Asset managers

The flow recovery continues but remains timid.

Key Takeaways

• In the third quarter of 2024, the global universe of sustainable open-end and exchange-traded funds attracted an estimated USD 10.4 billion of net new money, a notable uptick from the restated inflows of USD 6.3 billion in the second quarter.
• European sustainable funds garnered almost USD 10.3 billion, slightly down from the restated USD 11.1 billion in the previous quarter.

...

• Global product development continued on a downward trajectory with 57 new sustainable fund launches in the third quarter. While this number is likely to be revised upward, it confirms the normalization of product development activity in this space.
• Meanwhile, fund closing and rebranding activity continued. In Europe, 102 sustainable funds closed or merged in the third quarter, bringing the total to 349 so far this year.

The launch of an engagement theme to phase out ‘forever chemicals’ leads the Robeco Active Ownership team’s report on its work in the third quarter.

Summary

• Engagement theme begins on ‘Hazardous chemicals’, focusing on PFAS
• Update on sovereign engagement in Australia on climate policies
• Reports on ‘Controversial behavior’ theme and proxy voting season

RFI Foundation: OIC banks can improve their climate impact by learning from the challenges of global banks

The pace of announcements of responsible finance targets—especially about climate—has continued to grow. Concerns about greenwashing have been consistent and have begun to be incorporated into regulation. This pressure from stakeholders, including regulators, has contributed to a reduction in the easiest forms to identify. An analysis by RepRisk has found that, by their metric, greenwashing risk for companies has fallen for the first time since 2019.

Greenwashing includes companies producing convincing but misleading statistics, targets or descriptions to describe their environmental impacts. One place where the greenwashing risk is likely to be easiest to hide is in financial institutions’ targets around climate mitigation and the Just Transition. Because climate change is a problem of collective action, it can be easy to shift blame because no single country, company or financial institution can solve the problem.

Financial institutions that have set or announced targets, and are working on the process of baselining their current emissions, will have to prioritize where they put their focus. A recent update by the Transition Pathways Initiative (TPI) on progress on transition in the banking system has provided useful insights.

The report focuses on banks with a longer track record of target setting, measurement and transition planning and should be interpreted accordingly for the purposes of OIC-based financial institutions and those in Islamic finance. One challenge the larger banks face is that their climate targets and decarbonization pathways are often too narrowly targeted for one or a few sectors.

The way that banks approach target setting is often focused on high direct emitters like banking for the oil & gas and electricity generation sectors. These are often clearly material, especially for global banks, but national or regional banks that operate in most OIC markets may have different sectors that carry the most relevance.

The determination of materiality that banks use to determine relevance is often geared around emissions and credit exposure in the banking book. The TPI specifically called out the lack of disclosures related to capital market activities (e.g., underwriting fixed income or equity issuance) as well as opacity about the materiality of different sectors from a revenue perspective.

Even for the largest banks, this has been an issue, TPI summarizes:

“Of the banks providing sufficient information, we estimate that targets cover on average only 22% of their total revenue. Only seven banks include capital market activities in their sectoral targets, meaning that significant portions of banks’ businesses are not covered.”

One of the challenges that banks often face when thinking about implementing policies on decarbonization targets is that it is conceptually easier to evaluate responsibility for financed emissions from the financing provided to high-emission companies. If a company has $1 billion of equity and $200 million of bank financing, and directly emits 1.2 MtCO2e per year, then a bank that provided $50 million of that financing would have financed emissions of 50,000 tCO2..

However, the same methodologies are more difficult to apply if the bank is involved as just one member underwriting a quarter of a $200 million debt or equity underwriting that is subscribed by other investors. Rather than providing financing directly, where it can more readily link its financing activity to future emissions, capital markets activity facilitates other investors who would be expected to account for the financed emissions.

But the investment bank could have applied the same effort to place equity or debt for lower-emission companies, or for companies promoting climate solutions. The methodologies for accounting and reporting these data are not as well developed, which leads to gaps in the data that are reported and what targets are set.

Similarly, a financial institution may report financed emissions only including its customer’s direct emissions and emissions related to their electricity use. This is the approach of the GHG Protocol, but it omits a company’s value chain and implicitly favours companies that are not vertically integrated (where more emissions would be counted as direct (Scope 1) emissions.) Decisions about corporate structure, or which entity in a wider group receives financing, can impact the financed emissions that are produced, even if the real-world emissions are not affected.

The lesson in these discussions about technical points related to financed or facilitated emissions is that disclosure alone isn’t going to provide an antidote to future concerns about greenwashing. Even a precise, accurate and validated measurement and reporting of a subset of financed emissions could omit enough that it becomes misleading when viewed in relation to the bank’s entire range of activities.

The point for banks to take away in planning their implementation is to not be too reliant on a single metric in their approach to decarbonizing their portfolios or rely on one measurement framework – even if prescribed in regulation – for understanding their climate exposure. The point is not just to disclose or set targets, but to take actions that produce real economy changes.

For example, a disclosure regulation could set the expectation for financed emissions reporting based on the GHG protocol. Calculating the relevant emissions in line with the regulation could highlight a specific set of activities that the bank should focus on in its decarbonization efforts. Yet, if a broader metric like PCAF were applied, this might highlight a different set of priorities based on including value chain emissions and facilitated emissions.

Other metrics have been proposed and supported, including a focus on financing extended for capital expenditures, which will influence longer-term (future) emissions trends. In this vein, Reclaim Finance has released a report that discusses in more detail the issues with bank decarbonization target-setting to date. Reclaim Finance along with the Institute of International Finance has also highlighted the Energy Supply Financing Ratio (ESF) as a useful metric.

The ESF compares the ratio of a financial institution’s exposure to fossil fuel-generated electricity to renewable energy financing. It is based on a finding from the International Energy Agency (IEA) that by 2030 there will need to be $6 of financing for every $1 of fossil fuel investment. Most banks are far from that target but can show progress by shifting the ratio in ways that are harder to exaggerate than other metrics sensitive to portfolio composition.

At the end of the day, the progress that matters is the decarbonization of the economy in a way that will increase the likelihood of staying under 1.5˚ C of warming while promoting a Just Transition away from current emissions sources. Showing progress on a single metric, or having one type of data calculated in the most precise way possible, won’t cover up for failure to have a real-world impact.

Investors and other stakeholders are already on the lookout for cherry-picked data, and it is critical for banks to challenge the data they are reporting or will be required to report when it comes to actually making decisions. The required types of data for disclosure can be useful, but always need to be challenged in the context of a bank’s operations and the economy in which it operates to ensure that another view of a bank’s actions won’t produce cries of ‘greenwashing’.

Get the latest insights about responsible finance in OIC markets & Islamic finance from the RFI Foundation, C.I.C. Subscribe to RFI’s free email newsletter today!

CDC's latest report covers key areas of their activities, including:

• Mission
• Methodology
• Projects and impacts

DPAM: Non Financial Annual Report 2023 

DPAM's report covers key areas of their activities, including:

• Sustainable strategy
• Walking the talk
• Accompanying people in the transition
• Offering sustainable solutions

Manulife's latest report covers key areas of their stewardship activities, including:

• Engagement
• Collaboration
• Stewardship, investment, and ESG integration
• Purpose, strategy and culture

GMO: Sustainability & Responsible Investing Report 2023

GMO's latest report covers key areas of their stewardship activities including:

• ESG governance
• Responsible investing
• GMO's focus on climate change
• Industry collaboration
• Diversity, equity and inclusion
• Sustainability at GMO

Brookfield Asset Management's latest report covers key areas of their activities including:

• Our investment approach
• Our people
• Corporate disclosure
• Sustainability at brookfield
• Environmental sustainability 
• Governance

Hurricane Helene hit the shores of Florida as the curtain closed on New York Climate Week (NYCW) at the end of September, resulting in widespread devastation and loss of life. Its destructive power along the eastern seaboard and timing at the heels of one of climate investing’s largest conferences was enough to thrust climate adaptation into the spotlight at a global gathering typically absorbed with climate change mitigation.

Summary

• Challenge of incorporating climate adaptation concerns into portfolios
• Limited investment options available for tackling severe weather
• Second dilemma of not having an agreed yardstick for biodiversity

Asset disposals are commonplace in the oil and gas industry, and M&A has long been a feature of the industry.

Yet, as the energy transition continues to gather pace, there is a growing risk that assets are transferred to companies which have lower operational standards and reduced financial ability to pay to. Where such transfers are in response to pressures to reduce emissions, they may actually result in higher emissions.

Accordingly, we have developed a set of Responsible Exit Principles for Oil and Gas Companies for use by a range of stakeholders. They define a set of credible, widely recognised best practice standards governing the operation and eventual closure of such assets, by informing how sellers, buyers and their financial stakeholders can mitigate financial, environmental, governance and reputational risks related to such transfers.

An equity-driven assessment of countries’ progress towards 100% renewable energy systems

For the first time in history, COP28 established a global commitment for energy transformation, with countries pledging to tripling renewable capacity and doubling energy efficiency improvements by 2030, compared to 2022 levels, as well as “transitioning away from fossil fuels in energy systems, in a just, orderly and equitable 
manner [...] so as to achieve net zero by 2050”. Realizing those commitments will face multiple challenges.

Countries are not on track to achieve the tripling goal. Annual improvements in energy efficiency 
fell to 1.3% in 2023, far below the 4% needed by 2030. Investments in fossil fuels, although now half of those in clean technologies, remain astonishingly high, at $1.1 tn in 2024. For the first time in over a decade, the number of people without basic access to electricity increased from the previous year, reaching 685 million in 2022 (an increase of 10 million since 2021), while 2.1 billion people still lack access to clean cooking 
fuels and technologies.

This edition of the Renewable Energy Tracker follows 62 countries’ performance and progress 
in renewable energy deployment, in the power and end use sectors, factoring in several justice and equity aspects, including financial support, ambition and sustainable development.

Financing Focuses on Water Infrastructure Projects; Ocean-Related Projects Restricted by Fluid Frameworks

• Investor focus on biodiversity and climate adaptation is encouraging the issuance of blue debt instruments, particularly blue bonds, to finance projects that benefit freshwater and marine ecosystems.
• Investing in ocean projects isgaining traction within blue debt, but mostof the proceeds from blue bonds have been allocated to freshwater infrastructure-related projects that have a clearer set of criteria and metrics under existing frameworks.
• Supranationals and financial institutions were the initial drivers ofthe blue bond marketprior to 2022. Issuers have diversified to include corporates, local governments and agenciessince 2023.•Asset managers are considering the inclusion ofblue bonds in their fixed-income strategies to diversify assets and support sustainable water and ocean ecosystems

The Net-Zero Banking Alliance 2024 Progress Report provides an overview of member banks’ independent efforts towards transitioning their financing activities to align with pathways to net zero by 2050 at the latest and to set intermediate sectoral targets for 2030 or sooner to put them on a path towards this goal. It summarises information received from 122 member banks up to the end of May 2024 and offers insights into members’ progress on target setting and transition planning, two key aspects of the voluntary commitment banks make when joining the Net-Zero Banking Alliance (NZBA).

Progress on membership, target setting, and transition planning

• Since the launch of NZBA in April 2021, membership has more than tripled from 43 to 144 banks.
• 97 per cent of the 122 banks due to have set their first individual sectoral targets had done so.
• Around four-fifths of the 50 banks due to have set targets covering all or a substantial majority of the carbon-intensive sectors where they have material exposure had done so.
• Nearly two-thirds of the 91 banks that were due to have published transition plans had done so, with more banks planning to publish in 2024.

In addition, 15 case studies from member banks are featured in the 2024 Progress Report.

Download the full report

Climate Action 100+, the world’s largest investor engagement initiative on climate change, has released the latest round of company assessments against the Net Zero Company Benchmark. The Benchmark assesses the performance – based on disclosures and alignment assessments – of 168 Climate Action 100+ focus companies against the initiative’s three high-level goals: improved governance, emissions reduction and enhanced climate-related disclosures.

• Net Zero Company Benchmark annually assesses focus companies’ decarbonisation strategies and alignment with a 1.5°C emissions pathway as a tool for investors to understand their exposure to climate-related financial risks and opportunities. 

• The vast majority of companies have set net zero 2050 emissions targets for their operations and assigned board responsibility for climate risk oversight, demonstrating widespread recognition that climate risk is financial risk. 

• This year’s Benchmark includes the first analysis on historical emissions reductions and shows that most of assessed focus companies have reduced their emissions intensity over the past three years. But fewer are reducing emissions at the pace necessary to achieve a 1.5°C aligned pathway. 

• Despite stronger disclosures related to companies’ decarbonisation strategies, capital allocation, and just transition, few companies reveal how they will align their business practices to achieve their net zero commitments. 

• Climate Action 100+ also announces that 90 new signatory investors have joined since 1 June 2023. 

A summary of results can be found here and the full dataset can be found here.  

• Date: Tuesday 29 October 2024
• Time: 13:30
• Session duration: 75 mins
• Host: Duncan Wanblad, CEO, AngloAmerican
• Access via: Link

Vontobel: Modern mining: Digging deep to find winners on the brink of a technological revolution

Key takeaways

• The mining industry is entering a green supercycle, driven by demand for metals and minerals for decarbonization, with technology playing a key role in boosting productivity and reducing emissions.
• Epiroc, a leading maker of mining equipment, is at the forefront of this transformation, with a strong focus on autonomous operations and electrification, and a significant aftermarket presence.
• Despite challenges such as increased competition, we believe Epiroc's aggressive push into new technologies and close customer relationships could position it well for the future.

The State of transition in the banking sector report assesses the climate ambitions of 26 major international banks, ten US super-regional banks, and two custodian banks.

The TPI Centre began assessing the banking sector’s progress on the low-carbon transition with a pilot study in 2022. This 2024 assessment includes an evaluation of 26 major international banks, 10 US super-regional banks and two US custodian banks, on two elements: 

- Net Zero Banking Assessment Framework (NZBAF)
- Carbon Performance

The results of our 2024 assessment send a clear message: the overwhelming majority of banks are still in the early stages of their transition to a low-carbon economy. This is despite the fact that most banks we assess are now publicly disclosing some of their financed emissions and half are committing to reducing them to net zero by 2050. Yet, banks score poorly on both the NZBAF and Carbon Performance assessments. 

We consider why government bonds could be the missing link for decarbonising investment portfolios.

Decarbonisation and net-zero targets are front of mind for many investors these days. So why is one of the biggest asset classes – government bonds – not in the picture?

As the world grapples with climate change, reducing greenhouse gas emissions (GHG) is at the forefront of global conversations. Carbon offsets have emerged as one tool to help tackle this problem - they let you make up for your emissions by funding projects that remove or reduce an equivalent amount of carbon dioxide (CO₂) from the atmosphere. 

However, there’s a catch - not all carbon offsets are created equal. If we want to make a real difference, we need high-quality carbon offsets that deliver genuine, long-term benefits for the climate that are only used for residual emissions that remain after all feasible direct emission reduction actions have been taken.

Read this article by Katie Woodhouse to learn more about the problem with low-quality carbon offsets as well as common best practice and WHEB’s approach to carbon offsetting.

Dormakaba's Annual General Meeting (AGM) in Zurich on 10 October symbolically marked the end of the 2024 general meeting season for companies listed in Switzerland. Of the companies included in the Swiss Performance Index (SPI), only Barry Callebaut still has to hold their meeting before the end of the year (4th of December).  The publication of this study provides an opportunity to take stock of a year in which questions - and concerns - about the excessive remuneration of certain senior executives have returned.

Sovereign sustainability-linked bonds (SLBs) have so far been extremely rare, with Chile and Uruguay the only issuers to date. However, this may soon change. South Africa, Thailand, Kenya and Rwanda have recently floated the prospect of issuing some this year. Emerging market governments are starting to take notice of SLBs’ flexibility and potential for accessing a deeper pool of international finance, especially to finance the energy transition. Unlike green or sustainability bonds, SLBs do not impose use-of-proceeds requirements on the issuer. Instead, they oblige it to achieve predetermined key performance indicators (KPIs) to avoid a step up in coupon payments (or, as in the case of Uruguay, benefit from a step down).

But there are good reasons for investors to be wary about SLBs’ potential for meaningful impact, and hence their credibility. Questions of materiality and additionality loom large. It may not be clear whether KPIs would be achieved anyway without any additional effort. There can be a mismatch of timescales: a KPI may relate to a long-term structural trend which the issuing government has limited power to affect in the time available to meet a short-term target. Nor are coupon step-ups hefty enough to incentivise progress. In practice, SLB penalties are typically very low (12-25bps), usually less significant than global interest rate moves. This renders the instrument more of a signalling device – a show of intention on the part of the government and of support on the part of the investor – that marks a direction of travel rather than a promised final destination.

SFDR has become a cornerstone for guiding investors toward funds that supposedly align with their values. But how do these classifications impact the actual environmental and social performance of these funds?
 
"In this analysis, we look at how funds classified under Articles 6, 8, and 9 perform across a variety of ESG factors, as well as examining how these factors relate to the funds' tracking error, offering insights into the trade-offs that may come with sustainable investing. More methodology detail can be found at the end of the article."

For many investors as sustainability considerations move closer to the forefront of investment strategies, regulation has emerged as a key driver of both opportunity and risk.

This shift is being primarily driven by improved data availability, new scientific insights such as those from the UN’s World Meteorological Organization, policy changes and growing voter interest, all of which has pushed climate and sustainability issues higher up on political agendas in many jurisdictions. According to a recent Pew Research Center survey, a median of 75% of people across 19 countries in Europe, North America, and the Asia-Pacific region see climate change as a major threat — higher than concerns over misinformation (70%), cyberattacks (67%), the economy (61%), or infectious disease (61%).

This growing sociopolitical concern is influencing some policymakers and, in turn, reshaping the regulatory landscape for many institutional investors. For those managing institutional portfolios, understanding and adapting to these changes may be crucial.

The shift to a low-carbon economy will demand more capital than any of us have seen in our lifetimes—far more than private actors alone can provide. Public markets—the securities that make up the bulk of most investor portfolios available on stock exchanges—are set to play a much larger role in this transition. So, while private markets may have a head start, public markets are catching up quickly.

In this special episode, Mark Wiedman, Head of BlackRock’s Global Client Business, will lead a conversation with BlackRock investors Evy Hambro, Olivia Markham, and Will Su about the transition opportunities they’re seeing in public markets—and what it will take to fully unlock their potential.

The scientific community is exploring every avenue to expand and accelerate efforts around climate change. One area of research and investment is solar radiation modification (SRM), which reflects sunlight away from Earth’s atmosphere and into space.

Although much remains uncertain about SRM’s impacts — such as the effect of aerosols on clouds and climate — research in this area is expanding rapidly. Over the last few years, the US government has allocated more than $47 million to increase understanding of cloud aerosol effects and SRM.

Jefferies’ Sustainability and Transition Team hosted three experts to discuss the trajectory of solar radiation modification and its role in decarbonization.

Solar Radiation Modification remains a novel and underexplored field of decarbonization research, and it is not without some risks and controversies. Still, amid the push to expand and accelerate decarbonization efforts, SRM remains a crucial area for scientists, governments, and investors to actively monitor.

Climate transition plans are coming to a jurisdiction near you. Regulators are broadly moving beyond mandatory disclosures of emissions and climate targets toward disclosure of the actions companies are planning to take to achieve those targets. Within a few years, most large companies will be required to specify precisely that in a transition plan as part of their disclosure requirements. As is often the case, Europe leads the way, but other jurisdictions will soon follow.

It’s a prospect that may not be universally welcomed. Many companies already struggle to stay on top of the steady flow of new regulations and expectations on sustainability topics. So far, most of the companies that have produced climate transition plans have approached it as an exercise for disclosure reasons, not always as a plan to integrate into their strategy and operations.

Against a tougher economic backdrop and reduced business certainty, should sustainability still matter to treasurers, or should it take a back seat? In this short report, Citi Commercial Bank examines why sustainability-related themes are not just alive and well, but at the very heart of corporate strategy.

Click here to download the full report. 

At a glance

• The growth in AI and associated data centre expansion is set to increase power demand. This has significant implications in the era of energy transition.
• We explore options for power provision including behind the fence locations at nuclear and gas plants alongside efforts to improve grid connectivity and efficiency.
• Emissions will increase as a result of data centre expansion. Big tech will likely use some non-renewable resources but we expect them to continue investing in renewables.
• The AI revolution is thirsty for energy. We see numerous opportunities including quality names in areas like energy efficiency and provision of clean energy infrastructure.

Progression Pathways are a new way for the PRI to support signatories in progressing their responsible investment practices. Multiple pathways are available, to better direct signatories towards the PRI services – such as guidance, collaborative initiatives and education – that are most relevant to their objectives and level of development. 

There is no hierarchy between the pathways – they exist in parallel to reflect the diversity of responsible investment objectives that PRI signatories have. Progression happens within pathways: introductory, intermediate and advanced levels within each pathway will help to guide signatories in getting started, developing their approaches and exploring market-leading practices. 

The three pathways will be tailored towards: 

• those seeking primarily to incorporate ESG factors;
• those aiming to address drivers of sustainability-related financial risks;
• those seeking to have positive real-world impact alongside financial goals.  

Note: 2024 PRI AWARD WINNERS ANNOUNCED - details here

IIGCC has worked with a group of investors to identify four areas for enhanced policy interventions that would most effectively de-risk and support the transition of the European steel sector.

The steel industry is responsible for 7-9% of global CO2 emissions and around 5% in Europe. Steel is a crucial input to construction, energy infrastructure, machinery, and transport; all strategic sectors that support jobs and economic growth across Europe.

The steel sector’s decarbonisation is essential both for the economy-wide shift to net zero and for the alignment of investment portfolios with the transition. Creating a supportive policy environment for the transition of high emitting sectors is critical for achieving Europe’s commitment to climate neutrality by 2050.

Supporting investor engagement

Investors committed to working towards a net zero and climate resilient future - in line with their fiduciary responsibility to their clients and beneficiaries – see a net zero steel sector as an opportunity for job creation and industrial innovation in Europe.

In this context, the European steel industry is facing a historic, strategic turning point with risks and opportunities ahead. Investors see Europe as well positioned to lead the global transformation of the steel sector. The EU is a large, highly developed economy with generally high-end steel production that can seize the opportunities and show what is possible, paving the way for other regions to follow.

The areas identified and the underpinning recommendations are intended to serve as a resource to support individual investors’ engagement activities in relation to the steel sector. They are intended to provide a reference point for investors to refer to in their economy-wide macro-stewardship activities, direct engagement with policymakers, as well as engagement with companies in the steel sector and value chain.

As a basis for discussion, they are presented as high-level topics that need to be addressed rather than prescriptive next steps.

This guidance provides an outline of how investors can engage with issuers on labelled bonds to fulfil net zero commitments and decarbonise real world emissions.

Labelled bonds provide investors with an opportunity to tie fresh capital to Paris aligned climate targets and activities in line with their own commitments to decarbonise real world emissions. However, even with rapid growth in issuance, GSS+ bonds only account for 5% of total issuance volume, and the growth in sustainability-linked bonds has plateaued.

This guidance advances the IIGCC Net Zero Bondholder Stewardship Guidance by taking a more granular approach to stewardship and engagement for labelled debt, in particular green and sustainability-linked bonds, and seeks to:

1. Promote best practices for aligning labelled bonds with the net zero transition
2. Explore approaches to engaging on labelled bonds

Focusing particularly on green bonds and sustainability-linked bonds, the guidance identifies the opportunities and challenges for engagement beginning with issuers from pre-issuance to post-issuance and through to a wider ecosystem of policymakers and other key players.

The guidance focuses on labelled bonds and the opportunities for net zero bondholder stewardship they provide. Unlabelled debt also provides an important opportunity to finance the transition. For more on unlabelled debt, please see the IIGCC Net Zero Bondholder Stewardship Guidance and the Potential of Unlabelled Debt discussion paper.

Trase research shows huge variations in the traceability of cocoa from Côte d’Ivoire and the likelihood of whether supplies will comply with the EU deforestation regulation. Support for smallholder farmers is needed to avoid excluding them from the EU market, as companies prepare for regulation.

From 30 December 2024, companies trading agricultural commodities in the EU, including cocoa from Côte d’Ivoire, will need to demonstrate that their supplies are legally produced and deforestation-free in order to comply with the EU deforestation regulation (EUDR). To do this, companies need to provide the geolocation of the plots of land where commodities were produced to prove there is no or negligible risk that they were grown on land deforested after the end of 2020. The EU and Switzerland are the largest market for Ivorian cocoa, accounting for 61% of exports in 2022.

Although the traceability requirement – if properly implemented – should help guide action to reduce deforestation linked to EU commodity imports – it will be challenging to meet for cocoa produced in Côte d’Ivoire, according to our research.

USS's latest report covers key areas of their stewardship activities including:

• 2023-24 Activities and Highlights
• Purpose and Governance
• Investment Approach

PGIM's latest report covers key areas of their activities, including:

• PGIM Philosophy and Implementation
• ESG Policy, Governance & Resources
• ESG Research & Investment Approach
• Active stewardship

DNB's latest report covers key areas of their stewardship activities, including:

• Engagements
• Voting, active ownership and progress on the transition plan
• Exclusions

There is growing awareness of the potentially catastrophic economic risks posed by biodiversity loss, as more than 50% of global GDP is moderately or highly dependent on natural ecosystems.  

This report examines the global landscape of open-ended funds and ETFs that focus on the biodiversity theme. It examines the range of options on offer based on three categories: risk-oriented, mixed, and solutions-focused. The analysis looks at the growth in assets, flows, and products in each grouping, and analyses the funds and their most common holdings through the lens of a number of financial and ESG metrics.  

Key insights of this report include: 

• An introduction to key metrics used to use to assess biodiversity investments.
• Global assets held in biodiversity open-end funds and ETFs more than doubled over the last three years to USD 3.7 billion, boosted by product development.  
• Biodiversity funds have underperformed, on average, but showed resilience in the 2022 market downturn.  
• How each type of biodiversity strategy, given their unique risk/reward characteristics, can fit into an investor's portfolio. 

Download the report now to learn more.

"At BNPP AM, we have focused on contributing to mitigating structural inequality through significant actions and initiatives for several years. In recent years, there has been a growing consensus among the public, governments, corporations and investors that unequal access to opportunity and lack of social mobility poses long-term threats to social cohesion, trust and a healthy economy. Yet, unlike climate change, there is no Paris Agreement for addressing structural inequality. Concerted action is needed from a variety of stakeholders."

The term “ESG,” an acronym of the phrase “environmental, social, and governance,” began appearing in fund names as early as 2010. By 2019, hundreds of “ESG funds” had been created. It remains unclear, however, exactly how ESG funds are distinct from other groups of funds.

Despite efforts to define and clarify the meaning, the ambiguity of ESG funds stubbornly endures. This paper explores the meaning of ESG funds through the lens of fund classification, which involves sorting funds into groups defined by boundaries. The funds of interest in this paper include those funds that take ESG information, issues, and/or conditions into account—in any way, for any purpose, and to any extent.

The focus is on defining groups and boundaries rather than debating which words should be used to refer to those groups. In fact, we use generic references such as “Feature 1” and “Group A” to avoid the traps of terminology. Decisions about a group’s boundaries and decisions about
a group’s name can be separated; the scope of this paper is the former.

Key findings

• Understanding the financial opportunities in the climate transition requires a close look at how private capital is allocated across a broad spectrum of activities in the supply chains.
• In aggregate, since-inception internal rates of return for active investment holdings revealed that transition assets have largely kept pace with the broader private-capital universe.
• Such insights are relevant not only to climate-focused investors but to all investors who are exposed to transition-enabling activities and suggest that transition-related investments don’t have to come with a sacrifice on returns.

MSCI ESG: ESG Integration in Islamic Investments

"Integrating the principles of sustainable investing within the framework of Islamic finance has become a significant area of interest for investors who aim to align their portfolios with both ethical and financial goals.

In this report, we examine the financial performance of MSCI ESG Ratings within global Islamic equity indexes over their 11+ year history. Utilizing a standard quintile analysis on MSCI ESG Ratings scores — controlled for sectors, regions and company size — we found that companies with higher MSCI ESG Ratings outperformed their lower-rated counterparts in the MSCI ACWI Islamic M-Series Index over the study period."

November 7 – 8, 2024 | Beurs van Berlage, Amsterdam

On the agenda:

• Navigating Geopolitics
• Navigating the Responsible AI Landscape: Investment Risks and Opportunities
• Climate Litigation Heating Up
• Climate Transition: Engagment Over Divestment
• From Idea to Impact
• Biodiversity & the Road Ahead of COP16
• A Spotlight on Governance in ESG
• The Power of Impact Investing in Emerging Markets
• Breakout sessions
• Green FinTech Showcase
• How Will Anti-Greenwashing Rules Reshape the ESG Fund Landscape?
• Why Should Investors Care About Human Rights?
• Five Ways ESG Hit Markets in 2024
• What is the Future of ESG?

The European Union introduced its taxonomy in 2020. The regulation aims to help companies and investors identify environmentally sustainable economic activities to make sustainable investment decisions.

"In our first EU Taxonomy Reporting Review, Morningstar Sustainalytics examined taxonomy alignment on key performance indicators (KPIs) for more than 1,300 non-financial companies to assess the progress companies are making in reporting their taxonomy alignment.

Key findings of this report include:

• Reported capital investments reached USD 500 billion, but average taxonomy-alignment levels have not increased.
• Non-financial companies reporting above-zero data have 28% of their capital investments (capex) aligned with the taxonomy, on average.
• Alignment levels are expected to increase starting next year, when alignment reporting on the four new environmental objectives of the taxonomy becomes mandatory. Currently, reporting on these objectives is limited."

Download the report to learn more.

S&P Global: Path to net-zero: US utilities face new headwinds on decarbonization journey

Most large US power companies are gaining ground on decarbonization, with several utilities approaching the net-zero finish line. However, progress was uneven in 2023 and new challenges lie ahead, a survey by S&P Global Commodity Insights showed.

Extreme weather, rapidly rising energy demand, grid interconnection delays and opposing state policies can hamper progress for the most ambitious of power companies, the survey results indicated.

S&P Global: Texas lawmakers, Houston controller say anti-ESG law is government overreach

A group of Texas lawmakers and the Houston city controller said state officials are interfering in free markets and tarnishing the state's pro-business reputation by banning investment firms that have environmental, social and governance policies.

Texas adopted legislation in 2021 that prohibits cities, counties and state agencies from contracting with banks that screen investments for ESG risks and opportunities. Such investment criteria are among multiple factors that asset managers and other financial services providers consider when placing money.

S&P Global: Path to net-zero: Shipping sector faces supply hurdle for green marine fuels

Major shipping companies have largely aligned their net-zero targets with the International Maritime Organization's mid-century time frame, but further regulatory efforts may be needed to ensure the production of enough sustainable marine fuels for the industry to meet the UN agency's mandate.

The currently limited supplies of green fuels, and their higher cost compared to traditional fuels, might not prevent shippers from meeting 2030 interim targets for greenhouse gas emission cuts. For those, companies may be able to rely heavily on deploying energy-saving equipment and optimizing operations.

Ahead of the Biodiversity COP16 in Colombia in late October, Sonya Likhtman, Ingrid Kukuljan, and Gemma Corrigan set out our expectations of policymakers and highlight the key developments to watch out for.

Emerging markets are pivotal to the world’s climate transition and inclusive growth efforts. Investors have a key role to play in financing their transition.

Key Takeaways

1. Financing Sustainable Growth - Public equity and fixed income markets are key sources of global capital. We expect their role in driving sustainable, inclusive growth across emerging markets to become increasingly important.
2. Active Management and Engagement - To propel multiple areas of sustainability across emerging economies—from growth in renewables, to greater financial inclusion—we believe investors should adopt an active approach with a focus on fundamental metrics and engagement with company management teams and policymakers.
3. Strategic Capital and Local Context - Alongside strategic capital allocation, an understanding of local context is key given emerging economies are at varying stages of development, and collectively crucial in contributing to global sustainability goals.

Highlights include:

- Steady growth in impact investing assets: At 14% CAGR over the past five years, there is continuous growth in the assets allocated to impact investing strategies. The dynamics between large and small investors are particularly intriguing, suggesting that investors are increasingly playing to their strengths — a sign of a maturing market. 
- The rise of equity-like debt and public asset classes: Investors are leveraging the unique features of these asset classes to derive value, indicating a strategic shift in how capital is deployed.
- Satisfaction with financial performance despite unmet targets: Investors report high satisfaction with financial performance, even when targets are not met. This underscores the need to enhance data-sharing practices to better understand actual impact performance results. The GIIN’s impact performance benchmarks represent an important step in this direction, but there is much more work to be done.

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JobPost: Jupiter Asset Management Ltd -  ESG Analyst (12 month FTC)(London | CloseDate: Unknown)

JobPost: U.S. International Development Finance Corporation (DFC) - Managing Director, Environmental & Social Risk Assessment (Health & Agribusiness) (Washington | CloseDate: 5th November)

JobPost: S&P Global - Reporter, Energy Transition Metals (Washington | CloseDate: Unknown)

JobPost: ISS - Sustainability & Climate Sales Specialist (Rockville/Washington | CloseDate: Unknown)

JobPost: ESG Implementation & Strategy Manager [Distribution] (London | CloseDate: Unknown)

 
Employment Type Contract Please note, where PRI has an office there is an expectation to work a minimum of 2 days per week 
 
Location  Hybrid · London, UK   
 
Seniority Mid-level
Closing: 8:00pm, 13th Oct 2024 BST

JobPost: ESG & Impact Associate (London | CloseDate: Unknown)

JobPost: ERM - Consulting Associate - Product Sustainability & Circularity (UK | CloseDate: Unknown)

JobPost: M&G plc - Sustainability Assistant Analyst (London | CloseDate: 21st Oct)

Employment Type Contract Please note, where PRI has an office there is an expectation to work a minimum of 2 days per week 
 
Location  Hybrid · London, UK   
 
Seniority Senior
Closing: 8:00pm, 20th Oct 2024 BST

At Fitch, we have an open culture where employees are able to exchange ideas and perspectives, throughout the organization, irrespective of their seniority. Your voice will be heard allowing you to have a real impact. We embrace diversity and appreciate authenticity, employees work in an environment where they can be their true selves. Our inclusive and progressive approach helps us to keep a balanced perspective. 

With our expertise, we are not only creating data and information, but also producing timely insights from every angle to influence decision making in this ever changing and highly competitive market. We have a relentless hunger to innovate and unlock the power of human insights and to drive value for our customers. There has never been a better time to make an impact and we invite you to join us on this journey.

Sustainable Fitch is currently seeking an Associate Director based in Hong Kong.
Part of Fitch Group, Sustainable Fitch is focused on research and analysis of ESG themes for companies and their debt instruments across the globe. The products offered by Sustainable Fitch include ESG Scores, ESG Ratings and ESG Research, with the support of Product Development and Resource teams. It has offices in Barcelona, Hong Kong, London, New York, Singapore and Toronto.

What We Offer:

• Opportunities for public speaking, external engagement and development of analytical and research skills.  
• Access to a wide range of learning and training programs, courses, and certificates.
• Development of managerial skills.

We’ll Count on You To:

• Produce and oversee the production of ESG ratings, scores, and other analysis, including the review of reports.
• Work alongside peers in the APAC and the global Research team to publish in-depth, thematic research on ESG trends, as well as contribute to Sustainable Fitch’s regular publications.
• Represent Sustainable Fitch at external events.
• Participate in internal and external interactions.
• Serve as a thought leader / internal reference; viewed as a subject matter expert.

What You Need to Have:

• Experience in sustainable finance research or analysis and understanding of the sustainable debt market.
• Fluent English and Mandarin Chinese (written and spoken) a must.
• Excellent written and spoken communication skills.
• Collaborative attitude with excellent inter-personal skills.
• Self-motivation and good time management skills.

What Would Make You Stand Out:

• Experience managing small teams or medium- to long-term projects.
• Expertise in sector(s) analysis (e.g. real estate, technology, natural resources).