Green Stress Tests, Global Watchdogs, Net-Zero Backlash, and Chinese ESG ETF Demand
Here are 5 ESG insights you might have missed this week:
Investors Should Prepare For Impact Of Green Stress Tests On Banks-
Central bankers look at powerful tool to nudge financial system to address climate risks.
The world’s central banks are going green. At a recent “Green Swan” conference for regulators, the world’s top central bankers agreed they had a clear role to play in tackling climate change. But which measures are the most important? And how much would their actions shift the cost of capital for high and low carbon companies?
Stress tests have been the single most consequential change in financial regulation since the financial crisis. They set the pace for capital and operational planning for banks simulating crises as a way to protect against them. They were central to the banks’ resilience during the pandemic. Will climate stress tests be as effective?
Global Watchdog To Tackle Greenwashing With ESG Ratings Guidance-
IOSCO – the International Organization of Securities Commissions – expects to publish a report mid-July. Ashley Alder, chair of the IOSCO body that groups securities regulators from the United States, Europe and Asia, says that many countries have no rules for ESG raters.
IOSCO is working with the International Financial Reporting Standards (IFRS) Foundation on setting up a new body by November to write mandatory global standards for company disclosures on climate change.
The watchdog also wants asset managers to incorporate more meaningful climate-related considerations into their risk management as the companies in which they invest face more stringent ESG disclosure rules.
Chinese Institutions Put ESG ETFs On Most-Wanted List-
Survey reveals 80% plan to allocate up to 20% of their assets to the sustainable funds over next five years.
Mainland Chinese and Taiwan investors rank ESG ETFs as their top choices for new products, while Hong Kong investors rank it as their third-most desired ETFs, a new survey from Brown Brothers Harriman shows.
More than 300 institutional investors, financial advisers and fund managers, including 146 respondents across the three markets of the mainland, Hong Kong and Taiwan, were questioned for the survey. A total of 80 per cent of the surveyed mainland investors said they planned to allocate between 11 per cent and 20 per cent of their assets into ESG ETFs over the next five years.
The Net-Zero Backlash Has Arrived-
Companies making net-zero commitments are coming under special scrutiny.
Yes, the businesses that have set those goals are coming under special scrutiny, never mind that only about 20 percent of the world’s 2,000 largest corporations have yet done so, according to the University of Oxford. The other 80 percent seem to be getting a free pass, at least for the moment. It’s the so-called leaders that are taking the heat.
"A lot of companies have made dubious climate commitments using accounting tricks — usually relying on problematic ‘carbon offsets’ to make the books look better than they are." Dr. Jonathan Foley, Project Drawdown
World Bank Group Increases Support for Climate Action in Developing Countries-
World Bank Group Climate Change Action Plan aims to deliver record levels of finance over 5 years to help countries reduce the trajectory of emissions and strengthen adaptation.
World Bank Group financing, diagnostics and advice will help the largest emitters flatten the emissions curve. These will also help countries achieve successful adaptation and resilience to climate change, while preserving jobs and improving livelihoods.
The World Bank Group now accounts for over half of multilateral climate finance to developing countries, and two-thirds of adaptation finance. We are increasing climate finance and focusing on meaningful results — greenhouse gas reduction and successful adaptation to climate change.
One more thing: From UN PRI- ESG-linked pay: Recommendations for investors. Recommendations for an investor considering how to engage/vote on ESG-linked pay.
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