Inequality-Related Financial Disclosures (TIFD) and the Taskforce for Social-Related Financial Disclosures (TISD) announced their merger into the TISFD, but the setback was only temporary.

COP28 has seen a welcome return of growth in the task force space, with the launch of the Taskforce on Net Zero Policy, the Task Force on Sustainability-Linked Sovereign Financing for Nature and Climate and a climate and tax task force.

To address this proliferation, RI understands that global standard setters are set to launch the Task Force for ESG and Financial Task Forces (TFEFTF, pronounced “teeth”).

The new body will be assigned with ensuring that task forces are responsibly carrying out their tasks and that their tasks do not overlap with already established task forces. Mark Carney will chair the TFEFTF with the secretariat provided by Bloomberg.

RI understands that discussions are also ongoing around a High Level Expert Group on High Level Expert Groups, which will seek to ensure that the experts represented on High Level Expert Groups possess sufficient expertise. This will be chaired by Mark Carney alongside a Bloomberg secretariat.

Finally, global standard setters will join together in the Global Standard for Global Standardisation, which will seek to end competing global standards by producing its own global standard and reporting framework. This group will be chaired by Mark Carney wearing a fake moustache with a secretariat provided by UNEP FI.

An announcement is also expected at COP28 that these global oversight bodies are set to combine into the Dubai Union of Multilateral Board Overseers, also to be chaired by Mark Carney with Bloomberg providing the secretariat.


Today’s letter was prepared by the RI editorial team.