• Gustavo Bernal Torres

TCFD, Document Leaks, UK's Roadmap, Electricity Grids, and Manifestos


Source: Pixabay



Here are 5 ESG insights you might have missed this week:


1. COP26: Document Leak Reveals Nations Lobbying To Change Key Climate Report-

  • A huge leak of documents seen by BBC News shows how countries are trying to change a crucial scientific report on how to tackle climate change.

  • The leak reveals Saudi Arabia, Japan and Australia are among countries asking the UN to play down the need to move rapidly away from fossil fuels.

  • One senior Australian government official rejects the conclusion that closing coal-fired power plants is necessary, even though ending the use of coal is one of the stated objectives the COP26 conference.

  • Saudi Arabia, the world's biggest oil exporter, requests the UN scientists delete their conclusion that "the focus of decarbonisation efforts in the energy systems sector needs to be on rapidly shifting to zero-carbon sources and actively phasing out fossil fuels". Argentina, Norway and Opec also take issue with the statement.

  • Link to Source: https://www.bbc.com/news/science-environment-58982445


2. TCFD's 2021 Status Report-

  • This report provides an update on key TCFD-related developments and initiatives supporting the TCFD as well as the results of the Task Force’s annual review of climate-related reporting.

  • Global momentum behind the Task Force’s work has grown significantly over the past year (Figure ES2). Multiple jurisdictions have proposed or finalized laws and regulations to require disclosure aligned with the TCFD recommendations — some coming into effect as early as 2022. The TCFD recommendations are also the basis upon which international accounting standard setters are building global standards for climate risk disclosure.

  • The report also describes key findings from an analysis of disclosures on the financial impact of climate-related risks and opportunities on companies’ businesses and strategies. Overall, the Task Force is pleased to see increased maturity in climate-related disclosure efforts but believes significant work remains to “mainstream” consideration of climate-related issues within financial decision-making.

  • Link to Source: https://assets.bbhub.io/company/sites/60/2021/07/2021-TCFD-Status_Report.pdf


3. UK's Greening Finance: A Roadmap to Sustainable Investing-

  • This document sets out the government’s ambition to make the UK the best place in the world for green and sustainable investment.

  • The document sets out the government’s long-term ambition to green the financial system and align it with the UK’s world-leading net-zero commitment. This will happen in three phases: Informing, Acting, Shifting.

  • It focuses on the first step to deliver this: ensuring that the information exists to enable every financial decision to factor in climate change and the environment.

  • The roadmap outlines the legislative and regulatory changes that will be made across the economy to arm investors and consumers with the right information by setting world-leading standards on environmental sustainability reporting.

  • Link to Source: https://www.gov.uk/government/publications/greening-finance-a-roadmap-to-sustainable-investing


4. The Booming Business of Knitting Together The World’s Electricity Grids-

  • Intermittent renewables and current mayhem in energy markets highlight the importance of firms that link up producers of power with faraway consumers.

  • The ways electricity is both consumed (more of it, notably by cars) and produced (also more, increasingly through renewable sources) are changing. Balancing energy supply and demand is never easy, as mayhem in European gas markets has shown. It is all the more complex for electricity, which is trickier to store than not just gas, but also coal, diesel or wood chips. Renewables add more wrinkles: wind blows haphazardly; the sun can be obscured by clouds or night. As a result, most of the power that is produced has to be consumed immediately, and mostly in the place that produces it.

  • Advances in undersea cable-laying have helped open up the prospect of new and novel interconnections. Longer cables mean fewer legs of 100km or so that need to be stitched together. The viability of much longer interconnectors is being mooted as a result. A 720km Norway-to-Britain link started operating this month. Many are in various stages of planning, for example hooking up Greece and Israel, or Ireland and France. Others are more speculative, such as a 3,800km cable linking the sun-baked solar fields of Morocco with Britain. Another consortium wants to link Australia, Indonesia and Singapore, a 4,200km project.

  • Link to Source: https://www.economist.com/business/2021/10/16/the-booming-business-of-knitting-together-the-worlds-electricity-grids


5. The Resilience Manifesto: Integrating ESG and Risk Management, in Inv. Portfolios and Organizations-

  • Researchers from Stanford University, publish a paper / manifesto showing how investors can integrate ESG with traditional risk management to drive longer-term investment decisions.

  • Nowadays, two major pressures that investors must face are: 1) the need to account for environmental, social, and governance (ESG) factors in their investment processes; and 2) the need to manage risk at multiple timescales (e.g., short, medium, and long terms simultaneously). Integrating ESG and risk management is one way for investment organizations to address both of those pressures. Yet a cohesive framework for doing so has so far been absent.

  • In this manifesto, we introduce Portfolio Resilience as a paradigm by which investors might jointly manage ESG and risk, both in their portfolios and own organizations. We provide a framework (the DARLing decomposition) for examining Resilience in a principled manner. We also supply a template for exploring how useful a given dataset might be for revealing the Resilience of assets and organizations. To demonstrate the utility of the Resilience paradigm, we present a case study of a major investment organization that has successfully aligned its risk and ESG operations by using Resilience concepts.

  • Link to Source: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3942909




One more thing: From Bloomberg’s Methane Hunters, a 15-minute video on how dying gas wells are making one company rich in Appalachia.


Find the video here: https://www.youtube.com/watch?v=6c-WCg2Y7sE


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