RI ESG Briefing, March 14: London ranked top green finance centre

Environmental

London has been rated the top green finance centre in terms of both “quality” and “penetration” according to a new green finance index launched today. The Global Green Finance Index, which ranks financial centres on the quality and depth of their green finance offerings, was created by Brussels-based not-for-profit group, Finance Watch and think-tank, Z/Yen. Paris, Frankfurt and New York were most cited to become significant green centres over the next few years. For more details, see RI’s story from January.
The Climate Disclosure Standards Board has published a new report exploring how companies can use existing international accounting standards when implementing the recommendations of the Financial Stability Board’s Taskforce on Climate Related Financial Disclosures (TCFD). The report follows calls from the European Commission – in its recent Action Plan on Sustainable Finance – to review the current International Financial Reporting Standards (IFRS) to assess their potential impact on sustainable investment.
The Nature Conservancy has worked with the Mexican State Government of Quintana Roo to create the first-ever parametric insurance policy for a coral reef. Mexico’s Mesoamerican Reef in Mexico, the longest barrier reef in the Western Hemisphere, will now be covered by the “Coastal Zone Management Trust”, which will promote conservation of coastal areas in the Mexican Caribbean and will finance the policy. Reefs are particularly vulnerable to hurricanes, with a potential loss of 20-60% of live coral cover after a category 4 to 5 hurricane.
Climate change is the “biggest” challenge facing the oil industry, Shell’s CEO has reportedly said. Speaking at an event in Texas, Ben van Beurden said that while oil and gas would “continue to be core to Shell for many decades”, to meet its climate ambitions the company would be considering initiatives such as storing over 20 million tonnes of CO2 each year using carbon capture or the planting of forests the size of Mexico and Oklahoma before 2050.
Ørsted, previously known as Dong Energy, has committed to phasing out fossil fuels completely. Denmark’s biggest energy company had already reduced coal consumption by 73% and halved its carbon emissions, according to its 2017 sustainability report. The firm now hopes to be completely coal-free and 95% reliant on green energy by 2023, it has said, focusing on sustainable biomass and energy storage. Ørsted has pivoted sharply away from fossil fuels since 2006, which culminated last year in the divestment of its upstream oil and gas business along with the renaming of the company.h6. Social

Convergence, a blended finance platform backed by players such as the Canadian government and Ford Foundation, has announced that $5m in grants it has awarded for the design of blended finance vehicles has helped so far raise $116m in investment. Deals that it has helped incubate included Asia’s first corporate sustainability bond, a $95m deal designed by ADM Capital and a $9m development impact bond to fund maternal health in India designed by Palladium. Convergence says the $5m in grants it has awarded to date has the potential to catalyse $2bn in investment.

Governance

Anglian Water has been accused of intentionally provoking strike action, after the water company refused to enter talks at the conciliation service ACAS over the closure of its final salary pension scheme. This is to be replaced with a cheaper Defined Contribution pension scheme. Anglian Water CEO, Peter Simpson, reportedly told trade unions GMB, Unite and Unison to “ballot for industrial action as he was not prepared to attend any meetings with ACAS”. The change in pension scheme will affect over 1,300 workers at Anglian Water. The feud is the latest in growing backlash against changes to UK pension schemes. Academics belonging to USS’ pension scheme have made national headlines by striking in recent weeks over a move to Defined Contribution and concerns over the performance of the fund.
All companies trading on the AIM (formerly the Alternative Investment Market) will be required to adopt a recognised corporate governance code and explain how they manage corporate governance, from 28th September. Parent company, the London Stock Exchange, announced the changes. Research from Quoted Companies Alliance (QCA) indicates that well over 400 AIM companies currently refer to the QCA Corporate Governance Code. Companies can also choose to report against the UK Corporate Governance Code published by the Financial Reporting Council (FRC).