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January 27, 2022

ESG news: January 27 edition

The Net Zero Asset Owner Alliance got serious with new commitments this week, while the EU’s advsory body hit back at attmempts to shoehorn ‘transitional’ gas and nuclear power into the bloc’s taxonomy of green activities

Net-Zero Asset Owner Alliance tightens climate targets

On Wednesday, the UN-convened Net-Zero Asset Owner Alliance said its members are to halve carbon emissions linked to their portfolios by 2030, tightening the initial commitments of the group of 69 investors representing $10.4tn worth of assets. 

Pension funds and other investors in the alliance would aim to cut portfolio emissions by between 49 per cent and 65 per cent by 2030, which the group says would bring them in line with the Intergovernmental Panel on Climate Change’s latest pathways to keep global warming below 1.5C.

EU advisers reject nuclear and natural gas as ‘transition’ investments

The Platform on Sustainable Finance, an EU advisory body, has concluded that nuclear power and natural gas should not be considered transition fuels under the green taxonomy, following a European Commission’s draft proposal released in December.

While recognising that “transitioning our whole economy to meet climate neutrality by 2050 and the 55% greenhouse gas emissions reductions by 2030 goals require consideration of environmental, social, cost and supply issues and not environmental performance alone”, the group says the proposed measures fall short of those goals, reported Euractiv. These include applying a ‘transitional’ investment label to gas-fired plants with “at least 30% of renewable or low-carbon gases as of 1 January 2026, and at least 55% of renewable or low-carbon gases as of 1 January 2030”. Similarly, the group said that both existing and new nuclear plants would require “substantial changes” to ensure no significant harm is inflicted to the environment and the transition to a circular economy.

Businesses not ready for EU green disclosures

Fewer than 10 out of the 11,700 eligible companies were ready to comply with the EU non-financial reporting requirements, according to a survey by The Conference Board – a US-based group of large businesses – and ratings company Sustainalytics. The Financial Times reported that the study found that “only a handful” had published taxonomy audits, including Spanish group Acciona

The rules, which came into effect this year, apply to listed companies with more than 500 employees, and are set to be expanded by the Corporate Sustainability Reporting Directive, which will capture a greater number of businesses.

EU banking supervisor sets ESG reporting rules

The European Banking Authority has published its final draft of mandatory standards that banks should use to ensure stakeholders are properly informed about their ESG exposures, risks and strategies.

In a statement, the EBA said that in creating its framework, it “has built on the recommendations of existing initiatives, like those of the Task Force on Climate-related Financial Disclosures … , but has gone beyond by defining binding granular templates, tables and instructions, to ensure enhanced consistency, comparability and meaningfulness of institutions’ disclosures”.

New European initiative to measure private equity and EV ESG

In an effort to improve transparency in private markets, the association of European private equity and venture capital firms, Europe Invest, has launched an initiative to measure the industry’s efforts in tackling ESG issues, including climate change, corruption and female underrepresentation. National associations are also part of the project.

The European Data Cooperative will gather data on more than 1,600 European private equity and venture capital firms and their portfolio companies, accounting for 90 per cent of the €754bn in capital under management in Europe, says Europe Invest, which says it hopes to be able to use the data from mid 2022.

A service from the Financial Times