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Daily ESG Briefing: US issues climate risk roadmap

The latest developments in sustainable finance

The Biden Administration has launched a ‘roadmap’ laying out how it plans to execute on the US Executive Order on Climate-related Financial Risk, issued earlier this year. The 40-page document covers topics including protecting pensions from climate risks, building climate-safe infrastructure and incorporating climate considerations into federal lending. “By looking at a broad set of issues from federal procurement, retirement, budget planning and other areas, President Biden has taken important steps to ensure that we’re on a path for a safe and sustainable future,” said Mindy Lubber, head of US sustainable finance network Ceres. “The federal government is important both in what it does in terms of purchasing, underwriting and lending, but also as a guidepost for investors and companies.”

Japan’s Nippon Life, Sumitomo Life and Meiji Yasuda Life Insurance – which represent a combined $1.4trn in assets – have joined the the UN-convened Net-Zero Asset Owner Alliance (NZAOA), which commits signatories to decarbonise their portfolios by 2050 and adopt interim targets every five years. Dai-ichi Life Insurance Company, which signed up to the Alliance in March, was the first Japanese and Asian signatory. Separately, the €5bn Dutch private pension scheme for the IT conglomerate IBM – another new signatory to the NZAOA – will target to reduce its portfolio emissions by 30% in five years, according to a LinkedIn post by the fund’s Executive Director Wouter van Eechoud. Danish lender Danske Bank has also committed to aligning its lending and investment portfolios with Net Zero by 2050 after announcing its membership of the Net-Zero Banking Alliance – the banking equivalent of the NZAOA – yesterday.

The Reserve Bank of Australia’s Deputy Governor Guy Debelle warned yesterday that “the likelihood of more significant divestment is increasing” for Australian companies, and federal and state governments, over climate concerns. “So, irrespective of whether we think these adjustments are appropriate or fair, they are happening and we need to take account of that. The material risk is that these forces are going to intensify from here,” he added.   

The Board of Directors of the European Investment Bank (EIB) has approved a new framework requiring its borrowers “to align with objectives of the Paris Agreement”. The bank will offer technical support to help higher emitting corporate borrowers and financial intermediaries cut their overall emissions. It also announced a total of €8.3bn in new financing for climate action, clean transport, renewables, health and education.

AllianceBernstein has published guidance on how investors can address modern slavery risk within their portfolios ahead of Anti-Slavery Day on October 18. It includes a framework which assesses companies based on their potential modern slavery exposure and a benchmark for corporate best practices on the subject. 

Climate Neutral Group, a climate consultancy based in the Netherlands, has released what it claims is the first certification to target absolute zero emissions – going beyond net zero. It is billed as the first standard to include a mandatory carbon reduction component and allows companies to only offset unavoidable emissions. 

AXA this week announced it had acquired a 20% stake in sustainable investment manager Blue Like an Orange Sustainable Capital for an undisclosed sum, as well as making an undisclosed investment in Blue Like an Orange’s Latin America Fund II. The SDG-focused investment house has offices in the US, Brazil and Luxembourg.