The ESG assurance bonanza
Implementation of the Corporate Sustainability Reporting Directive (CSRD) is fast approaching, with companies due to start reporting from January.
The limited assurance requirements for CSRD, which will follow the first reporting cycle, are expected to create a huge opportunity for accountants and consultants.
As RI revealed last month, EU policymakers are keen for this work not to only go to the Big Four – but at least one of the accounting giants is clearly expecting a big payday.
KPMG is recruiting for eight positions in its ESG assurance team. In the job ads, the firm states that CSRD is “expected to create a multi-billion dollar opportunity for KPMG” in this area.
It also stresses that taking advantage of this will require a “significant amount of capacity and subject matter experience” to meet demand.
Look out for our upcoming deep dive on how auditors are gearing up on ESG assurance.
BP pensions voting unveiled
As part of its successful application to become a signatory to the UK stewardship code, BP’s pension fund disclosed its first ever stewardship report this week. It revealed some interesting voting decisions.
The fund does not hold shares in its parent company and sponsor in order to mitigate exposure risk, so we didn’t find out what it thought about BP’s revised transition plan. But we do know that, unlike 20 percent of shareholders, it voted against the Follow This resolution at rival Shell last year.
The stated rationale was that the energy giant had made good progress against its transition strategy by disclosing and strengthening interim targets and constructive engagement was being carried out by manager LGIM.
While the BP fund also voted against a shareholder resolution filed by the Sierra Club at JPMorgan, claiming it was too prescriptive, its record on human rights proposals was more promising.
In 2022, it backed key votes at Meta, Twitter, Apple and General Motors on topics including forced and child labour. It has also been pressuring its own managers, encouraging them to sign up to the stewardship code and noting that examples of stewardship activities provided “varied in quality”.
The week in RI
A holiday week in the UK was a busy one for the RI team.
As Australian policymakers finally set a date for the Voice referendum on First Nations’ rights, we looked at how investors are responding to the initiative.
In the UK, publication by the FRC of the list of signatories to the stewardship code revealed a host of new additions and a couple of departures.
Other articles focused on increasing investor engagement with US semiconductor firms over the use of their products in Russian weapons systems, how EU firms are struggling to meet taxonomy criteria on nuclear and gas, and an emerging split among key stakeholders over what topics the ISSB should focus on next.
Finally, the next two articles in our series on PAI reporting looked at investors’ approach to voluntary indicators and how some are turning data into tools for portfolio managers.
Quote of the week
“Central banks and supervisors need to build up their capabilities to assess and manage the risks posed to the financial sector by [climate-related] litigation”
As the NGFS published two reports on climate-related litigation, its chair Ravi Menon – head of the Monetary Authority of Singapore – stressed the risks it poses to financial institutions.
Meet the mentors
For ESG newbies keen to learn from experienced professionals, or those looking to pass on their knowledge to the next generation, two new programmes may be of interest.
In the UK, CCLA and recruitment firm Farrell Associates put out a call last month for sustainable finance mentors.
Neil Farrell, founder of Farrell Associates, told RI that 60 people have already put themselves forward, but more “battle-hardened heads” are needed to help out those with less time in the field.
For details of how to sign up as a mentor or mentee, see Farrell’s post on LinkedIn.
A more formal mentoring initiative is being launched by the Australian Sustainable Finance Institute. Limitless, as it’s called, will match mid-career sustainable finance talent with experienced mentors via a digital programme. The deadline for expressions of interest is 22 September.
Do you have any thoughts about or experience of mentoring in sustainability? If so, we’d love to hear from you. Email us at edit@responsible-investor.com.
‘Loss and damage’ fund on UK agenda
Developing countries have sought compensation for climate-related disasters for at least a decade and came a step closer with the establishment of a “loss and damage” fund at last year’s COP27. But there is little agreement on how much the fund should pay out or even how the money will be raised.
An early indication of the UK’s approach could be revealed next week, with MPs due to debate climate finance for tackling loss and damage in parliament on Tuesday.
Estimates of what the total size of the fund should be vary, but a range of $290 billion-$580 billion per annum is often cited. This is on top of the annual $100 billion that wealthy countries have said they would provide to support climate adaptation but have not yet delivered.
Considering the amounts involved and the rise of blended finance mechanisms such as the UN’s Just Energy Transition Partnership, private capital may be key to plugging any gaps. Watch this space!
A wind farmer’s daughter?
A Reuters report that coal miners are facing higher prices for insurance is obviously good news for the planet.
On a lighter note, it also sparked an earworm for our Country-music loving editor.
With the Loretta Lynn classic “I was born a coal miner’s daughter” stuck in her head, she wondered how the genre might respond to the newfound enthusiasm for renewables in US Red states sparked by the Inflation Reduction Act.
In the absence of time and song-writing talent, the obvious place to turn was ChatGPT. Artificial intelligence notoriously doesn’t always hit the target but, asked to write a Country song about renewable energy, it did a pretty good job.
If any musical readers would like to add a melody, please get in touch. It would make a great theme tune for our RI USA conference in November!
♪♪ A love so fine ♪♪
Well, I woke up this mornin’ to a brand new dawn,
Sun’s a-shinin’ bright, wind’s a-blowin’ strong.
Got my heart in the right place, it’s clear to see,
We’re harnessin’ the power of renewables, it’s destiny.
No more drillin’ for that black gold,
We’re turnin’ to the sun and wind, I’m told.
Livin’ hand in hand with nature’s grace,
Chasin’ after a brighter, greener space.
(Chorus)
Give me solar panels and wind turbines,
Fields of green where the future shines.
Clean electrons dancin’ down the line,
Singin’ a song of a love so fine.
Out in the heartland, where the cornfields grow,
Farmers tending to the land they know.
But now they’re also harvestin’ the breeze,
Turnin’ wind into power, with such ease.
Oil derricks and coal mines fade away,
As we embrace a more sustainable way.
The rivers run clear, the air is clean,
In this renewable energy dream.
(Chorus)
Give me solar panels and wind turbines…
It ain’t just about the energy we save,
It’s the legacy for the kids we pave.
A world that’s thriving, full of life,
Powered by the sun, wind and the drive.
From the cities to the valleys, mountains tall,
People comin’ together, answerin’ the call.
Innovatin’ solutions, breakin’ ground,
A renewable revolution, spreadin’ ‘cross the town.
No more midnight oil, burnin’ through,
The Earth’s resources, it’s overdue.
With every ray of sunlight that we seize,
We’re buildin’ a future that’s green and free.
(Chorus)
Give me solar panels and wind turbines…
So let’s keep on ridin’ this renewable trail,
Where hope and progress will never fail.
A country united, hand in hand,
Powered by the elements, forever we’ll stand.
Today’s letter was prepared by the RI editorial team.
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