Request Free Trial

Regulatory Round-up: Japan’s code of conduct for ESG data providers, UK’s ESG update to corporate governance code

By Victor Smart

Japan’s Financial Services Agency has drafted a code of conduct for ESG data providers and is inviting feedback from market participants and others. The release follows concerns published in a report by its Expert Group on Sustainable Finance last year that included transparency and fairness of evaluation, as the expected role of ESG data providers increases.

The UK Financial Reporting Council is to propose changes to the corporate governance code to provide a stronger framework for reporting on the effectiveness of internal controls and board responsibilities for expanded sustainability and ESG reporting. The changes come as the agency transitions into the new and more powerful Audit, Reporting and Governance Authority. 

The London School of Economics has published a new paper outlining a “stable and prudent course” for UK macroeconomic policy during a period of high geopolitical, energy and cost-of-living tensions. One of the key policy recommendations by the LSE’s Grantham Research Institute on Climate Change and the Environment is to continue expanding investment in renewables, electrification and resource efficiency, to address issues such as slow energy productivity growth. 

Partial nature collapse would have severe consequences for the debt sustainability of sovereign issuers, according to a new report by Finance for Biodiversity and the SOAS Centre for Sustainable Finance. The report says nature-related risks must be factored into assessment frameworks used by the IMF and World Bank since catastrophic damage to nature would disrupt wild pollination, marine fisheries and timber from native forests, forcing up the debt-to-GDP ratios of many developing countries. 

Eurosif, the EU sustainable investment advocacy group, has devised a new classification for green assets, to overcome what it sees as a lack of ambition in current systems. The EU green taxonomy, for example, provides little guidance on how investors can help investees to transition their assets to net zero, says the report. Working in conjunction with Hamburg University, Eurosif proposes that investments should be classed in a range going from low to high: exclusions-focused, basic ESG investments, advanced ESG, impact-aligned and impact-generating. The categorisation is based on an investment’s ambition level, with transition at the core.

European non-profit groups have written to the European Parliament and finance ministers of EU member states requesting the inclusion of mandatory transition plans and capital requirements for climate-related risks in their review of prudential rules for EU banks and insurers.

The International Sustainability Standard Board, part of international accounting standard setter IFRS, has unveiled preliminary feedback on its disclosure proposals ahead of its first board meeting in Frankfurt on July 20 and 21. The ISSB staff is also seeking market participants’ views on its recommendation to create a sustainability disclosure taxonomy separate from the IFRS accounting taxonomy, designed to tag information and facilitate its digital reporting.

 

A service from the Financial Times