GOVERNANCE AND POLICY
Code Red for the Earth and us!
It is now Code Red for both humanity and the planet because of climate warming, warns the United Nations.
Disaster may be avoided, but only if we make major cuts in greenhouse gases, UN scientists believe.
The new AR6 Climate Change 2021 report from the UN's Intergovernmental Panel on Climate Change (IPCC), published on 9 August, well and truly sounded the alarm over climate change.
Other reports have made similar ominous predictions, but this is the first time that warnings of irreversible damage have been made while stating that "it is unequivocal that human influence has warmed the atmosphere, oceans and land".
UN Secretary General António Guterres says the situation is “a code red for humanity”, but still struck a note of optimism. "If we combine forces now, we can avert climate catastrophe. But, as today's report makes clear, there is no time for delay and no room for excuses.”
The pressure is on world leaders at the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow, UK, from 31 October-12 November 2021, to ensure they reach agreement and make real changes.
The IPCC report looks at historical data and climate modelling to forecast that the world will reach 1.5 degrees Centigrade above pre-industrial levels between 2030 and 2035.
Since 1970, surface temperatures around the world have risen faster than in any other 50-year period over the past 2,000 years. This now affects many weather and climate extremes across the globe. The rise in sea levels has almost tripled compared with 1901-1971.
Limiting human-induced global warming to a specific level requires limiting cumulative CO2 emissions, to at least net zero carbon emissions, along with strong reductions in other greenhouse gas emissions.
One of the authors, Professor Ed Hawkins, from the University of Reading, says, “The consequences will continue to get worse for every bit of warming and for many of these consequences, there's no going back."
iResearch Services Chief Executive Yogesh Shah says, “This is one of the most important research-led Thought Leadership reports on the effects of climate change to have been published. The only thing that matters from here on is action from us all – companies included – that will reduce greenhouse gases and – just maybe – avert complete environmental catastrophe. That action has to happen now, with the COP26 leaders taking immediate measures, not merely targets for 10-20 years ahead.”
Leaked IPCC report suggests drastic action is needed
What is claimed to be a leaked draft of an IPCC follow-up report, due to be published next year, suggests that drastic reductions in greenhouse gases are required imminently. The draft, leaked in Spain and reported by The Guardian website, says greenhouse gas emissions must peak within the next four years and coal-powered plants must shut down in the next decade to avoid a complete environmental breakdown. A shift to plant-based diets could bring about a substantial reduction in emissions. The draft says rich nations pollute the most, with 45% of all emissions down to the top 10% of emitters — the wealthiest 10%. The world’s poorest 10% contribute just 3-5% of the emissions.
Coal, cars, cash and trees
In response to the IPCC report, UK Prime Minister Boris Johnson took to Twitter to upload a video and soundbite, saying the UK will make bold commitments on coal, cars, cash and trees – to limit climate change to 1.5 degrees. He says: on coal - we want the developed world to kick the coal habit entirely by 2030 and the developing world by 2040. Cars - we want the world to follow the UK lead and abandon fossil fuel internal combustion engine machines. Cash - we want the richest nations, which have historically produced so much of the world's carbon, to recommit to supporting the rest of the planet to go green with funds of $100bn a year. Trees - we want COP26, the UN great summit, to commit to restoring nature and habitat and ending the massacre of the forests, because trees are among our best natural defences against climate change. To be net zero for carbon you must be net positive for trees and by 2030 we want to be planting far more trees across the world than we are losing."
How companies should prepare for COP26
Ahead of COP26, companies and capital markets, and all market participants must commit to net zero across their businesses and portfolios, says Remy Briand, head of ESG and climate at US-based finance company, MSCI. He tells ESGClarity.com they should make net zero commitments a central part of business strategies, mandate a core set of quantitative climate disclosures and begin decarbonising their portfolios now.
MORE ABOUT COP26
- For a week-long preview of COP26, sign up for this newsletter from sustainable business website, edie.
- “The last IPCC report forced humanity to recognise its emergency, it is incumbent on decision-makers to ensure that this report drives us to resolve it.” So says Sam Greenwood, Political Consultant at strategic reputation management consultancy, Lansons, as he considers the IPCC report and how far the global community is from resolving the crisis in its Political Capital weekly newsletter.
- Mark Lacey, Head of Global Resource Equities at global asset manager Schroders, outlines why the CIPP detail matters to those investing in electric cars, their batteries and wind power.
UK outlines hydrogen revolution vision
The UK government has published the “first ever vision to kick start a world-leading hydrogen economy.” The UK Hydrogen Strategy plans to invest in the generation of blue and green hydrogen, could unlock up to £4 billion investment by 2030 and support over 9,000 UK jobs. It forecasts that hydrogen technology could generate up to 35% of UK energy by 2050 and be worth up to £13 billion. Business and Energy Secretary Kwasi Kwarteng called it the start of the UK’s hydrogen revolution. “This home-grown clean energy source has the potential to transform the way we power our lives and will be essential to tackling climate change and reaching Net Zero.”
European firms and climate change
How prepared are EU businesses to meet the challenges of climate change and the energy transition?
A new report by the European Investment Bank (EIB) titled European firms and climate change 2020/2021: Evidence from the EIB Investment Survey seeks to answer this question. It has three main conclusions:
1. Firms are more aware of the physical risks posed by climate change, but less aware of the risks caused by the transition to clean energy.
2. Almost half of EU firms surveyed are investing in climate change measures, compared with roughly one-third of US firms.
3. There is uncertainty over regulation and taxation continues to hamper climate investments.
This aligns with a recent iResearch Services study of 550 financial services firms on the sustainability of their businesses and attitudes towards sustainability across the finance industry. In this research, over 30% of respondents in US countries say they have adopted sustainable practices.
Regulation was cited as a key component for success, with 30% of firms surveyed waiting for clearly defined regulatory measures before acting on sustainable measures. A significant 57% want governments to do more to progress sustainability and 42% feel policymakers need to take the lead on sustainability initiatives.
“Similar opinions shared in our recent research on the state of sustainability in financial services reiterate that Europe appears to have covered more ground in their sustainable developments. The USA and UK are working to catch up, but lagging in their current efforts,” observes Andrew Newby, Operations Director at iResearch Services. “Just as activity spiked following this summer’s G7 summit, further developments will follow thick and fast from across the G7 and key players in the run-up to and post-COP26. We will be monitoring new initiatives and comparing progress in the weeks and months ahead.”
UN publishes Finance Sector Climate Action Pathway
The United Nations has published a 2050 net zero pathway for the financial services industry. The 2021 Finance Sector Climate Action Pathway explains how to attract and manage finance to result in a sustainable shift for the planet by ensuring “every financial decision takes climate change into account.” The report features a detailed Action Table. “From the top down, policy and regulation will set the tone of what is required in the transition. This will send powerful signals to drive markets in support of the transition to net-zero emissions and to finance projects for climate-resilient infrastructure to adapt to the impacts of climate change already being felt around the world, particularly by those least able to afford them. Transformational tools and capacity-building in human resources, enhanced by technology and harnessing innovation, will deliver change. This will involve creating new financing mechanisms, market norms, shared taxonomies, scenarios, and other tools for net-zero alignment and resilience. Governance, oversight and/or coordination mechanisms will need to develop to promote integrity, accountability and harmonization of targets and standards across financial systems,” the UN says. “From the bottom up, incentives and risk management will need to align with and drive the shift within the financial system. “Prudential risk management and the alignment of board/executive remuneration with net-zero emission and climate-resilience goals, including meaningful interim targets, will be essential to recognize the central nature of climate risks and opportunities and support a successful transition.”
- How sustainable is Financial Services? Read this revealing blog from iResearch Services, summarising the findings of our recent research on sustainability in financial services.
Second best month in the UK for ESGs
ESG UK inflows rose to £995 million in July, its second-best performance on record, reports global funds network, Calastone. Most of the capital was actively managed. Equity fund inflows fell in July as investors grew more concerned over global growth. Index funds suffered most, but active funds saw strong inflows thanks to ESG
Boost to sustainable finance as EU prepares to launch new green bonds
The EU will commence a new €250 billion green bonds initiative in October 2021, forming part of the EU’s €800 billion recovery programme. This will ne a significant boost to sustainable finance initiatives, which are predicted to grow to $850 billion in 2021, a sizeable increase from 2020’s figure of $530 billion, according to Moody’s Investor Services.
NLP used to verify SDG Bonds
Financial services group Nomura and Sony CSL Is developing natural language processing (NLP) technology to verify SDG bonds. The eligibility of SDG bonds - green bonds, social bonds and sustainability bonds - is currently determined by internal rules and third-party assessment. The research will quantitatively evaluate how funds are used to achieve SDGs and NLP will analyse issuers' prospectuses and sustainability reports. By evaluating non-SDG corporate bonds to determine the extent to which they possess characteristics of green, social or sustainability bonds, the research aims to expand options and quantify and refine SDG bond determination. Sony CSL will develop the technology. Results of the research will be announced later through seminars. A spokesperson says, “By providing data from the research and developing indices, Nomura aims to contribute to the sustainable development of the economy and society and support the growth of the SDG bond market in Japan.”
Growing appetite for VC alternative meat investments
Global venture capital investments in alternative meat product producers tripled in 2020 to US$3.1billion and grew six-fold in Asia-Pacific to $206 million, reports alternatives company, Prequin.
SEC chair urges mandatory disclosure on climate risks
Securities and Exchange Commission Chair Gary Gensler wants mandatory disclosure on climate risks and a climate disclosure rule by the end of the year. He told a Climate and Global Financial Markets webinar that investors are demanding more information on climate change, reports CNBC. Currently, SEC guidelines on climate disclosure are voluntary, resulting in inconsistent disclosures. He says, “Companies and investors alike would benefit from clear rules of the road.”
ESG ratings regulatory Consultation
The Environmental, Social and Governance (ESG) Ratings and Data Products Providers Consultation by IOSCO, the international policy forum and standards setter for securities regulators, closed on 6 September, seeking recommendations for the providers and users of the information, and for covered companies, plus comment on proposals for markets regulators to considering increasing focus on the ratings and data providers and products.
Support grows for ESG corporate proxy ballots
Investor support for ESG ballot proposals has reached new heights in 2021, says a new report from investor website, Morningstar. Even so, 19 ESG shareholder proposals were blocked due to opposition from insiders and controlling parent companies in corporate proxy ballots. And in a separate analysis, Morningstar identifies hidden ESG risk in portfolios. Among its findings is that Value and size may possess long-term performance advantages, but they carry higher ESG risk and carbon intensity than growth and large caps and High-quality companies tend to carry lower ESG risk and less carbon intensity, as do many thematic strategies focused on transformative technologies.
Record £1 billion private credit-backed sustainability-linked financing
Environmental, engineering and technical services business RSK Group has signed a £1 billion sustainability-linked financing deal, the largest private credit-backed loan. Alternative investment manager Ares Management provided the funds. Alan Ryder, Chief Executive Officer of RSK Group, says, “There are very few firms like Ares that possess the scale, flexibility and sharp focus on ESG to provide a sustainability–linked financing of this kind. This financing demonstrates our deep commitment to driving sustainable business practices not just within our clients’ businesses, but also within our own.”
How to manage the politics of climate change policies
In the first analysis of its kind, International Monetary Fund (IMF) staff research identifies strategies to minimise, manage and even eliminate the Political Economy of Climate Change Policies. Market-based measures, for instance, carbon tax on fossil fuels, which are the most effective to limit pollution levels, are likely to face opposition from the energy sector and the public at large. But this can be avoided if mitigation policies consider political economy dimensions and complementary policies are deployed to protect vulnerable households who may lose out in the short term from the transition to a greener economy.
Thoughtful ESG approach helps win business
Demonstrating “the most advanced and thoughtful approach to ESG integration and engagement relative to the other managers” helped Royal London Asset Management (RLAM) manage a £2.1 billion sterling bond fund for pension pool Brunel Pension Partnership. It beat 25 other investment managers. The fund has been created on behalf of Brunel’s 10 UK-based local authority pension fund clients. David Cox, Head of Listed Markets at Brunel, says, “The fund is highly diversified, providing our clients with access to a range of holdings, as well as a range of maturities. Our clients’ prioritisation of ESG considerations was also reflected in the fund’s design and manager selection process."
HSBC and Deloitte educate staff on climate change
Following an initiative by HSBC last month to send 500 of its commercial banking staff to ‘sustainability school’, Deloitte is launching a climate learning programme for all 333,000 of its employees around the world. HSBC is working with the Chartered Banking Institute’s Green and Sustainable Finance e-learning. Deloitte has now announced a new climate learning program for all of its 330,000 global employees. The program, described as the “first-of-its-kind among major global organisations” has been developed in collaboration with World Wildlife Fund.
Deloitte Global CEO, Punit Renjen, says, "Deloitte’s climate learning program is a powerful tool to unlock the climate ambition of our most valuable asset and superpower—our people. By educating and inspiring all 330,000 of us, we can help drive collective action at the scale required to help address climate change."
KPMG puts big data at heart of ESG
Professional services network KPMG is putting big data at the heart of ESG, including the development of its ESG IQ analytics platform. It enables clients to select and pool both structured ESG reference data from multiple providers and unstructured data from news reports, social media posts, blogs, NGO reports, research reports, web pages and more. It can also pull out ESG data from ‘dark data pools’, such as legal documents, trade confirms and other sources.
A spokesperson says, “We believe it is unique in that other score providers can only score individual entities or companies. But the ESG IQ platform can go beyond this, scoring whole investment funds, sovereign wealth funds, bonds, equities, structured bonds (tranches of RMBS/CMBS/ABS etc.) or an illiquid product such as loans or mortgage-backed securities.” The tool also provides a root-cause analysis of what factors and issues have led to the rating.
New Fidelity International pledges on net zero and female leadership
Fidelity International (Fidelity) has pledged to reduce company-wide operational carbon emissions to net-zero by 2030, 10 years ahead of its previous goal. Fidelity intends to make operational improvements in the energy efficiency of its offices, responsible business travel and the use of renewable energy. The new goal is part of Fidelity’s Corporate Sustainability Report. The company has also committed to increasing the ratio of women in global senior management roles to 35% and to 45% of the global workforce. It also plans to buy responsibility, by carrying out ESG monitoring for 90% of its high-risk suppliers and for 95% of tenders to include at least one diverse supplier.
Sustainable fund investment dip ‘due to new ESG disclosures’
A slowdown in global sustainable funds investments from April-June 2021 is likely down to changes in European legislation rather than a dip in interest, says the Global Sustainable Funds Flows Report, (free access with registration) from Morningstar. The net total was US$139.2 billion, down 28% from $184 billion in the first three months of the year. The second quarter also saw a dip in the overall fund market of 24%. Europe’s 25% drop in sustainable fund investment follows the introduction of the EU Sustainable Finance Disclosure Regulation, which requires new ESG disclosures to boost transparency.
Rise Climate Fund first close raises $5.4 billion
The TPG Rise Climate Fund has initially closed with $5.4 billion raised, including backing from some of the world’s largest institutional investors. It hopes to finally close with $7 billion in capital commitments at the end of the year. The fund seeks to work collaboratively with the companies, entrepreneurs, and scientists who have pioneered and developed innovative climate solutions over the past decade. It is designed to grow the wide range of commercially viable climate technologies that have been incubated by the research community, early-stage investors, and other climate innovation accelerators. TPG Founding Partner and Executive Chairman Jim Coulter, Managing Partner of TPG Rise Climate, says, “It’s a time of both peril and possibility. Climate change is a societal risk but also a generational investment opportunity. Leveraging our deep experience in impact investing, we believe TPG Rise Climate can play a positive role in catalyzing capital to combat climate change.”
- Catch up with some senior ESG appointments in the financial services sector, collated by ESG Clarity
- How Google parent company Alphabet spent $4.4billion of its Sustainability Bond proceeds, says Edie.net
Why social is important for oil and gas ESG
The environmental aspects of ESG in the oil and gas sector often hit the headlines, but the social value is vitally important, too. That’s the focus of the new ESG and Oil and Gas report from global professional services specialist, PwC. It investigates how oil and gas companies can deliver a social narrative that contributes to the greater good, attracts ongoing investment and talent, and drives sustainable growth. Oil and gas companies need to understand how social factors align to shareholder value, purpose and societal obligations. They must then determine how to measure, report, evaluate and articulate those social goals for the investor community.
Is blue hydrogen really green?
‘Blue’ hydrogen – using methane in natural gas to make hydrogen – is being lauded as a clean energy source, but it could be 20% more harmful for global warming than burning natural gas, say Cornell and Stanford University researchers.
Largest electronic bus contract
The largest contract for up to 7,500 electronic shuttle buses has been agreed by Lightning eMotors and Forest River Inc. The multi-year agreement, which includes charging products and services is worth up to $850 million. Tim Reeser, CEO of Lightning eMotors, says the deal may help encourage the adoption of commercial electric fleets by other commercial vehicle OEMs.
US targets 50% EV sales by 2030
President Biden has signed an executive order for electric vehicles, hydrogen fuel cell, and plug-in hybrid vehicles to make up to 50% of US sales by 2030. The target is voluntary and was agreed in consultation with three major car companies—Ford, General Motors and Stellantis N.V, which owns Peugeot, Citroen, Fiat, Chrysler, Jeep, Ram, Maserati, Alfa Romeo and others. Among the brands expected to benefit most isTesla, which dominates the US EV market. The new announcements will put the U.S. on track to cut greenhouse gas emissions from new passenger vehicle sales by more than 60% by 2030, compared to 2020. Dan Becker, director of the Safe Climate Transport Campaign, countered, “Voluntary pledges from auto companies make a New Year’s resolution to lose weight look like a legally binding contract." Whatever figure is finally achieved, the change in the US car sector will be seismic. However, some even doubt that the grid can cope.
UK energy demand drops to 1950s levels
The pandemic caused UK energy demand in 2020 to take an unprecedented fall to levels last seen in the 1950s, according to a new report. The comprehensive Digest of UK Energy Statistics also caused renewable generation to hit a record 43.1% share, outpacing fossil fuels (37.7%) for the first time. The fossil fuel ratio was half that of 2010. However, the fall has not been sustained and by the end of the year, energy demand was back up to normal levels.
Voluntary Carbon Markets Integrity Initiative launched
A Voluntary Carbon Markets Integrity Initiative (VCMI) has been launched to help businesses make robust climate claims and improve the integrity of voluntary carbon markets. VCMI help businesses ensure “net-zero” and “carbon neutral” claims are underpinned by science-based action on reducing greenhouse gas emissions. VCMI aims to address critical gaps in voluntary carbon market integrity – building solid foundations as the market scales up. It will develop guidance on the use of carbon credits and transparent claims and promoting multi-stakeholder engagement and partnerships so that this translates into meaningful action on the ground. The initiative is financed by the UK Government and the Children’s Investment Fund Foundation and is and supported by the COP26 Presidency and United Nations Development Programme.
The power of technology in climate change disruptions
Transportation, energy and food sector disruptions driven by eight technologies can directly eliminate over 90% of net greenhouse gas (GHG) emissions worldwide within 15 years, it is claimed. Market forces can be leveraged to drive the bulk of global GHG emissions mitigation because the technologies required are either already commercially available and competitive today, or can be deployed to market before 2025 with the right societal choices, says independent think tank, RethinkX. The same technologies will make the cost of carbon withdrawal affordable, so ‘moonshot’ breakthrough technologies are not required.
Kevin Anthony, Associate Director of Thought Leadership Sales at iResearch Services, says, “It’s easier for most people to embrace solar, wind and other alternative power sources as powerful allies against climate change. But what about using transport as a service, where you are no longer an owner, but rely on ridesharing and there is increased use of autonomous vehicles? Do you embrace meat and milk alternatives? These sectors are growing, but they need a change in mindset from many before they become mainstream. There is an interesting role for the technology and financial sectors to play in working in partnership with infrastructure, retail and agricultural initiatives, for example, that contribute to combatting climate change.”
Moody’s to buy RMS climate risk modeller for $2 billion
Risk assessment firm Moody’s Corporation has agreed to purchase RMS, a global provider of climate and natural disaster risk modelling, for around $2 billion from the Daily Mail and General Trust plc. With over 400 risk models covering 120 countries, RMS is the world’s leading provider of climate and natural disaster risk modelling for the global property and casualty (P&C) insurance and reinsurance industries.
It will increase Moody’s insurance data and analytics business to nearly $500 million in revenue and will accelerate the development of the company’s global integrated risk capabilities to address the next generation of risk assessment. Meanwhile, Moody ESG Solutions has launched a Global Compact Screening tool. This allows market participants to evaluate companies’ alignment with the principles set by the United Nations Global Compact (UNGC), the world’s largest corporate sustainability initiative.
Ambri financing aims to fuel rapid growth
Clean energy battery maker, Ambri Inc. has secured US$144 million financing, led by Reliance New Energy Solar and Paulson & Co. Bill Gates, the company’s largest shareholder, also participated in the funding. Ambri plans to build new domestic production facilities in the United States and Internationally for its long-duration battery systems to meet the growing demand from the grid-scale energy storage market and large industrial energy customers, such as data centres.
Ethical credentials vital for investors
A growing number of investors are not only focused on the bottom line, but the ethics and ESG credentials of the companies and funds they buy into.
The pandemic and environmental worries have been the catalysts for the shift away from just chasing profits.
Hitanshu Dhingra, AVP Investment at iResearch Services, says, “The momentum consolidated by the Covid-19 pandemic and the more socially, community-spirited zeitgeist it generated has proven to be a gamechanger, compounded by the high-profile climate change narrative and demand for greater corporate transparency and stakeholder accountability. As all these factors conspire, attention falls more acutely on how companies treat both their stakeholders – particularly employees and their customers – as well as the environment. These factors increasingly define their reputation within the broader business community and public and can have a marked bearing on their market share.”
Another major factor that is crucial for the future of sustainable investing is transparency. iResearch Services’ survey into sustainability within the financial services industry found greenwashing activity around firms’ environmental practices is believed to be rife. At the same time, only 18% of business leaders didn’t see the value in becoming sustainable. “Clearly, investors and business leaders are aligned on sustainable initiatives being the route forward.”
So, should there be more regulations to set standards in sustainability? See what Hitanshu has to say.
Can family-owned businesses take the lead on ESG?
Family-owned businesses dominate key sectors of the economy. If they make environmental, social, and governance (ESG) issues a priority, they can change the world and lead on ESG, states a new report from PwC. Peter Englisch, Global Family Business and EMEA Entrepreneurial and Private Business Leader, Partner, PwC Germany, says the claim is not just wishful thinking, as large family-owned businesses dominate sectors including shipping, automotive, retail clothing and more. Some family businesses are already integrating these goals into their operations.
According to PwC’s Family Business Survey 2021, however, the majority of respondents have yet to grasp that the impulse to do well by society needs to be embedded in the business’s operations—rather than separated out as traditional philanthropy. According to the survey, only 39% rank sustainability and ESG as top priorities. It’s now time for family businesses to turn their long-term approach into concrete actions on ESG that are part of everyday operations.”
Gurpreet Purewal, Vice President of Sales – Thought Leadership at iResearch Services, says, “Family businesses often have a rich history and in-depth knowledge and experience, so can play an important role in ESG Thought Leadership. There are almost five million family businesses in the UK, for instance, generating 28% of GDP. Whether your family business is large or small, if you have something important to say about ESG, don’t be afraid to get out there and say it! Taking a lead on Thought Leadership is a great way to approach this and again, there is a genuine opportunity for successful collaboration the finance industry, trade bodies, technology and consultancy firms to bring this to life and spur on action.”
- Grant Harrison, the new chair of the annual GreenFin conference invites you on a learning journey examining the "climate finance week when everything changed."
- It’s a great time to be an ESG professional, amid a war on talent. Joel Makower, GreenBiz Chair and Co-Founder, asks if the war can be won.
- Read more about the fight for ESG talent in financial services and beyond in Chapter 24 of the recent iResearch Services report, How Sustainable is Financial Services?
EY’s diversity campaign
Professional services network, EY has worked with Black colleagues in the UK to make a video showing why it is committed to Black diversity and how it aims to help build a fairer world. It has asked Black voices to help EY ask better questions and get better answers. The video follows EY’s July 2020 Anti-Racism Commitments, in which it vowed to be a voice and force for change, both within and in society. EY says, “We know that we must continue to listen and encourage open and honest conversations to become the allies our friends deserve. Being ‘not racist’ is not enough – and we are taking action to ensure that EY is a place where every one of our people feels they belong and where Black talent can thrive.”
Rachael Kinsella, Editor at iResearch Services, says, “This is one of the most powerful campaigns I have seen recently and we congratulate EY on this important programme. It may not appear to be a traditional Thought Leadership campaign, but it addresses key themes, including people, communication, connection, collaboration, leadership and partnership. We believe all these have a bearing on the effectiveness and profitability of a business and should be a key focus within Thought Leadership and business development strategies.”
FCA consults over listing rules and board diversity
The UK Financial Conduct Authority (FCA) is asking for feedback on whether to change its Listing Rules concerning Diversity and Inclusion of Company Boards and Executive Committees. It plans to change its rules to require in scope companies to disclose publicly in their annual financial report whether they meet specific board diversity targets relating to gender and ethnicity on a ‘comply or explain’ basis.
To encourage a broader consideration of diversity at board level, the FCA also wants companies to publish standardised data on the composition of their board and most senior level of executive management by gender and ethnic background. Responses are sought before 20 October.
Diversity and social equality vital to success, says KPMG
Diversity and Social Equality (IDSE) are fundamental to drive the future success of any organisation, says KPMG UK in a new report. Companies with culturally diverse teams are 30% more likely to experience above-average profitability, and businesses that create an inclusive environment report an 83% increase in innovation.
“Often it is the aspects of Diversity which can be seen (aka above the surface) which are focused on. In order for us to be truly inclusive, we must also account for all aspects of Diversity which cannot be seen (aka below the surface). Inclusion and diversity is a key pillar within ESG frameworks, and investors, shareholders, employees and customers are looking to what organisations are doing around IDSE when making decisions, the report states.
Net Zero Hub launches amid UK SME inaction over carbon cuts
A free online hub has been launched to help UK SME businesses access information, tools and support to become net zero. The Net Zero Hub was unveiled as news broke that only around one in 10 UK small businesses (11%) had targets in place to reduce carbon emissions. Only one in seven (13%) have set targets to reduce their emissions – down from one in five (21%) when firms were surveyed before the pandemic in February 2020. Even so, half of the 1,000 businesses taking part in the survey by the British Chambers of Commerce and phone giant O2 acknowledge their customers are worried about the environment. Cost is a major issue for 30% of respondents. Shevaun Haviland, Director General of the BCC, said: “This research is a real eye-opener and shows just how big a challenge the UK’s net-zero target is.”
How to set climate change goals
To address climate change and decarbonisation — that is, reducing carbon emissions from a company’s direct operations as well as its supply chain — companies must set a public goal. Sustainability Professional, Serena Mau, explains in a Sinai Technologies blog how companies can set meaningful emissions reduction targets.
SUSTAINABILITY STORIES YOU MAY HAVE MISSED
- Defeat despondency and the doom-sigh to combat climate change, says Ethical Money writer, Rebecca O’Connor
- Two-thirds of UK plastic and packaging waste is down to the ‘dirty dozen’, says environmental charity, Surfers Against Sewage. It calls on Coca-Cola, PepsiCo, Anheuser-Bush InBev, McDonalds, Mondelez International, Heineken, Tesco, Carlsberg Group, Suntory, Haribo, Mars and Aldi to cut plastic pollution.
- Europe’s biotech hotspots mapped out by management consultant, McKinsey & Company
- How Sustainable is Direct to Consumer Retail? Operations Experience Management website ParcelLab explains in a white paper how DTC brands can improve sustainability through last mile experiences. (Free sign-up).
- History shows we rely on shareholders to compel corporations to meaningfully act on ESG issues, say shareholder litigation experts Rebecca Boon and John Rizio-Hamilton (Free access via Responsible Investor)
- A new report from The Boston Consulting Group (BCG), Will Car Subscriptions Revolutionize Auto Sales?, suggests that by 2030, car subscriptions may be worth up to $40 billion in Europe and the United States, accounting for 15% of new car sales.
- Response Global Media, which publishes Responsible Investor and Responsible Company and organises global ESG events, has been bought by information and networking events provider PEI.
- Can circular cities boost biodiversity? A circular economy–based Nature-Based Solutions approach can significantly contribute to climate change mitigation by improving sustainable material management, promoting dematerialization (reducing the material and energy input of a process) and decarbonisation, argues Cities Circle Economy.
- The value of UK property without net-zero plans will depreciate over the next five years, claims a new report. Net Zero and Valuations is the third in the Insight series from property stock exchange IPSX and sustainability consultancy, Carbon Intelligence. Retrofitting to align with climate science can be costly, it argues. Oliver Light, Real Estate Commercial Director at Carbon Intelligence, says, “We believe that if you do not invest CAPEX (capital expenditure) now, not only will you miss out on the short-term benefits such as reduced energy costs and rental premiums, but you will also end up needing to invest the same or more to avoid non-compliance, voids, or high discount rates linked to obsolescence.”
- The journey to net zero carbon is full of many known and unknown variables. Emily Wiener from TIAA and Nuveen’s Sarah Wilson discuss the challenges of treating climate change risk as an investment risk in a free webinar on Wednesday 15 September.
- Register for a Deep Dive into Investing with Indigenous Communities on 28 September. Free to register.
- Understand the latest advances in biotechnology and energy and climate challenges at the EmTech MIT Virtual Conference from Tuesday 28 Sep 2021 12:00 PM – Thursday 30 September 2021 5:00 PM EDT. General admission to MIT Technology Review’s flagship event on emerging technology is US$800.
- Driving Value with Values is the subject of the Sustainability & Impact Investor Forum in Monaco on 20 & 21 October. Set the standards for sustainable investment. Get advice from fund managers, investors, regulators and market experts on how the industry will respond to COP 26, how allocation preferences are shifting and more. The event is free for fund buyers.
Need support with sustainability? Do any of these initiatives jump out as issues or opportunities for your organisation? Get in touch with the iResearch Services team.
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