In the Loop: Heard in New York, another UK U-turn, and NZIA’s next steps

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Heard in New York

Image: Getty

This week our reporter Gina Gambetta has been dashing around New York during its annual Climate Week.

As expected, the anti-ESG movement featured prominently in discussions throughout the week. However, its concrete effects were played down both on and off stage.

“I’d be living in Disneyland if I were to say it’s not having an impact – it is having a chilling impact on some speech of companies and investors,” said Mindy Lubber, CEO, Ceres. “But most fiduciaries are saying they cannot ignore climate risk.”

One person closely involved in a net-zero alliance said the biggest thing they’d learned from having to engage with the ESG backlash was that “lawyers are expensive”.

More broadly on ESG initiatives, delegates reiterated the growing sentiment that there are simply too many of them – a topic we explored in an asset owner survey earlier this month.

One investor told RI in New York that they are unable to join some initiatives it would like to be part of because of current commitments to other such groups, as well as the growing reporting burden.

It also emerged that initial plans for a potential “Race to Nature” were scrapped because of an initiative fatigue.

Ramiro Fernández, a campaign director for the Climate Champions team, told an event: “Among our initial plans and ideas, we started thinking about this concept of ‘Let’s set up a race for nature’. We got this pressure about initiative fatigue: ‘Please don’t set up a new initiative, new pledges, and commitments.’”

Günther Thallinger, an Allianz board member and chair of Net-Zero Asset Owners Alliance (NZAOA), also weighed in on the need for time management and the paradox of sustainability events.

He said that, although he looked forward to being on stage, attending more events and having good discussions “is absolutely not enough anymore and if you need to prioritise your time then it should really be spent very, very much on the transformation work.”

Stay tuned for next week when Gina will be publishing a longer piece on her reflections from New York.

The week in RI

Disclosure was in focus this week, with mixed reactions from market participants on the recently launched EC consultation to potentially overhaul the SFDR investor disclosure framework.

And as the Taskforce on Nature-Related Disclosures (TNFD) published its final recommendations, it also said it is seeking feedback on two disclosure metrics specifically for financial institutions.

In US news, the SEC signed off rules for funds with ESG or sustainability in their name, while the US Treasury published net-zero principles for financial institutions. RI also reported on the cautious welcome for California’s new climate laws.

Elsewhere, a French investor group started working on a social taxonomy and RI confirmed that several big investors are involved in the efforts.

Finally, our senior reporter Khalid Azizuddin spoke to Simone Dettling of the Principles for Responsible Banking about what’s next for the group ahead of its fourth anniversary.

Quote of the week

“It’s a regulatory bankruptcy declaration. [The EC is saying] ‘Listen, we know what we have built over years is completely useless and we will completely tear it down. What size wrecking ball should we use in your opinion?’”

A market observer who declined to be named gave their view on the “staggering” European Commission consultation on potentially overhauling the SFDR

Get in line

This week saw heavy criticism of the UK government, following prime minister Rishi Sunak’s announcement that several of the country’s climate commitments would be watered down.

This will exacerbate concerns in the finance and business community about the UK’s climate policy. Just this time last week, hundreds of business people joined the “Queue for Climate and Nature” in central London to sign a petition calling on all political parties in the UK to support strong action on nature, invest more in renewable energy, and stop new licences for fossil fuels.

RI reporter Fiona McNally also joined and spoke to a number of attendees from the finance community.

Nick Robins, professor in practice, sustainable finance at the Grantham Research Institute, told RI: “I think it’s a really good event. It’s bringing the sleeping majority of people in the city out and about. It’s nice to feel that you’re part of a bigger community.”

Aviva’s chief responsible investment officer Steve Waygood said: “There is more than enough capital in the global markets to stop this from happening. What we need is much more political will globally.”

In contrast, we were somewhat surprised that when we approached 10 large UK-based asset managers with net-zero commitments for their views on this week’s green rollback, sadly, just one commented, without directly criticising.

One declined to comment, three others acknowledged the request but did not follow up. Five remained silent. Notably, all have made policy advocacy commitments as part of the Net Zero Asset Manager Initiative.

Out and about

With everyone back from New York, there will be plenty going on in the sustainability space in London next week – and, obviously, the RI team will be in the mix.

On Monday, our editor Lucy Fitzgeorge-Parker and nature reporter Gina Gambetta will be at the Royal Society for the UK launch of the TNFD (thank you to the Green Finance Institute for the invitation).

Both of them will also be out and about again on Thursday.

Lucy will be on stage at the GlobalCapital Sustainable and Responsible Capital Markets Forum, where she will be moderating a panel on sustainability-linked instruments with speakers from Acciona, Swedbank, Mizuho, Federated Hermes and Heimstaden.

Meanwhile Gina will be heading to South Kensington for the New Frontiers in Climate Finance conference, a one-day event hosted by the Centre for Climate Finance & Investment at Imperial College London.

Putting TNFD into practice

Image: Getty

We will also be talking about TNFD on Tuesday in the latest RI webinar, which will look at what the taskforce’s recommendations mean for corporates.

Our editor Lucy will be joined by David Croft, global head of sustainability at Reckitt, one of the leading corporates involved in pilot-testing the TNFD reporting framework.

The other speakers will be Cécile Girardin of the University of Oxford’s Nature-Based Insights team, which helped Reckitt with its TNFD trial; and Tony Goldner, the taskforce’s executive director.

It should be a great discussion, and there will be plenty of time for audience questions. Full details available here.

Can’t stop, won’t stop

The Net-Zero Insurance Alliance (NZIA) is “still active” and regularly meeting for working group discussions, a person close to the alliance has told RI.

After seeing a bulk of departures following a letter from a group of US state attorneys general in May, which raised concerns over whether NZIA’s target-setting protocol and other actions could breach local and national laws, the alliance is now left with just 11 members.

The person told RI that members are in active conversations with regulators to address any antitrust concerns and want to “safeguard” the work produced for other insurers, as well as “create an environment for more members to join”.

In July, the UN Environment Programme, which coordinates the alliance, said NZIA members would no longer be required to set or publish targets through the alliance, but could do so independently. Instead, the target-setting protocol now serves as a “voluntary best practice guide”.

The remaining members are reportedly now being coordinated by Aviva and Generali, following the departure of chair AXA, which made its decision to leave in late May, alongside Allianz and Swiss Re, which were followed by a series of other exits.

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