FINPUBLICA NEWS YOU CAN USE November 4, 2024

Investing

Global Impact Investing Network’s (GIIN) "Sizing the Impact Investing Market 2024" estimates that more than 3900 organizations globally manage $1.57 trillion in impact investing assets. This estimate includes a compound annual growth rate (CAGR) of 21% since 2019 -- underscoring the sector’s significant growth.? The report further highlights key capital influencers and regional efforts in impact investing, emphasizing that despite growth.? Despite the size and growth of these assets, the report states that more investors, investments, and collaboration in allocating capital do the UN Sustainable Development Goals (SDGs) arel needed to mitigate the worst effects of global inequality and climate change.

Regulation

The Wolters Kluwer has published its 2024 “Future Ready Lawyer Survey," which highlights the growing demand for expertise in environmental, social, and governance (ESG) matters among legal professionals.? Nearly 70% of respondents (77% of in house vs. 61% at law firms) noted an increased demand for ESG expertise -- reflecting a significant shift as corporations and firms seek to meet new regulatory requirements, manage ESG data, and uphold standards.? The survey reflects a preparedness gap between corporate legal departments and law firms:? while 41% of corporate lawyers feel very well-prepared, only 29% of law firm respondents share that confidence.? The report also notes the establishment of specialized ESG departments within legal settings – with approximately 40% of corporates and law firms establishing such groups. ?

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A recent Roland Berger study reveals that ESG standards have evolved into a critical factor shaping corporate strategies across sectors, driven by rising stakeholder expectations and regulatory demands. With EU’s Corporate Sustainability Reporting Directive (CSRD) requiring extensive ESG disclosures, 70% of surveyed companies cite regulatory compliance as a major priority. However, fewer than 8% of companies rate their ESG efforts as “excellent” and organizational challenges, like lack of board involvement and dedicated resources, hinder progress. ESG frontrunners, particularly in finance and real estate, distinguish themselves with structured, board-level commitment, dedicated budgets, and widespread ESG training. Companies embracing a systematic, enterprise-wide approach are not only navigating compliance, but also transforming ESG into a competitive advantage by embedding sustainability throughout their corporate framework.

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According to EY’s 2024 Global Corporate Reporting Survey, finance leaders worldwide are increasingly concerned about the reliability of nonfinancial data in corporate reporting, with 96% expressing concerns about its quality. Challenges cited include inconsistent data formats and integrity issues, with half of finance leaders surveyed fearing that their organization will miss sustainability targets.? That said, nearly 80% of investors surveyed are hopeful new reporting standards can improve sustainability disclosures – though more than half of finance leaders believe that the cost of regulations will be burdensome.? Going forward,?57% of investors see AI as a solution for assessing data accuracy and identifying discrepancies, though many finance chiefs remain cautious about AI’s costs and regulatory hurdles. Despite these concerns, there is optimism that AI could revolutionize ESG reporting, enabling better insights into sustainability performance and building trust with stakeholders.

Environmental

?Levi Strauss & Co. has launched its first climate transition plan, aiming for Net Zero emissions by 2050.?Strategic focus areas?include?improving?operations, engaging?the value chain, and ensuring?robust governance. Key targets include a 90% reduction in scope 1 and 2 emissions by 2025 and a 42% reduction in scope 3 emissions by 2030. Levi’s efforts?will?include boosting energy efficiency,?investing in sustainable materials and innovation,?supporting sustainable cotton farming,?significantly reducing freshwater use,?and securing 100% renewable electricity for company-operated facilities by 2025.?

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Morgan Stanley has revised its climate targets to introduce a range-based approach for financed emissions, acknowledging that current global policies?and practices?are not on track to limit warming to 1.5°C above pre-industrial levels. The?firm’s?new targets include an upper band in line with a 1.5°C pathway and a lower band aligned with a 1.7°C scenario, still consistent with the Paris Agreement’s broader goal of keeping warming well below 2°C. Despite this adjustment, Morgan Stanley reiterated its commitment to reaching net-zero financed emissions by 2050, noting sector-specific challenges in meeting these goals, especially in automotive and energy.

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Microsoft has entered a 10-year deal with Ebb Carbon to remove and store up to 350,000 tonnes of CO?, starting with an initial contract for 1,333 tonnes. The project will use Ebb’s electrochemical ocean alkalinity enhancement to mimics natural oceanic carbon capture processes. ?This will complement other Microsoft carbon removal deals involving forest management, agroforestry and soil-based projects.? Microsoft also helped launch a carbon removal coalition with Meta, Google, and Salesforce, which aims to contract for 20 million tons of nature-based CO2 removal by 2023.?

Events & Membership

Please join the New England Impact Investing Initiative and Finpublica's Executive Director, Adam Wasserman, on October 21st 12pm ET, for a virtual skills session exploring the State of ESG Regulation in the US, EU, and Globally. We will discuss, among other things, the proposed disclosures promulgated by the U.S. Securities and Exchange Commission and the State of California, EU disclosure requirements such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), and the standards set forth by the International Sustainability Standards Board (ISSB).

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Finpublica’s membership portal is live. If you are interested in joining a community more than 450 finance leaders focused on sustainable finance and impact investing, and ways to implement initiatives inside their organizations and across the industry, we invite you to apply.

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