Climate action not on track & changes in sustainability expectations
International Sustainable Finance Centre (ISFC)
Apolitical, expertise-led think tank with an advisory practice focused on #sustainablefinance in finance and business
Latest developments in sustainable finance
On 21 October,?International Sustainability Standards Board (ISSB) of the IFRS Foundation ?voted unanimously to require company disclosures not only on Scope 1 and 2, but also on Scope 3, indirect GHG emissions.??
EU approaches indirect emissions similarly: the European Sustainability Reporting Standards (ESRS) , which will fall under the Corporate Sustainability Reporting Directive (CSRD) also requires scope 3 emissions reporting where relevant.??
ISSB aims?to develop relief provisions to give protection and reduce liability, states ESG Today ?
#Interoperability – one of the key priorities is to ensure standard interoperability between EU and other jurisdictions. ISSB chair Emmanuel Faber urged the EU earlier this year to align its process with international reporting rules . Similar statements were also issued by other institutions, such as the UN-convened Net-Zero Asset Owner Alliance (UNEP FI), the ECB and IMF .??
#Materiality: ISSB’s decision to use the same materiality definition as the IFRS was welcomed by the Global Reporting Initiative (GRI) stating that this will help to "clarify the distinct yet inter-related approaches: impact materiality with GRI and financial materiality through the ISSB".??
For further information on Scope 1-2-3 emissions, check out Plan A 's article on the topic . Read this newsletter from Natixis Corporate & Investment Banking for a comparison of proposed climate-related disclosure - SEC, ISSB and EFRAG .?
MSCI ESG Methodologies: Are you as passionate about ESG methodologies as we are? Make sure to check out how ESG data and ratings are assessed by MSCI Inc. ?
ESG ecosystem: for those still confused by all the acronyms, initiatives, standard setters, data providers, etc., World Economic Forum has created a fantastic ESG ecosystem map which shows all the different ESG ecosystem actors.
United Nations Environment Programme Finance Initiative (UNEP FI) Principles for Responsible Banking have just released a publication with case studies on principle 2: impact and target setting, featuring Raiffeisen Bank International AG , Vancity , and Banco Promerica de Costa Rica S.A. . Congratulations to Christine Würfel on great work at Raiffeisen!
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In the news?
Misleading sustainability action ads banned: The UK’s financial regulator Financial Conduct Authority proposed restrictions on fund marketing against unjustified environmental claims, such as "green" and "ESG" (check out the paper below). This comes after the Advertising Standards Authority ordered to remove HSBC ′s ad on net zero transition as ASA found it to be deceptive regarding the company's contribution to emissions.??
Nature disclosures by 2030: In an open letter, 300 businesses urge world leaders to make nature impact disclosures mandatory for large companies. For more on biodiversity due diligence check out RepRisk’s three datasets to assess biodiversity risk for financial market practitioners.?
Climate action at Apple: Apple is expanding investments in clean energy and climate solutions around the world. The company's goal is to be carbon neutral across its supply chain by 2030 and to decarbonise Apple-related operations.?
Loss and damage: E&E News lists 5 facts on climate reparations , such as how to put a price on them.?
Green standards in Singapore: The Association of Banks in Singapore launched new guidelines for private banks to integrate sustainability practices and investments.?
Global climate finance: Climate Policy Initiative published a great report on the global landscape of climate finance. Their research shows that the past decade saw growing momentum, with public and private climate finance almost doubling between 2011 and 2020. Adaptation finance is increasing, but is starkly underfunded and mitigation finance has been dominated by renewable energy in the last 10 years, accounting for almost 70% of total.?Reaching climate objectives will require climate investment to increase at least seven times by the end of this decade.?
Rising gas emissions & temperatures: World Meteorological Organization published its Greenhouse Gas Bulletin on gas emissions. Carbon dioxide, methane and nitrous oxide - all have reached new highs. In 2021, we have seen the biggest year-on-year jump in methane concentrations since systematic measurements began nearly 40 years ago.
Argentina & stranded asset risk: A new study warns that Argentina is stuck in an ‘Oil and Gas Trap’, as it has hitched its economy to a risky bet on fracking.
News from Central Europe?
Fear of ESG exposure in Czechia:?In Czechia, some companies are worried that ESG reports reveal too much. This year, only about 25 of the largest corporations - banks, investment funds, and insurance companies - will issue non-financial reporting, writes Jaroslav Bukovsky and Jaroslav Krej?í from Deník E15 .?
Sustainability reports in Hungary: More and more companies active in Hungary are issuing sustainability reports for 2021 - this article from portfolio.hu? looks into Borsodi Brewery and C&A Europe reports.??
Value creation and ESG in Slovakia: An article from Jozef Tvardzik , Denník SME , elaborates on the problem of misleading ESG practices and US culture wars related to?traditional vs value-based investing.??
Top Polish coal producer: Poland's Pekao changed its credit policy to allow financing of coal trading?due to fuel shortages on the market after the start of Russia's war in Ukraine.?
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Recommended readings
Eroding trust: The Financial Conduct Authority published a Consultation Paper on misused investment labels. The below image shows proposed actions needed to be taken by firms and stakeholders to tackle greenwashing in sustainability-related claims:?
领英推荐
Extraordinary turbulence in energy markets: International Energy Agency (IEA) 's World Energy Outlook 2022 (WEO) is out! It provides analysis of the ongoing energy shocks across the globe with insightful graphics on current trends.??
Countries, NDCs and Paris Agreement target: The UN Climate Change 's Nationally Determined Contributions (NDC) Synthesis Report 2022 shows that the combined climate pledges of 193 countries/Parties under the Paris Agreement could put the world on track for around 2.5 degrees Celsius of warming by the end of the century - and not the 1.5 degree target.
State of climate action: Climate Action Tracker published its excellent analysis which assesses progress across 40 indicators of systems change, showing that none are on track to reach their 2030 targets. The research is a joint effort by Bezos Earth Fund , ClimateWorks Foundation , World Resources Institute , and others.
FSB Task Force on Climate-related Financial Disclosures (TCFD) Milestones: 5 years ago, the Task Force on Climate-related Financial Disclosures issued its final recommendation for developing disclosure standards. TCFD 2022 Status Report reflects on the progress made since.??
Taxonomy shortcomings: Andreas Hoepner and Fabiola Schneider published a paper on the current state and usability of EU Taxonomy and Do No Significant Harm on the corporate universe.?
The future state of sustainability reports: Based on 200 reports analysed, the Harvard Law School issued 10 strategic considerations for companies on how and what to disclose on ESG .?
5tn USD a year: This is the amount of annual issuance needed from 2025 to substantively contribute to climate mitigation, according to Climate Bonds Initiative . Read the Five by Five Manifesto and join the initiative.??
Hydrogen limitations: Fraunhofer-Institut für Solare Energiesysteme ISE published a comprehensive study on the limitations of hydrogen blending in the European gas grid, looking at the transport and distribution level.
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Events?
Europe's Energy Earthshot: The B Team organised a three day special event, Europe's Energy Earthshot which saw interventions by Laurence Tubiana from ECF, Halla Tomasdottir , CEO of B-Team, Paul Polman , Richard Branson from Virgin Group , Mary Robinson, former President of Ireland, and many others; our CEO Linda Zeilina-Cross joined some of the discussions about financing the #transition . Follow the work and the new initiatives and plans on the dedicated website !
Egypt: COP27 - 27th Conference of the Parties of the UNFCCC , is happening soon: between 6-18 November in Sharm El-Sheikh. On the 9th of November, COP27 will delve deeper into finance topics.?You can find the full side event agenda here .
Switzerland: 8-9 November 2022 Swiss Sustainable Finance is hosting its Annual Forum for Sustainable Finance Education with new teaching materials, trainings, and research.??
Czechia: Between 4 and 6 November, Cassini Hackathons & Mentoring are hosting the 4th hackathon at the Sustainability Hub Prague, with a focus on how to utilise EU space data for improving financial institution processes and analysis.
Czechia: Soulmates Ventures , along with EIT Urban Mobility , is organising a panel discussion featuring top women investors from CZ and CEE on Gender Diversity in venture capitals . The event will be held at the Sustainability Hub Prague , on 9 November.
Czechia: On 10-11 November, the Prague European Summit will gather a wide range of stakeholders to discuss European policies and politics, as well as the financial instruments to support innovation in mobility.??
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Books
Alcohol & climate change: Brian Freedman's new book "CRUSHED " explores how the dramatically shifting natural environment affects the production and consumption of alcoholic beverages.?
Sustainable business: A great book on how businesses can rethink their operations and business models for the benefit of everyone, including their shareholders and the wider society: "Net Positive, How Courageous Companies Thrive by Giving More Than They Take " by Paul Polman and Andrew Winston .
Sustainability professionals: Springer Nature has published a special book on how chief sustainability officers can best benefit their companies: "Chief Sustainability Officers At Work" How CSOs Build Successful Sustainability and ESG Strategies ".
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Podcasts
S&P Global has a very informative podcast, called "The Essential Podcast ", exploring macroeconomic trends, the credit cycle, climate risk, ESG, global trade, and other critical topics. Last episode features Diane Coyle .
"ESG Decoded " is a podcast by ClimeCo has a great range of episodes on modern portfolio theory and #esginvesting , and many other themes explored in more depth.
Trends in non-financial reporting: The new podcast episode on Sustainability in Finance discusses strategies for gathering and using data, how to report on scope 1 & 2 emissions (with more flexibility on scope 3) and how to leverage taxonomy indicators. The speakers are Robert Adamczyk , Maria Ibisz , Petr Koblic , Filip Gregor , Michael (Mihály) Zimonyi and Vessy Haralampieva .?
Glimpse into the life of a climate diplomat: This episode of the 2050 podcast is available in English, with David Moran, Regional Ambassador at COP26 and Ondrá? P?ibyla , Fakta o klimatu .?