Navigating the year of action and implementation: Exploring market practices

It is clear that the ESG focus is shifting to converting strategies into practical action and implementation. The market is honing in on real-life examples, practical case studies, and invaluable insights to drive the effective application of new policies, follow market trends, and leverage financial solutions and instruments. Let's delve into some of the key publications and news from the past weeks and upcoming events.

News

The EU Platform on Sustainable Finance launches the 'Compendium of Market Practices' report , offering valuable insights into how the EU Taxonomy and sustainable finance framework support financial and non-financial actors in transitioning to net zero. It presents market practices of seven key economic players, spanning three areas: 1) the EU sustainable finance framework for business strategy and transition planning, 2) Finance and transactions and 3) Reporting, monitoring, and assurance.

On 22 January 2024, EFRAG launched the public consultation on the Exposure Draft ESRS for listed SMEs (ESRS LSME ED) and the Exposure Draft for the voluntary reporting standard for non-listed SMEs (VSME ED). The consultation will be open until 21 May 2024.The purpose of the ESRS LSME ED is to set reporting requirements that are proportionate and relevant to the scale and complexity of the activities and to the capacities and characteristics of LSMEs.

New FAQs to support the financial sector in disclosing their alignment with EU Taxonomy now available. The draft notice provides additional guidance to financial undertakings on the reporting of their respective key performance indicators (KPIs), including the green asset ratio (GAR), under the Disclosures Delegated Act, and aims to increase usability of the EU Taxonomy rules for the financial undertakings that have to report on their environmental performance from 1 January 2024.

320 Companies Commit to Begin Nature-Related Disclosure Based on TNFD Framework by ESG today , this article summarises key announcements made at the World Economic Forum Annual Meeting, particularly on the topic of reporting.

EIT InnoEnergy and Demeter launch €500m European battery raw materials fund article shared by EIT InnoEnergy informs about the target fund size, key representatives and illustrates investment support for projects.

The Conference Board provides an overview in their article Maximising the Benefits of ESG Performance Metrics in Executive Incentive Plan of what to expect in terms of ESG progress and developments in company plans, with a strong focus on S&P 500 companies, while also providing interesting statistics.

How can climate assessment tools support investment in emerging markets? published by Transition Pathway Initiative (TPI) , overviews basic methods in assessing companies climate performance and provides advices to investors.

EU Parliament signs off on anti-greenwashing legislation an article by edie , provides a complex summary about Parliament meeting in Strasbourg.

European Banking Authority launched draft guidelines in a form of public consultations regarding management of ESG risks, explaining the basic layers of ESG risks and their implications and outlining reporting requirements.

Norges Bank Investment Management published its view on ESG ratings , which includes a basic introduction to ESG ratings, the obligations of providers and 4 key recommendations for ESG ratings.

Recommended readings

A guide to the next sustainable finance agenda a report published by Finance Watch focuses on EU Sustainable finance legislation in the context of potential improvements and the challenges of creating a robust framework, while also reflects the EU 2024 elections.

The London Assembly published an interim report London Climate Resilience Review , where they reviewed London preparation for climate change as well as provided few recommendations regarding the city London and its climate resilience. They also focused on global heating and the heatwaves experienced in recent years and their impacts.

Bruegel released briefing to the Eurogroup highlighting 4 key challenges regarding EU green transition. The report is focusing on decarbonization, high energy costs, fiscal rules as well as economic security.

The European Banking Authority (EBA) has recently released its report on green loans and mortgages in response to the European Commission’s call for advice on these financial instruments. To encourage increased participation by banks in the green loans market, the EBA offers practical recommendations and proposals aligned with the current market practices and industry standards that support the EU's environmental objectives.

Climate action network Europe (CAN) published report Paris Pact Payoff: Speeding up the green transition for socio-economic co-benefits which discusses transitioning to a climate neutral society according to 1,5 °C scenario and its benefits, while also presenting and comparing the costs of inaction.

Global Reporting Initiative shared document presenting summary and analysis of requirements regarding GRI 305 and IFRS S2 related to companies better understanding while measuring GHG emissions.

European Central Bank published an assessment Risks from misalignment of bank’s financing with the EU climate objectives which focuses strongly on the risks of the transition to decarbonised economy in the context of financial institutions, analyses key transition risk factors and provides several recommendations and approaches.

Shareaction has published a report Voting matters 2023: Are asset managers using their proxy votes for action on environmental and social issues? in this report they lay the groundwork for the concept of asset managers, analyse the voting results of 69 asset managers, provide rankings and touch on the topic of greenwashing.

Online community insights

LinkedIn Post: Low Carbon Building Initiative shared new pan-European methodology for whole life cycle carbon measurement in buildings, summarizing the basic purpose of the methodology.

LinkedIn Post: David Harris shared key points presented by research team on scope 3 emissions reporting and data issues.

LinkedIn Post: Thomas Buch Anderson focuses on reduction of scope 3 emissions and proposed 13 concrete initiatives of leading companies across 4 main themes.

LinkedIn Post: Eric White shared an article on Brussel's view on the EU Industrial Policy.

LinkedIn Post: The Transition Pathway Initiative (TPI)? Centre at?The London School of Economics and Political Science (LSE) published results for the world's largest food producers based on an innovative methodology to evaluate company Carbon Performance in the food sector.

LinkedIn Post: Ken Pucker pointed out the difference in approach of Blackrock to ESG resolutions.

LinkedIn Post: Simas Gradeckas comprehensively and visually mapped the voluntary biodiversity market.

LinkedIn Post: Hans van Dam shared his experience with number of sustainability managers on the topic of CSRD and provided key insights.

LinkedIn Post: David Carlin reports on preparations for the launch of the new Risk Centre and outlines next steps.

LinkedIn Post: Philippe Diaz posts a few comments regarding 2023 Nature Benchmark Findings.

Events

Online: Webinar on Launch of GRI 101: Biodiversity . GRI 101: Biodiversity 2024 is slated to be released in the second half of January 2024 which updates, expands, and replaces GRI 304: Biodiversity 2016. The Standard, aligned with the goals and targets of the Kunming-Montreal Global Biodiversity Framework, will help organisations to better understand which decisions and business practices lead to biodiversity loss, where in their value chain impacts occur, and how they can be managed. Register to for the webinar here .

In-person: PSF Data Science?Hub Technical Workshop - On the 30th and 31st of January the PSF Data Science Hub is organising a technical workshop hosted by SEB in Stockholm.? The two day event revolves around Scope 3 estimations with the Precautionary Principle and the Entity Activity Investment Identifiability Imperative Project. It will be a great opportunity to discuss the Taxonomy-Aligning?Benchmarks (TABs), which are currently out for consultation (see here ). It will also feature a fireside chat with PSF Chair Helena Vi?es-Fiestas and a keynote?by Prof. Alexander Bassen, the Chair of the new Independent Standards Board of the Greenhouse Gas Protocol.