Tech Powered ESG Strategies and Other Sustainability News Updates

4 March, 2022

By Adrian Bishop

Energy
Financial Services
Healthcare
Technology

New-look Sustainability Summary

Welcome to our new-look Sustainability Summary. We’ve updated the content to be slicker and sharper, to cover new industries and with more comments from the iResearch Services team. We’ll focus on five key sectors: Financial Services, Technology, Energy, Professional Services and Healthcare.

We hope you like the changes!

FINANCIAL SERVICES

Roadmap to tackle EU greenwashing

Europe has produced a new Sustainable Finance Roadmap. The European Securities and Markets Authority (ESMA) says its priorities over the next three years are:

Tackling greenwashing and promoting transparency
Building capacities for ESMA and National Competent Authorities (NCAs)
Monitoring, assessing and analysing ESG markets and risks

ESMA sets out to take the necessary measures to promote investor protection across the European Union. It also engages in risk assessment and market monitoring activities, focusing on potential financial stability risks from ESG factors. Chair Verena Ross says, “Advancing the sustainability agenda is crucial for ESMA, particularly as investor preferences shift to environmentally friendly financial products and the European Union strives to meet its commitments on tackling climate change. The roadmap is a milestone for our sustainable finance work, identifying the priority work we will do to ensure that ESMA and national supervisors take ambitious action on priority sustainable finance issues.”

Mayors boost London green fintech credentials

London’s mayors are aiming to add to the city’s credentials as a green fintech capital. London Mayor Sadiq Khan has outlined plans for over £90 million in green bonds to unlock over £500 million for zero-carbon projects. He is committing a record £90 million of Greater London Authority funds, with £4 million for high-impact green investment opportunities for the public and private sector; and £86 million to support a substantial GLA Green Bond programme and direct decarbonisation investment. Sadiq Khan says, “I’ve committed to making London net-zero by 2030, faster than any other comparable city.” Meanwhile, Vincent Keaveny, Lord Mayor of the City of London and ambassador for the City and UK’s financial and professional services sector, is lobbying in the United States and Mexico. “We want to see London positioned as the international capital of fintech,” he says. “If London stays forward on the innovation, on the know-how improvement, London shall be completely superb.”

iResearch Services says…

Are you facing a staff crisis? You are not alone!

There is a massive shortage of properly qualified staff in the financial services sector, particularly in the field of environmental, social, and governance (ESG). In Scotland, the situation has been exacerbated by Brexit and COVID-19 issues, creating a perfect storm, according to the Core-Asset Consulting’s Salary Guide 2022-2023. With vacancies up by more than half on this time last year at 52% and applicants down 5%, firms are finding it difficult to fill positions. To fill vacancies and retain top talent, companies are having to offer bigger salaries, more flexibility and extra perks. Rising demand for ESG expertise and capabilities also mean staff shortages are acute.

“The current staff shortage is a crisis that has been highlighted in Scotland, but, frankly, it could be anywhere in the world,” says iResearch Services CEO Yogesh Shah. “Businesses, particularly those scaling up, need to be more creative than ever in the hunt for new talent.”

Other stories you may be interested in:

The Future of Asset Management
James Redgrave, Head of EMEA Insights at State Street, discusses a greener future for the asset management industry in this episode of The Thought Leader’s Voice podcast
The inner voice for ESG
See how different sections of the financial services sector are faring in becoming more sustainable in Sustainability Snapshots: How Sustainable is Financial Services?
Bank of England announces new climate change stress tests (Bank of England)
Investors back ESG stocks (UK.Finance.Yahoo)
266 new sustainable funds hit market in Q4, 2021 (Morningstar/IFA Magazine)
Investor briefing on how to vote on climate transition plans (UN PRI)

TECHNOLOGY

Could quantum computing produce ESG ‘super strategy’?

Quantum computing, with its power to solve huge problems, carries the promise to transform all industries – and have a major effect on ESG initiatives, according to a report, “Quantum Impact” — The Potential for Quantum Computing to Transform Everything, from advisor, Pathstone. In it, Green Alpha Advisors discuss what would happen if quantum computing could apply ESG research processes to every publicly listed stock and come up with a “super strategy”. “Not only would it be potentially the highest-impact portfolio investors could own in terms of driving capital towards that economic transition, it may very well also provide a clear path to competitive returns as all the innovative solutions and brilliant approaches uncovered by this quantum-driven algorithm gain market share, and eventually grow to largely constitute the economy itself. It would also need human input. But it could replace us,” says Green Alpha.

iResearch Services says…

Impact on mainstream business some time away

Quantum computing is an exciting concept considering the implications and applications for the financial services sector and broader ESG, says Gurpreet Purewal, VP Thought Leadership at iResearch Services. “Quantum computing is focused on solving vastly complex challenges that standard computers cannot. There is a lot of talk about quantum computing as an important future trend, but despite rapid developments by major companies like IBM and Honeywell, it is still some way away from being of use to most businesses. Instead, businesses are better served to focus on what they can do digitally to transform their operations and improve customer experience. The principle, though, of using computing, apps and AI to help predict and streamline business management and strategy, is something that companies can embrace.”

Are you keeping up with embedded finance?

Embedded finance technology has the potential to radically alter investment, so financial services firms must embrace the opportunities it presents, says a blog from the LSE Business Review. Embedded finance was initially most connected with payment systems and became used more widely as smartphones became more common. Now, investment firms are using embedded finance to transform lending.

Dan Tammas-Hastings, managing director and founder of outsourced compliance and regulatory hosting firm RiskSave, says, “In 2022, we anticipate that banks, challenger banks, more payments firms and even companies like Walmart will look at entering the embedded wealth arena. There is already demand for a range of mass-market low-cost brokerage and investment services that didn’t exist ten years ago. The fintech solutions that have emerged enable investors to start their savings journey earlier, be more engaged with their process, automate their savings, and perhaps understand when – and if – they need professional financial advice. Whilst the larger banks will move slowly, challenger bank interest in embedded wealth is strong, and I expect a broad array of wealth products available on these platforms before year-end.”

Other stories you may be interested in:

Tech to the Rescue connects non-profits with tech (TechInformed)
How to boost ESG Technology investment (Industry Week)
Apartment owners turn to ESG technology (GlobeSt.com)
Climate solutions platform Watershed unicorn gains $70m in new funding and hits $1billion valuation (Watershedclimate.com)

ENERGY

Who are the ‘new energy superpowers?

Six “new energy superpowers” lead the way in clean hydrogen production, which is disrupting fossil fuel usage, says the World Economic Forum (WEF). They are China, India, the European Union, Japan, South Korea and the United States. This is according to a new report, Geopolitics of the Energy Transformation: The Hydrogen Factor, which analyzes the political and economic changes taking place in the energy landscape. According to the WEF, “The race is on to adopt hydrogen technologies, with some countries positioning to become tomorrow’s hydrogen superpowers. Hydrogen isn’t a direct substitute for coal, oil and natural gas, but it can help to decarbonize parts of the economy.” By 2050, hydrogen could account for up to 12% of global energy use.

UK National Grid adds renewable generators

The UK National Grid is to use power from renewable generators for the first time. Wind, wave and solar generators can now offer the kind of stability services that have traditionally been delivered by conventional generators. The move is a result of a game-changing modification to the GB Grid Code which sets the specification for grid connections. This world-first ‘grid forming’ reform is a key step towards operating a decarbonised electricity system by 2035 and delivering net zero. Tony Johnson, who led the project for National Grid ESO’s markets team, says, “This is a breakthrough moment, a key piece in the energy transition jigsaw, that will ensure we can operate a fully decarbonised grid and deliver on our net-zero commitments.”

iResearch Services says…

Major step forward for renewables is welcome

“In the past, coal or gas-fired generators have been used to balance the UK National Grid and maintain the required 50hz frequency, so this major step forward for renewables is welcome,” says iResearch Services Director of Global Operations, Andrew Newby. One investment manager involved in the process is Quinbrook Infrastructure Partners, in Wales, which has completed construction and commissioning of a new synchronous condenser installation. Co-founder and Managing Partner, Rory Quinlan, says, “We view the UK’s ‘Net Zero’ transformation as an unprecedented investment opportunity with a diverse array of attractive thematics.” More development of the renewables sector is required in the UK is to hit its 2030 target of 40 gigawatts of electricity from offshore wind. It is currently at around 10 GW.”

You may also be interested in…

Energy and ESG
This episode of The Thought Leader’s Voice podcast features Adrian Del Maestro, Director of Research and Head of Global Thought Leadership in Energy at Strategy&, on the energy evolution, covering the complex journey to net zero and beyond.
How tech is transforming offshore energy operations (TechInformed)
GM doubles Climate Equity Fund to $50m (investor.gm)
US announces $5b over five years for national electric vehicle charging network (NBC News)

PROFESSIONAL SERVICES

EY launches new sustainability service

Leading consultancy EY has launched a new sustainability service in the UK to advise businesses on their net- zero plans. The company plans to invest £100 million in EY Carbon and create 1,300 jobs in the next three years. The 250-member team will be led by Managing Partner for Sustainability, Rob Doepel. The move follows the announcement by Chancellor Rishi Sunak instructing all UK-listed businesses and financial institutions to publish net-zero plans by 2023. Mr Doepel says, “Sustainability is one of the defining issues of our generation and EY has a significant contribution to make in addressing today’s environmental challenges by supporting our clients and our communities. I’m incredibly excited and proud to be leading this effort across EY. While we have seen a number of large, medium and small businesses sign up to net zero targets, the new requirement for UK-listed businesses to publish their plans by 2023 is a significant shift. It is an extremely positive step in the fight against climate change but means that businesses will need to move from purpose statements and pledges to the detailed transition plans that will lead to positive action being taken.”

How do businesses manage trust?

Many senior executives recognize the need to trust in their organisations, but they often struggle to understand exactly how trust can be managed. A new insight paper from Deloitte says that privacy breaches, mis- and disinformation, and companies failing to live up to their promises, are common in today’s business world. The report says “We propose that trust should be seen as a tangible, strategic, and critical asset, given the real, quantifiable value that it can bring to an organization. And it should be managed much like other key performance indicators on the organization’s balance sheet, by considering its drivers and implications more deeply across the enterprise.” How do businesses measure and manage trust? It suggests companies can:

Get an initial sense of trust levels
Diagnose critical gaps
Prioritise which are best to tackle
Focus on critical action
Continue and build trust equity.

iResearch says…

Misinformation is widespread, but more firms must take preventative action. Misinformation is widespread in businesses, The New Reality: Mitigating the Risks of Misinformation survey from iResearch Services confirms. “According to our research nine out of ten business leaders believe misinformation presents a serious problem,” says Kevin Anthony, Associate Director of Thought Leadership Sales at iResearch Services. “However, only around one third (37%) of respondents were “very prepared” to face any negative impact from misinformation. Trustworthiness also affects a company’s ability to generate revenue. Of the 1,000 consumers we polled, 90% said that reliable information was important to their purchasing decisions.”

Other stories you may be interested in:

A bigger business risk than fake news?
The effects of misinformation and disinformation on profitability are explored in this latest blog post from iResearch.
The 100 most sustainable corporations of 2022 (Corporate Knights)
Globant adds to Be Kind initiative (Globant)
Professional Services young people jobs initiative reaches 25,000 in UK (FENews)
Venture Capital firms should take proactive approach to ESG (World Economic Forum)

HEALTHCARE

How healthcare ESG reporting can be ‘the real thing’

When it comes to environmental, social, and governance reporting, the healthcare sector could learn a thing or two from Coca-Cola, according to an industry paper. The drinks giant publicly reports the environmental impact of their operations — something the health care industry in the United States and elsewhere would do well to replicate, says an article in a New England medical journal. The Yale-led paper says, “Beyond the idea that addressing environmental and social externalities from health care is the ‘right thing to do,’ growing evidence indicates that these efforts have significant and wide-ranging positive impacts on financial and business performance that can provide substantial cost savings, reduce risks, and improve numerous measures of corporate performance.” It concludes, “The US healthcare sector can no longer afford not to act on sustainability. It is time for bold, collective action. Health care organizations must strive to be at least as good as a sugared beverage company when it comes to protecting people and the planet.”

iResearch Services says…

ESG essential for healthcare firms

“When healthcare firms need to take ESG lessons from the world of fizzy drinks, you know there is something wrong”, says iResearch Services Editor-in-Chief, Rachael Kinsella. “The United States could follow the European standard, where publicly-listed companies should be required to disclose ESG performance data, climate risk issues that could affect financial performance, related corporate policy issues and diversity progress. But all healthcare firms should be striving for positive change and leading the way in ESG, as it’s an essential component of wellbeing and in demand from patients and businesses alike.

“Firms need to beware of greenwashing, however, and take care to not over-exaggerate sustainability claims. Reporting what’s required on ESG progress and demanded by stakeholders is one thing; but packaging the narrative as being more sustainable than it really is to redirect or mislead customers is quite another. There have been many such claims across industries seen to be embracing ESG reporting, so ensuring sufficient transparency across corporate marketing and communications as well as in formal reports is vital in highlighting areas for improvement and keeping an open dialogue on progress.”

ESG a priority in healthcare property investment

Environmental, social, and governance (ESG) is moving up in importance for investors and lenders in healthcare real estate. The UK Healthcare Market Sentiment Survey 2021 from CBRE says, “This presents a compelling opportunity for them to work with developers and operators to create new initiatives which will help improve quality.” With 79% of investors prioritising ESG in their decision-making and just 39% of operators surveyed having an ESG strategy, there is an opportunity for the healthcare sector to give investors the platform to make a positive impact in society, the report says.

Other stories you may be interested in: